BLRK 8-K
Bluerock Acquisition Corp. (BLRK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 1.01. Entry Into a Material Definitive Agreement.
Business Combination Agreement
On July 31, 2026 (the “Signing Date”), Bluerock Acquisition Corp., a Cayman Islands exempted company (which will transfer by way of continuation and domesticate as a Delaware corporation prior to the Closing) (“Bluerock”), entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”), by and among Bluerock, Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (“Yellow”), and BLRK Merger Sub Inc., a Delaware corporation (“Merger Sub”). The transactions contemplated by the Business Combination Agreement are referred to as the “Business Combination.” Bluerock, Yellow and Merger Sub are individually referred to as a “Party” and, collectively, the “Parties.”
The Business Combination Agreement and the Business Combination were unanimously approved by the boards of directors of each of Bluerock and Yellow.
The Business Combination is expected to close in the second half of 2026, following the receipt of the required approval by Bluerock’s shareholders and the fulfillment of other customary closing conditions.
The Domestication
Subject to obtaining the required shareholder approvals and at least one day prior to the time of the closing of the Business Combination (the “Closing,” and the date on which the Closing occurs, the “Closing Date”), Bluerock will deregister as a Cayman Islands exempted company and transfer by way of continuation to and domesticate as a corporation incorporated under the laws of the State of Delaware (the “Domestication”). In connection with the Domestication, Bluerock will file with the Secretary of State of the State of Delaware a certificate of incorporation (the “Charter”). Among other things, the Charter will set forth the rights and preferences of the equity interests of Bluerock after the Domestication (such company after the Domestication, “Pubco”).
Immediately prior to the Domestication, each then issued and outstanding Class B ordinary share of Bluerock, par value $0.0001 per share (each, a “Cayman Class B Share”), will convert automatically, on a one-for-one basis, into a Class A ordinary share of Bluerock, par value $0.0001 per share (each, a “Cayman Class A Share” and, together with the Cayman Class B Shares, the “Cayman Shares”). In connection with the Domestication: (i) each then issued and outstanding Cayman Class A Share will convert automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of Pubco (the “Pubco Common Stock”); (ii) each then issued and outstanding warrant of Bluerock representing the right to purchase one Cayman Class A Share (each, a “Cayman Purchaser Warrant”) will convert automatically into a warrant to acquire one share of Pubco Common Stock pursuant to the related warrant agreement (each warrant, a “Pubco Warrant”); and (iii) each of the then issued and outstanding units of Bluerock will convert automatically into one unit of Pubco consisting of one share of Pubco Common Stock and one-third of one Pubco Warrant (each, a “Pubco Unit”).
The Business Combination and Consideration
In connection with the Closing, Merger Sub will merge with and into Yellow (the “Merger”), with Yellow surviving the Merger as a direct wholly-owned subsidiary of Pubco. Contemporaneous with the Closing, Bluerock will change its name to “Yellow.ai”.
Subject to, and in accordance with the terms and conditions of the Business Combination Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of Yellow, par value $0.00001 per share (the “Yellow Common Stock”), issued and outstanding immediately prior to the Effective Time (excluding Dissenting Shares and Cancelled Shares (each as defined in the Business Combination Agreement)) will be automatically converted into the right to receive the Per Share Merger Consideration, which is equal to (i) the Aggregate Consideration (as defined below), divided by (ii) the Company Fully Diluted Stock (as defined below). “Aggregate Consideration” means the number of shares of Pubco Common Stock equal to: (a) $300,000,000 divided by (b) $10.00, with the value in (a) subject to certain adjustments as further described in the Business Combination Agreement. “Company Fully Diluted Stock” means the sum of (without duplication): (i) the aggregate number of shares of Yellow Common Stock issued and outstanding immediately prior to the Effective Time (including (a) the number of shares of Yellow Common Stock issuable upon conversion of (i) all Simple Agreements for Future Equity entered into between Yellow and investors (each, a “Yellow SAFE”), and (ii) all Yellow Preferred Stock (as defined in the Business Combination Agreement), in each case outstanding as of immediately prior to the Effective Time), plus (b) the aggregate number of shares of Yellow Common Stock issuable upon exercise or settlement of all eligible options of Yellow issued and outstanding as of the Closing, plus (c) the aggregate number of shares of Pubco Common Stock issuable upon exercise of all warrants of Yellow which are assumed by Pubco as of immediately following the Effective Time.
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Pursuant to the Business Combination Agreement, Bluerock will contribute to Yellow an amount in cash (the “Available Closing Cash”) equal to the sum of (without duplication): (a) all amounts in the Bluerock trust account as of 11:59 p.m. Eastern Time on the day immediately preceding the Closing Date, less (i) amounts required for the redemptions of Cayman Class A Shares by Bluerock’s shareholders (including any excise taxes expected to be payable in connection with the redemptions as reasonably determined by Bluerock in good faith consultation with Yellow) and (ii) transaction expenses of Yellow and Bluerock, plus (b) the aggregate proceeds, if any, actually received by Bluerock from the PIPE Investments (as described below) plus (c) all other cash and cash equivalents of Bluerock, determined in accordance with generally accepted accounting principles as in effect in the United States.
Milestone Equity Incentive Plan
Pursuant to the terms of the Business Combination Agreement, Bluerock has agreed to adopt, prior to the Closing Date and subject to the approval by Bluerock’s shareholders, a milestone equity incentive plan, to be effective as of the Effective Time (the “2026 Milestone Equity Plan” or the “2026 MEP”), in a form that provides for awards of restricted stock units on terms consistent with the term sheet attached as Exhibit E to the Business Combination Agreement. Subject to the terms and conditions of the 2026 MEP, eligible participants will be entitled to receive up to an aggregate of 17,500,000 shares of Pubco Common Stock upon the vesting of performance- and service-based awards to be issued under the 2026 MEP. Such awards will vest upon the achievement of certain revenue and stock price-based targets (each, a “Triggering Event”) as follows:
| (i) | 19.05% will vest on the date the Pubco Board (as defined below) certifies that Pubco has achieved annual revenue of at least $45 million on a trailing 12 month basis over the 3 fiscal year period commencing with the first full fiscal year immediately following the Closing; |
| (ii) | 19.05% will vest on the date the Pubco Board certifies that Pubco has achieved annual revenue of at least $55 million on a trailing 12 month basis over the 3 fiscal year period commencing with the first full fiscal year immediately following the Closing; |
| (iii) | 19.05% will vest on the date the Pubco Board certifies that Pubco has achieved annual revenue of at least $65 million on a trailing 12 month basis over the 3 fiscal year period commencing with the first full fiscal year immediately following the Closing; and |
| (iv) | 42.85% will vest on the date the Pubco Board certifies that, at any time during the 5-year period following the Closing Date, the VWAP of the shares of Pubco Common Stock as reported on Nasdaq equals or exceeds $12.00 for 20 out of 30 consecutive trading days. |
No eligible participant will vest in any award unless and until such participant remains in continued service with Pubco until the date of achievement of the applicable Triggering Event (and in the case of the price-based target, through the first anniversary of the Closing Date). If any of the Triggering Events fail to occur by the applicable deadline, then the associated portion of the award (and all shares of Pubco Common Stock subject thereto) will be immediately forfeited.
Governance
The Parties have agreed to take all necessary action, including causing the current directors of Bluerock to resign, so that effective at the Closing, the board of directors of Pubco (the “Pubco Board”) will consist of a three class “staggered” board of nine individuals (appointed in accordance with the rules of Nasdaq). Eight directors will be chosen by Yellow and one director will be chosen by Bluerock Acquisition Holdings, LLC, a Delaware limited liability company (the “Sponsor”), who will serve as a Class III director.
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Representations and Warranties; Covenants
The Parties have made customary representations, warranties, and covenants in the Business Combination Agreement, including, among others, covenants with respect to the conduct of Bluerock and Yellow prior to the Closing Date.
Conditions to Each Party’s Obligations
The obligations of Bluerock and Yellow to consummate the Business Combination are subject to the satisfaction or waiver of certain customary closing conditions. Without limiting the generality of the foregoing, such closing conditions include: (i) the adoption or approval, as applicable, by Bluerock’s shareholders (the “Bluerock Shareholder Approval”) of: (A) the Business Combination Agreement in accordance with applicable law and exchange rules and regulations; (B) the Domestication; (C) the Pubco charter and the bylaws; (D) any separate or unbundled non-binding advisory proposals as are required to implement the foregoing; (E) approval of the issuance of shares of Pubco Common Stock as required by the Nasdaq listing rules; (F) the adoption by Bluerock of the 2026 MEP and the Equity Incentive Plan (as defined in the Business Combination Agreement) with an initial share reserve equal to 10% of the aggregate number of shares of Pubco Common Stock outstanding immediately following the Closing on a fully-diluted, as-converted and as-exercised basis and with an annual evergreen share increase beginning in 2028 not exceeding 5% of the total number of shares of Pubco Common Stock outstanding on the last day of the immediately preceding fiscal year; (G) the election of members of the Pubco Board; and (H) any other proposals as the U.S. Securities and Exchange Commission (the “SEC”) (or staff members of the SEC or Nasdaq) may indicate are necessary in its comments to the registration statement on Form S-4 (the “Registration Statement”) to be filed by Bluerock and Yellow or any related correspondence (such proposals in clauses (A)-(H), together, the “Required Transaction Proposals”); (ii) the receipt of the requisite consent of the stockholders of Yellow; (iii) any applicable waiting period or any extension of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (and the rules and regulations promulgated under such Act) in respect of the Business Combination being expired or earlier terminated without the imposition of burdensome conditions; (iv) the Registration Statement becoming effective; (v) approval of the listing of the Pubco Common Stock on Nasdaq, subject only to notice of issuance; (vi) the accuracy of the representations and warranties of each Party and the performance of the covenants and agreements of the Parties subject, in each case, to customary standards; (vii) the completion of the Domestication; (viii) the adoption by Bluerock of the 2026 MEP; and (ix) the receipt by Bluerock of a valuation report from a reputable Indian chartered accountancy firm certifying the value of Yellow and its Indian assets. In addition, there is no minimum cash requirement in order to consummate the Business Combination.
Termination
The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing. Without limiting the generality of the foregoing, such circumstances include (i) by mutual written consent of Bluerock and Yellow; (ii) by Bluerock or Yellow if the Closing has not occurred on or before March 31, 2027 (or such later date agreed in writing by the Parties); (iii) by Yellow, if at any time prior to the receipt of Bluerock Shareholder Approval, the board of directors of Bluerock has amended, qualified, withdrawn or modified its recommendation to Bluerock’s shareholders that they vote in favor of the Required Transaction Proposals; (iv) by Bluerock or Yellow if the Bluerock Shareholder Approval is not obtained by Bluerock after the conclusion of the extraordinary general meeting of Bluerock’s shareholders held for the purpose of voting on the Required Transaction Proposals (the “Business Combination Meeting”); and (v) by Bluerock if the approval of Yellow’s stockholders has not been obtained and delivered to Bluerock by the second business day following the date the Registration Statement has been declared effective by the SEC and the prospectus thereto has been filed and distributed. In addition, Bluerock has the right to terminate the Business Combination Agreement if the Registration Statement is not filed with the SEC within 75 days after the date of the Business Combination Agreement.
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A copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Business Combination Agreement and the Business Combination does not purport to be complete and is qualified in its entirety by reference to the full text of the Business Combination Agreement filed with this Current Report on Form 8-K. The Business Combination Agreement is included to provide security holders with information regarding its terms. It is not intended to provide any other factual information about Bluerock or Yellow. In particular, the assertions embodied in representations and warranties by Bluerock and Yellow contained in the Business Combination Agreement are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement, including being qualified by confidential information in the disclosure schedules provided by the parties in connection with the execution of the Business Combination Agreement, and are subject to standards of materiality applicable to the contracting Parties that may differ from those applicable to security holders. The confidential disclosures contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Business Combination Agreement. Moreover, certain representations and warranties in the Business Combination Agreement were used for the purpose of allocating risk between the parties, rather than establishing matters as facts. Accordingly, security holders should not rely on the representations and warranties in the Business Combination Agreement as characterizations of the actual state of facts about Bluerock and Yellow. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Business Combination Agreement, which subsequent information may or may not be fully reflected in Bluerock’s public disclosures.
Sponsor Support Agreement
Concurrently with the execution of the Business Combination Agreement, Bluerock entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”) with Yellow and the Sponsor. Under the terms of the Sponsor Support Agreement, the Sponsor agreed to, among other things: (i) vote in favor of adoption of the Required Transaction Proposals; (ii) vote against any Alternative Transaction (as defined in the Business Combination Agreement) and any merger agreement or merger other than the Business Combination Agreement and the Business Combination; (iii) waive all anti-dilution rights with respect to the rate that the Cayman Class B Shares convert into the Cayman Class A Shares in connection with the Business Combination; and (iv) not transfer any Cayman Class B Shares or Cayman Purchaser Warrants (together, the “Sponsor Subject Securities”) held by it until the earliest to occur of (x) the Closing, (y) the termination of the Business Combination Agreement in accordance with its terms and (z) the liquidation of Bluerock.
In addition, the Sponsor agreed to forfeit, for no consideration, 750,000 Cayman Class B Shares held by it at or immediately prior to the Closing. Further, in connection with the Equity PIPE Investment (as defined below), the Sponsor agreed to transfer to the Equity PIPE Investors (as defined below) 0.5 Cayman Class B Shares (subject to adjustment, the “Commitment Shares”) for each Equity PIPE Unit (as defined below) (or Non-Redeemed Share (as defined below)) acquired by such investor pursuant to the Equity PIPE Subscription Agreement (as defined below), up to a maximum of 1,000,000 Commitment Shares. The Sponsor also agreed to forfeit 2,000,000 Cayman Purchaser Warrants in connection with the Note PIPE Investment (as defined below).
The foregoing description of the Sponsor Support Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Sponsor Support Agreement, a copy of which is included as Exhibit 10.1, and the terms of which are incorporated by reference in this Current Report on Form 8-K.
Company Support Agreements
Concurrently with the execution of the Business Combination Agreement, Bluerock, Yellow and certain stockholders of Yellow (the “Supporting Yellow Stockholders”), entered into support agreements (the “Company Support Agreements”), pursuant to which each of the Supporting Yellow Stockholders agreed to, among other things, (i) execute and deliver a written consent approving and adopting the Business Combination Agreement and the transactions contemplated thereby, including the Merger, no later than two business days after the effective date of the Registration Statement, and (ii) not to transfer any of the securities of Yellow (the “Yellow Securities”) held by it through the Closing.
The foregoing description of the Company Support Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Company Support Agreement, a copy of which is included as Exhibit 10.2, and the terms of which are incorporated by reference in this Current Report on Form 8-K.
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Lock-Up Agreement
Concurrently with the execution of the Business Combination Agreement, the Sponsor and certain other holders of Cayman Shares (collectively, the “SPAC Holders”) and certain holders of Yellow Securities (the “Target Holders” and, together with the SPAC Holders, the “Holders”) entered into a Lock-Up Agreement (the “Lock-Up Agreement”) with Bluerock and Yellow, pursuant to which, among other things, the Holders agreed not to transfer (except for certain permitted transfers) any shares of Pubco Common Stock held by such Holder immediately following the Closing (excluding any Non-Redeemed Shares held by the Holders, any shares of Pubco Common Stock issued to the Holders upon separation of the Equity PIPE Units or any securities issued as part of the Note PIPE Investment, the “Lock-Up Securities”), until the earliest to occur of (w) (i) with respect to 50% of the Lock-Up Securities held by a Holder, 210 days after the Closing Date and (ii) with respect to the remaining 50%, 1 year after the Closing Date, (x) the date on which the Trading Price (as defined in the Lock-Up Agreement) of the shares of Pubco Common Stock on Nasdaq equals or exceeds $12.00 per share, (y) the date on which the Common Stock ceases to be listed on any national securities exchange or automated quotation system (including, without limitation, OTCQB, OTCQX, OTCID, the Pink Limited Market or any other similar exchange) (each, an “Applicable Exchange”) and is not re-listed on any Applicable Exchange within five (5) Business Days thereafter, and (z) the date on which Pubco completes a liquidation, merger, amalgamation, capital stock exchange, reorganization or other similar transaction, that results in all of Pubco’s public stockholders having the right to exchange their shares of Pubco Common Stock for cash, securities or other property (the “Lock-Up Period”). Notwithstanding the foregoing, the Lock-Up Period with respect to any Commitment Shares held by the Holders will be the earliest to occur of (w) 180 days after the Closing Date, (x) the date on which the trading price of the shares of Pubco Common Stock on Nasdaq equals or exceeds $12.00 per share, (y) the date on which the Common Stock ceases to be listed on an Applicable Exchange and is not re-listed on an Applicable Exchange within five (5) Business Days thereafter, and (z) the date on which Pubco completes a liquidation, merger, amalgamation, capital stock exchange, reorganization or other similar transaction, that results in all of Pubco’s public stockholders having the right to exchange their shares of Pubco Common Stock for cash, securities or other property.
The foregoing description of the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Lock-Up Agreement, a copy of which is included as Exhibit 10.3, and the terms of which are incorporated by reference in this Current Report on Form 8-K.
PIPE Investments
Equity PIPE Investment
Concurrently with the execution of the Business Combination Agreement, Bluerock and Yellow entered into subscription agreements with certain institutional and accredited investors, including certain affiliates of Yellow (the “Equity PIPE Investors” and the subscription agreements, the “Equity PIPE Subscription Agreements” and the transactions contemplated thereby, the “Equity PIPE Investment”). Under the terms of the Equity PIPE Subscription Agreements, the Equity PIPE Investors agreed, subject to the terms and conditions set forth in the Equity PIPE Subscription Agreements, to subscribe for and purchase from Pubco, on the Closing Date and immediately prior to the Effective Time, an aggregate of 500,000 units of Pubco (the “Equity PIPE Units”) at $10.00 per Equity PIPE Unit, for an aggregate purchase price of $5 million. Each Equity PIPE Unit consists of one share of Pubco Common Stock and one Pubco Warrant to purchase one share of Pubco Common Stock for $11.50 per share for a period of five years from the Closing. The closing of the Equity PIPE Investment is conditioned upon, among other things, the completion or concurrent consummation of the Business Combination.
Pursuant to the Equity PIPE Subscription Agreements, each Equity PIPE Investor may elect to reduce the number of Equity PIPE Units it is obligated to purchase under its Equity PIPE Subscription Agreement, on a one-for-one basis, up to the total amount of Equity PIPE Units subscribed thereunder if such Equity PIPE Investor (i) beneficially owns any Cayman Class A Shares as of the fifth calendar day after the effectiveness of the Registration Statement (including any Cayman Class A Shares purchased by the Equity PIPE Investor in the open market at a price less than the Per-Share Redemption Price (as defined in the Equity PIPE Subscription Agreement) (the “Non-Redeemed Shares”), (ii) does not exercise its right to redeem any of its Non-Redeemed Shares in connection with the Business Combination Meeting, (iii) does not sell or otherwise transfer its Non-Redeemed Shares prior to the Closing; and (iv) does not vote any Non-Redeemed Shares in favor of the Business Combination at the Business Combination Meeting or in favor of any proposal contained in the Proxy Statement (as defined in the Equity PIPE Subscription Agreement) related thereto. If an Equity PIPE Investor properly makes such election in accordance with the terms of the Equity PIPE Subscription Agreements, then it will be entitled to receive one Pubco Warrant for each Non-Redeemed Share held by it at Closing.
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In addition to the foregoing, the Equity PIPE Subscription Agreements provide that the Equity PIPE Investor will be entitled to receive 0.5 Commitment Shares from the Sponsor at the Closing for each Equity PIPE Unit purchased by such Equity PIPE Investor and Non-Redeemed Share held by such Equity PIPE Investor at Closing, subject to adjustment as provided in the Equity PIPE Subscription Agreements, up to an aggregate of 1,000,000 Commitment Shares. The Commitment Shares issued to the Equity PIPE Investors will be subject to transfer restrictions for a period of 180 days after the Closing Date.
The foregoing description of the Equity PIPE Subscription Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Equity PIPE Subscription Agreement, a copy of which is included as Exhibit 10.4, and the terms of which are incorporated by reference in this Current Report on Form 8-K.
Note PIPE Investment
Concurrently with the execution of the Business Combination Agreement, Bluerock and Yellow entered into a securities purchase agreement (the “Note PIPE Purchase Agreement” and the transactions contemplated thereby, the “Note PIPE Investment” and, together with the Equity PIPE Investment, the “PIPE Investments”) with an accredited investor (the “Note PIPE Investor”), pursuant to which, following the Closing, Pubco will issue and sell to the Note PIPE Investor, in one or more closings, a new series of senior secured convertible notes (the “Notes”) in an aggregate original principal amount of up to $50,000,000, consisting of (i) an initial note in an original principal amount of up to $25,000,000, to be issued and sold at the initial closing (the “Initial Note”), and (ii) one or more additional notes in an aggregate original principal amount for all additional closings of up to $25,000,000, issuable in increments of up to $5,000,000, which may be issued and sold following the initial closing at the election of the Note PIPE Investor or, in certain circumstances, at the election of Pubco, in each case subject to the satisfaction of the conditions to closing set forth in the Note PIPE Purchase Agreement (the “Additional Notes”), such that the aggregate principal amount of Notes outstanding at any time may not exceed $25,000,000 without the consent of Pubco and the Note PIPE Investor. The initial closing under the Note PIPE Purchase Agreement is conditioned upon, among other things, the consummation of the Business Combination, and will occur immediately following the Closing, subject to all conditions to closing be satisfied as of such time.
The Notes will bear interest at a rate of 12% per annum, which interest will be payable quarterly at the Company’s option in shares of Pubco Common Stock (subject to satisfaction of certain equity conditions), in cash, or by capitalizing such interest into the outstanding principal balance of the applicable Note (i.e., payment in kind), or a combination of the foregoing. Upon the occurrence and during the continuance of an event of default, the applicable interest rate will automatically increase to 18% per annum. The Notes will be purchased at a price of approximately $950 for each $1,000 of principal amount issued, reflecting an original issue discount of approximately 5%. The Notes will mature 36 months from the applicable issuance date of each Note, subject to extension in certain circumstances, including during the continuance of an event of default and in connection with certain fundamental transactions.
The Notes may be convertible into shares of Pubco Common Stock at the election of the holder at an initial conversion price of $10.00 per share (the “Conversion Price”), subject to adjustment, including a downward reset of the Conversion Price if Pubco issues shares of its common stock or common stock equivalents at an effective price per share below the then-current Conversion Price, and a further downward-only reset, on the 6-month anniversary of the initial closing, to the greater of (i) the greater of (x) the floor price then in effect and (y) a price equal to the average of the volume-weighted average price of Pubco Common Stock during the 10-trading day preceding such 6-month anniversary date and (ii) $6.00. Beginning on the first trading day following the 12-month anniversary of the issuance date of the Initial Note, and, with respect to any Additional Note, the first trading day following the 45th day after the issuance date of such Additional Note, Pubco will be required to redeem or convert, in 21 equal monthly installments, the then-outstanding principal amount of the applicable Note, together with accrued interest, at its election (subject to satisfaction of certain equity conditions), in cash at a 5% premium to the amount of the applicable installment or in shares of Pubco Common Stock at a conversion price equal to the lower of (i) the Conversion Price then in effect and (ii) the greater of (x) the floor price then in effect and (y) 95% of the lowest daily volume-weighted average price of the Pubco Common Stock during the 10 trading days preceding the applicable installment date, or a combination thereof.
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Pubco will also have the right to redeem the Notes, in whole or in part, at any time prior to maturity, at a redemption price equal to (i) 120% of the amount redeemed; provided that, solely with respect to the Additional Notes, once the Company has delivered notice to the holder that the Company has elected to exercise such redemption right with respect to the Initial Note, 115% shall apply until the Company has redeemed an aggregate conversion amount of Additional Notes equal to such aggregate amount of the Initial Note redeemed as of such time of determination, in each case, if redeemed within 12 months following the applicable issuance date, (ii) 110% of such amount if redeemed after such 12-month anniversary but prior to the 18-month anniversary of such issuance date, and (iii) 108% of such amount if redeemed on or after such 18-month anniversary, in each case subject to advance notice requirements. Pubco may not exercise this redemption right while an event of default is continuing.
The Notes contain a beneficial ownership limitation that prohibits the holder, together with its attribution parties, from converting the Notes to the extent such conversion would result in the holder beneficially owning more than 9.99% of the outstanding shares of Pubco Common Stock.
The Notes rank senior to all other existing and future indebtedness of Pubco and will be secured by a first-priority perfected security interest in substantially all of the existing and future assets of Pubco and its direct and indirect subsidiaries, including a pledge of all of the capital stock of each subsidiary, and are further supported by guaranties from each of Pubco’s U.S. subsidiaries.
The Note PIPE Purchase Agreement and the Notes contain customary representations and warranties, affirmative covenants, negative covenants (including restrictions on the incurrence of additional indebtedness and the granting of liens, and restrictions on entering into variable rate transactions), a financial covenant requiring Pubco to maintain a minimum of $7,500,000 of available cash in U.S. bank accounts, closing conditions, equity conditions, and events of default.
For a period ending on the later of (i) July 31, 2030 (or such earlier date as the Note PIPE Investor may determine in its sole discretion) and (ii) the second anniversary of the later of the initial closing date and the last additional closing date, the Note PIPE Investor has the right to participate in future financing transactions of the Company for 9.9% of the securities offered, subject to customary exceptions for excluded securities.
In connection with the Note PIPE Investment, the Company shall also enter into a registration rights agreement with the Note PIPE Investor (the “Note PIPE Registration Rights Agreement”) at the initial closing under the Note PIPE Purchase Agreement, pursuant to which the Company will agree to file a registration statement registering the resale of the Conversion Shares within 35 days following the date of such initial closing, use its best efforts to cause such registration statement to be declared effective within 80 days after the date of such initial closing (or 110 days if subject to SEC review), and maintain the effectiveness of such registration statement during the applicable registration period, subject to customary suspension rights.
Concurrently with the execution of the Note PIPE Purchase Agreement, Yellow executed and delivered to the Note PIPE Investor a promissory note in the original principal amount of $100,000, which does not bear periodic interest and matures on January 31, 2027. The promissory note will automatically be exchanged, immediately prior to the Effective Time, for (i) 750,000 shares of Yellow Common Stock and (ii) warrants to purchase 2,000,000 shares of Yellow Common Stock at an exercise price of $11.50 per share. In connection with the closing of the Merger, such securities will be exchanged for (i) 750,000 shares of Pubco Common Stock and (ii) Pubco Warrants to purchase 2,000,000 shares of Pubco Common Stock.
The foregoing description of the Note PIPE Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Note PIPE Purchase Agreement, a copy of which is included as Exhibit 10.5, and the terms of which are incorporated by reference in this Current Report on Form 8-K.
Amended and Restated Registration Rights Agreement
At the Closing, Pubco, the Sponsor and certain securityholders of Yellow will enter into an amended and restated registration rights agreement (the “A&R Registration Rights Agreement”). Among other things, the A&R Registration Rights Agreement provides that the Sponsor and such other securityholders will be granted certain customary registration rights, on the terms and subject to the conditions in the A&R Registration Rights Agreement, with respect to securities of Pubco that they will hold following the Business Combination.
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The foregoing description of the A&R Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of A&R Registration Rights Agreement, a form of which is included as Exhibit 10.6, and the terms of which are incorporated by reference in this Current Report on Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K with respect to the Note PIPE Investment is incorporated by reference in this Current Report on Form 8-K.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K with respect to the PIPE Investments is incorporated by reference in this Current Report on Form 8-K. The securities of Pubco to be offered and sold in connection with the PIPE Investments have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated under the Securities Act.
Item 7.01. Regulation FD Disclosure.
On August 3, 2026, Bluerock and Yellow issued a joint press release announcing their entry into the Business Combination Agreement. The press release is furnished as Exhibit 99.1 and incorporated by reference into this Item 7.01.
The investor presentation that Bluerock and Yellow have prepared for use in connection with the Business Combination is furnished as Exhibit 99.2 and incorporated by reference into this Item 7.01.
The foregoing (including Exhibits 99.1 and 99.2) is being furnished pursuant to Item 7.01 and will not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liabilities of that section, nor will it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act.
Forward Looking Statements
This Current Report on Form 8-K includes certain statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about Bluerock’s or Yellow’s ability to effectuate the Business Combination discussed in this document; the benefits of the Business Combination; the future financial performance of Pubco (which will be the go-forward public company following the completion of the Business Combination) following the Closing; changes in Yellow’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Bluerock, Yellow and their respective management teams, as the case may be, are inherently uncertain. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Bluerock and Yellow. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) changes in domestic and foreign business, market, financial, political conditions, and in applicable laws and regulations, (2) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreements and any negotiations with respect to the Business Combination; (3) the outcome of any legal proceedings that may be instituted against Bluerock, Yellow, the combined company, or others; (4) the inability to complete the Business Combination due to the failure to obtain approval of the shareholders of Bluerock or Yellow for the Business Combination or to satisfy other conditions to closing; (5) changes to the proposed structure of the Business Combination that may be required or appropriate as a result of applicable laws or regulations; (6) the ability to meet stock exchange listing standards following the consummation of the Business Combination; (7) the risk that the Business Combination disrupts current plans and operations of Bluerock or Yellow as a result of the announcement and consummation of the Business Combination; (8) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things: competition, the ability of the combined company to grow and manage growth profitably, the ability of the combined company to build or maintain relationships with customers and retain its management and key employees, the timing and amount of future capital expenditures and requirements for additional capital, and the timing of future cash flow provided by operating activities, if any; (9) costs related to the Business Combination; (10) the possibility that Yellow or the combined company may be adversely affected by other economic, business, political and/or competitive factors; (11) estimates of expenses and profitability and underlying assumptions with respect to shareholder redemptions and purchase price and other adjustments; and (12) other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Bluerock’s filings with the SEC, including the Registration Statement, when available, and any periodic Exchange Act reports filed by Bluerock with the SEC such as its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
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You should carefully consider the foregoing risk factors and the other risks and uncertainties which will be more fully described in the “Risk Factors” section of the Registration Statement and other documents filed by Bluerock from time to time with the SEC. If any of these risks materialize or Bluerock’s or Yellow’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that neither Bluerock nor Yellow presently know or that they currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Bluerock and Yellow’s expectations, plans, or forecasts of future events and views as of the date of this Current Report on Form 8-K. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. These forward-looking statements speak only as of the date of this Current Report on Form 8-K. Bluerock, Yellow, and their respective representatives and affiliates specifically disclaim any obligation to, and do not intend to, update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, these forward-looking statements should not be relied upon as representing Bluerock’s, Yellow’s, or any of their respective representatives or affiliates’ assessments as of any date subsequent to the date of this Current Report on Form 8-K, and therefore undue reliance should not be placed upon the forward-looking statements. This Current Report on Form 8-K contains preliminary information only, is subject to change at any time, and is not, and should not be assumed to be, complete or constitute all of the information necessary to adequately make an informed decision regarding any potential investment in connection with the Business Combination.
Additional Information and Where to Find It
In connection with the proposed Business Combination, Bluerock and Yellow plan to file the Registration Statement with the SEC, which will include a prospectus with respect to the combined company’s securities to be issued in connection with the proposed Business Combination and a preliminary proxy statement with respect to the shareholder meeting of Bluerock to vote on the proposed Business Combination. Bluerock and Yellow also plan to file other documents and relevant materials with the SEC regarding the proposed Business Combination. After the Registration Statement is declared effective by the SEC, the definitive proxy statement/prospectus included in the Registration Statement will be mailed to the shareholders of Bluerock as of the record date to be established for voting on the proposed Business Combination. SECURITY HOLDERS OF YELLOW AND BLUEROCK ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS AND RELEVANT MATERIALS RELATING TO THE PROPOSED BUSINESS COMBINATION THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED BUSINESS COMBINATION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION AND THE PARTIES TO THE PROPOSED BUSINESS COMBINATION. Shareholders are able to obtain free copies of the proxy statement/prospectus and other documents containing important information about Yellow and Bluerock once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. In addition, the documents filed by Bluerock may be obtained free of charge from Bluerock at https://bluerock.com/bluerock-acquisition-corp/. Alternatively, these documents, when available, can be obtained free of charge from Bluerock upon written request to Bluerock Acquisition Corp., 919 Third Avenue, New York, New York 10022, Attn: Secretary, or by calling (212) 843-1601. The information contained on, or that may be accessed through the websites referenced in this Current Report on Form 8-K is not incorporated by reference into, and is not a part of, this Current Report on Form 8-K.
Participants in the Solicitation
Bluerock, Yellow and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Bluerock in connection with the proposed Business Combination. Security holders may obtain more detailed information regarding the names, affiliations and interests of certain of Bluerock’s executive officers and directors in the solicitation by reading Bluerock’s final prospectus related to its initial public offering filed with the SEC on December 12, 2025, the definitive proxy statement/prospectus, which will become available after the Registration Statement has been declared effective by the SEC, and other relevant materials filed with the SEC in connection with the proposed Business Combination when they become available. Information concerning the interests of Bluerock’s participants in the solicitation, which may, in some cases, be different from those of Bluerock’s shareholders generally, will be set forth in the preliminary proxy statement/prospectus included in the Registration Statement.
No Offer or Solicitation
This Current Report on Form 8-K and the exhibits hereto do not constitute an offer to sell or exchange, or a solicitation of an offer to buy or exchange, or a recommendation to purchase, any securities in any jurisdiction, or the solicitation of any proxy, vote, consent or approval in any jurisdiction with respect to any securities or in connection with the Business Combination. There shall not be any offer, sale or exchange of any securities of Bluerock or Yellow in any jurisdiction where, or to any person to whom, such offer, sale or exchange may be unlawful under the laws of such jurisdiction prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act or an exemption therefrom.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| † | Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5) or (b)(2), as applicable. The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 3, 2026
| BLUEROCK ACQUISITION CORP. | ||
| By: | /s/ Jordan Ruddy | |
| Name: | Jordan Ruddy | |
| Title: | President | |
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Exhibit 2.1
Business Combination Agreement
by and between
Bluerock Acquisition Corp.,
as the Purchaser,
BLRK Merger Sub Inc.,
and
Bitonic Technology Labs Inc. d/b/a Yellow.ai,
as the Company
Dated: July 31, 2026
TABLE OF CONTENTS
| Page | ||
| ARTICLE I MERGER | 4 | |
| Section 1.01 | Domestication | 4 |
| Section 1.02 | Merger | 5 |
| Section 1.03 | Effects of the Merger | 5 |
| Section 1.04 | Effect of the Merger on Securities | 5 |
| Section 1.05 | Equitable Adjustments | 6 |
| Section 1.06 | Allocation Schedule | 6 |
| Section 1.07 | Treatment of Company Options | 8 |
| Section 1.08 | Treatment of Company Warrants | 10 |
| Section 1.09 | Treatment of Company SAFEs | 10 |
| Section 1.10 | Exchange of Company Certificates and Company Book Entry Shares | 11 |
| Section 1.11 | Fractional Shares | 13 |
| Section 1.12 | Dissenting Shares | 13 |
| ARTICLE II CLOSING DATE PAYMENTS | 14 | |
| Section 2.01 | Closing Date Payments | 14 |
| Section 2.02 | Withholding Taxes | 14 |
| Section 2.03 | Further Assurances | 15 |
| ARTICLE III CLOSING | 15 | |
| Section 3.01 | Closing | 15 |
| ARTICLE IV Closing Documents | 16 | |
| Section 4.01 | Purchaser Closing Certificate | 16 |
| Section 4.02 | Allocation Schedule | 16 |
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 16 | |
| Section 5.01 | Organization and Standing | 16 |
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| Section 5.02 | Authorization; Binding Agreement | 17 |
| Section 5.03 | Capitalization | 17 |
| Section 5.04 | Subsidiaries and Investments | 19 |
| Section 5.05 | No Conflict; Governmental Consents and Filings | 19 |
| Section 5.06 | Financial Statements | 20 |
| Section 5.07 | Undisclosed Liabilities | 21 |
| Section 5.08 | Absence of Certain Changes | 21 |
| Section 5.09 | Compliance with Laws | 23 |
| Section 5.10 | Government Contracts | 24 |
| Section 5.11 | Company Permits | 24 |
| Section 5.12 | Litigation | 25 |
| Section 5.13 | Material Contracts | 25 |
| Section 5.14 | Intellectual Property; Data Privacy and Security | 28 |
| Section 5.15 | Taxes and Tax Returns | 32 |
| Section 5.16 | Real Property | 34 |
| Section 5.17 | Personal Property | 35 |
| Section 5.18 | Labor and Employment Matters | 35 |
| Section 5.19 | Benefit Plans | 37 |
| Section 5.20 | Environmental Matters | 39 |
| Section 5.21 | Transactions with Related Persons | 40 |
| Section 5.22 | Insurance | 40 |
| Section 5.23 | Top Customers and Suppliers | 41 |
| Section 5.24 | Certain Business Practices | 41 |
| Section 5.25 | Investment Company Act | 42 |
| Section 5.26 | Finders and Brokers | 42 |
| Section 5.27 | Independent Investigation | 43 |
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| Section 5.28 | Information Supplied | 43 |
| Section 5.29 | No Additional Representations or Warranties | 43 |
| ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB | 44 | |
| Section 6.01 | Organization and Standing | 44 |
| Section 6.02 | Authorization; Binding Agreement | 44 |
| Section 6.03 | Governmental Approvals | 45 |
| Section 6.04 | Non-Contravention | 45 |
| Section 6.05 | Capitalization | 45 |
| Section 6.06 | SEC Filings and Purchaser Financials; Internal Controls | 47 |
| Section 6.07 | Absence of Certain Changes | 48 |
| Section 6.08 | Undisclosed Liabilities | 48 |
| Section 6.09 | Compliance with Laws | 49 |
| Section 6.10 | Legal Proceedings; Orders; Permits | 49 |
| Section 6.11 | Taxes and Tax Returns | 49 |
| Section 6.12 | Properties | 51 |
| Section 6.13 | Investment Company Act | 51 |
| Section 6.14 | Trust Account | 51 |
| Section 6.15 | Finders and Brokers | 52 |
| Section 6.16 | Insurance | 52 |
| Section 6.17 | Information Supplied | 52 |
| Section 6.18 | Independent Investigation | 52 |
| Section 6.19 | Employees; Benefit Plans | 52 |
| Section 6.20 | Transactions with Purchaser Related Persons | 53 |
| Section 6.21 | No Additional Representation or Warranties | 53 |
| ARTICLE VII COVENANTS | 53 | |
| Section 7.01 | Access and Information; Cooperation | 53 |
| Section 7.02 | Conduct of Business of the Company | 54 |
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| Section 7.03 | Conduct of Business of the Purchaser | 58 |
| Section 7.04 | Additional Financial Information and Financing Cooperation | 61 |
| Section 7.05 | Purchaser Public Filings | 62 |
| Section 7.06 | No Solicitation | 63 |
| Section 7.07 | No Trading | 63 |
| Section 7.08 | Notification of Certain Matters | 64 |
| Section 7.09 | Efforts | 64 |
| Section 7.10 | Trust Account | 66 |
| Section 7.11 | Tax Matters | 66 |
| Section 7.12 | Further Assurances | 67 |
| Section 7.13 | The Preparation of Proxy Statement/Registration Statement; Shareholders’ Meeting and Approvals | 68 |
| Section 7.14 | Employee Matters | 71 |
| Section 7.15 | Public Announcements | 72 |
| Section 7.16 | Confidential Information | 72 |
| Section 7.17 | Post-Closing Board of Directors and Executive Officers | 73 |
| Section 7.18 | Indemnification of Directors and Officers; Tail Insurance | 73 |
| Section 7.19 | PIPE Investment | 75 |
| Section 7.20 | Ratification of Corporate Acts. | 75 |
| Section 7.21 | Affiliate Agreements | 75 |
| Section 7.22 | Requisite Stockholder Approval | 76 |
| ARTICLE VIII CLOSING CONDITIONS | 76 | |
| Section 8.01 | Conditions to Each Party’s Obligations | 76 |
| Section 8.02 | Conditions to Obligations of the Company | 77 |
| Section 8.03 | Conditions to Obligations of the Purchaser | 78 |
| Section 8.04 | Frustration of Conditions | 79 |
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| ARTICLE IX TERMINATION AND EXPENSES | 80 | |
| Section 9.01 | Termination | 80 |
| Section 9.02 | Effect of Termination | 81 |
| ARTICLE X MISCELLANEOUS | 81 | |
| Section 10.01 | No Survival | 81 |
| Section 10.02 | Notices | 81 |
| Section 10.03 | Binding Effect; Assignment | 82 |
| Section 10.04 | Third Parties | 82 |
| Section 10.05 | Governing Law | 82 |
| Section 10.06 | Jurisdiction | 82 |
| Section 10.07 | WAIVER OF JURY TRIAL | 83 |
| Section 10.08 | Specific Performance | 83 |
| Section 10.09 | Severability | 83 |
| Section 10.10 | Amendment; Waiver | 83 |
| Section 10.11 | Entire Agreement | 83 |
| Section 10.12 | Interpretation | 84 |
| Section 10.13 | Counterparts | 84 |
| Section 10.14 | Expenses | 84 |
| Section 10.15 | Legal Representation | 85 |
| Section 10.16 | Waiver of Claims Against Trust | 87 |
| Section 10.17 | Non-Recourse | 88 |
| Section 10.18 | Company and Purchaser Disclosure Letters | 88 |
| ARTICLE XI DEFINITIONS | 88 | |
| Section 11.01 | Certain Definitions | 88 |
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BUSINESS COMBINATION AGREEMENT
This Business Combination Agreement (this “Agreement”) is made and entered into as of July 31, 2026 (the “Signing Date”) by and between Bluerock Acquisition Corp., a Cayman Islands exempted company (which shall transfer by way of continuation and domesticate as a Delaware corporation prior to the Closing) (the “Purchaser”), BLRK Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Purchaser (“Merger Sub”), and Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (the “Company”). The Purchaser, Merger Sub and the Company are sometimes referred to individually as a “Party” and, collectively, as the “Parties.”
RECITALS:
WHEREAS, the Purchaser is a special purpose acquisition company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses;
WHEREAS, subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their terms are to be satisfied by actions taken at the Closing, but subject to such conditions being capable of being satisfied at the Closing), prior to the Closing, the Purchaser shall transfer by way of continuation to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended (the “DGCL”), and Part XII of the Cayman Companies Act (the “Domestication”), with the continuing entity following the Domestication to be renamed “Yellow.ai”. The Domestication will take place at least one day prior to the Closing Date;
WHEREAS, immediately prior to the Domestication, each then issued and outstanding Purchaser Class B Ordinary Share shall convert automatically, on a one-for-one basis, into a Purchaser Class A Ordinary Share (the “Sponsor Share Conversion”); and in connection with the Domestication: (a) each then issued and outstanding Purchaser Class A Ordinary Share shall convert automatically, on a one-for-one basis, into a share of Domesticated Purchaser Common Stock; (b) each then issued and outstanding warrant of the Purchaser (each a “Cayman Purchaser Warrant”) shall convert automatically into a warrant to acquire one share of Domesticated Purchaser Common Stock (“Domesticated Purchaser Warrant”), pursuant to the Warrant Agreement; and (c) each then issued and outstanding unit of Purchaser (the “Cayman Purchaser Units”) shall convert automatically into one unit of Purchaser consisting of one share of Domesticated Purchaser Common Stock and one-third of one Domesticated Purchaser Warrant (“Domesticated Purchaser Unit”);
WHEREAS, substantially concurrently with or immediately following the Domestication, and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their terms are to be satisfied by actions taken at the Closing, but subject to such conditions being capable of being satisfied at the Closing), the Purchaser will: (a) file a certificate of incorporation with the Secretary of State of the State of Delaware in form to be agreed to by Purchaser and the Company reflecting substantially the terms set forth on Exhibit A (the “Purchaser Charter upon Domestication”); and (b) adopt bylaws in in form to be agreed to by Purchaser and the Company reflecting substantially the terms set forth on Exhibit A (the “Purchaser Bylaws upon Domestication”);
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WHEREAS, subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their terms are to be satisfied by actions taken at the Closing, but subject to such conditions being capable of being satisfied at the Closing), at the Closing, Merger Sub will merge with and into the Company, with the Company surviving (the “Merger”), resulting in the Company becoming a direct wholly-owned subsidiary of the Purchaser;
WHEREAS, as a condition and inducement to the Company’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Sponsor has executed and delivered to the Company the Sponsor Support Agreement, pursuant to which the Sponsor has agreed, subject to the terms and conditions set forth in the Sponsor Support Agreement, among other things, to vote to adopt and approve this Agreement and the Transactions, including the Domestication and the Merger and to surrender 750,000 Purchaser Class B Ordinary Shares for nil consideration;
WHEREAS, as a condition and inducement to Purchaser’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Company’s shareholders listed on Schedule A to this Agreement (the “Company Support Stockholders”) have executed and delivered to Purchaser a Company Support Agreement (a “Company Support Agreement”) pursuant to which such shareholders have agreed, subject to the terms and conditions set forth in the Company Support Agreement, to vote (whether pursuant to a duly convened meeting of the equityholders of the Company or pursuant to an action by written consent of the equityholders of the Company) to adopt and approve this Agreement and the Transactions, including the Merger;
WHEREAS, on or prior to the Signing Date, Purchaser entered into (i) securities purchase agreements (the “Note PIPE Purchase Agreements”) with certain investors (such investors, the “Note PIPE Investors”) pursuant to which, and on the terms and subject to the conditions of which, such Note PIPE Investors have agreed to purchase convertible notes of the Purchaser in an aggregate principal amount of up to $50 million, with such notes to be issued in multiple tranches, with the first convertible note in an aggregate principal amount of $25 million to be purchased by the Note PIPE Investors substantially concurrently with the Closing (as defined below) (the “Note PIPE Investment”); and (ii) subscription agreements with third-party investors named therein (such investors, the “Equity PIPE Investors,” and together with the Note PIPE Investors, the “Initial PIPE Investors”), substantially in the form attached hereto as Exhibit B (the “Equity PIPE Subscription Agreements,” and together with the Note PIPE Purchase Agreements, the “Initial PIPE Agreements”), pursuant to which, among other things, the Equity PIPE Investors have agreed to subscribe for and purchase, and Purchaser has agreed to issue and sell to the Equity PIPE Investors, an aggregate number of units (each, an “Equity PIPE Unit”), with each Equity PIPE Unit representing the right to receive at the time of the Merger (i) one share of Domesticated Purchaser Common Stock and (ii) one Domesticated Purchaser Warrant, as set forth in the Subscription Agreements, at a purchase price of $10.00 per Equity PIPE Unit (the “Equity PIPE Investment,” and together with the Note PIPE Investment, the “Initial PIPE Investment”);
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WHEREAS, simultaneously with the execution of this Agreement, Sponsor and the officers and directors of Purchaser as of the Signing Date, the officers and directors of the Company as of the Signing Date, certain of the Company Stockholders, the Company and the Purchaser have entered into a Lock-Up Agreement (the “Lock-Up Agreement”);
WHEREAS, in connection with the consummation of the Transactions, simultaneously with the Closing, the Sponsor, the Purchaser, the Company Stockholders and the other parties to such agreement will enter into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”) in substantially the form attached as Exhibit C. The Purchaser and the Company may agree upon changes to the form attached as Exhibit C, provided those changes are reflected in writing signed by each of the Purchaser and the Company;
WHEREAS, the Parties intend that, for U.S. federal, and applicable state and local, income tax purposes: (i) the Domestication qualifies as a “reorganization” described in Section 368(a)(1)(F) of the Code and the Treasury Regulations promulgated under Section 368 of the Code; (ii) the Sponsor Share Conversion qualifies as a “reorganization” described in Section 368(a)(1)(E) of the Code and the Treasury Regulations promulgated under Section 368 of the Code; (iii) the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code; (iv) this Agreement constitutes, and is adopted by the Purchaser as, a separate “plan of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations promulgated under Sections 354, 361 and 368 of the Code for each of the Domestication and Sponsor Share Conversion; and (v) this Agreement constitutes, and is adopted by the Purchaser, Merger Sub, and the Company as, a separate “plan of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations promulgated under Sections 354, 361 and 368 of the Code for the Merger (clauses (i), (ii) and (iv), collectively, the “Purchaser Intended Tax Treatments,” clauses (iii) and (v), collectively, the “Company Intended Tax Treatments” and the Purchaser Intended Tax Treatments and the Company Intended Tax Treatments, collectively, the “Intended Tax Treatments”);
WHEREAS, the board of directors of the Company has unanimously: (a) determined that it is in the best interests of the Company and the Company Stockholders, and declared it advisable, for the Company to enter into this Agreement and each Ancillary Document to which the Company will be a party and to consummate the Transactions, including the Merger; (b) approved the execution and delivery by the Company of this Agreement, each of the Ancillary Documents to which it will be a party and the Transactions, including the Merger, on the terms and subject to the conditions of this Agreement; (c) directed that this Agreement be submitted to the Company Stockholders for their adoption and approval; and (d) recommended the approval and adoption of this Agreement and the Transactions, including the Merger, by the Company Stockholders;
WHEREAS, the board of directors of the Purchaser have: (a) determined that it is in the best interests of the Purchaser and the Purchaser Shareholders, and declared it advisable, for the Purchaser to enter into this Agreement providing for the Transactions, including the Domestication and the Merger, the 2026 Milestone Equity Plan and the Equity Incentive Plan, by, and each Ancillary Document to which it will be a party; (b) approved the execution and delivery by the Purchaser of this Agreement, each of the Ancillary Documents to which it will be a party and the Transactions, including the Domestication and Merger, on the terms and subject to the conditions of this Agreement; (c) directed that this Agreement, the Domestication and the Merger, the 2026 Milestone Equity Plan and the Equity Incentive Plan be submitted to the Purchaser Shareholders for adoption; and (d) recommended the approval and adoption of this Agreement and the Transactions, including the Domestication and the Merger, the 2026 Milestone Equity Plan and the Equity Incentive Plan, by the Purchaser Shareholders; and
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WHEREAS, the board of directors of Merger Sub has: (a) determined that it is in the best interests of Merger Sub and its stockholder, and declared it advisable, for Merger Sub to enter into this Agreement and consummate the Transactions, including the Merger; (b) approved this Agreement and the Transactions, including the Merger, on the terms and subject to the conditions of this Agreement; (c) directed that this Agreement be submitted to its stockholder for its adoption and approval; and (d) recommended the approval and adoption of this Agreement and the Transactions, including the Merger, by its stockholder.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE
I
MERGER
Section 1.01 Domestication.
(a) Upon the terms and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their nature are to be satisfied at Closing), and in accordance with the DGCL and the Companies Act, at least one (1) day after the Redemption and at least one (1) day prior to the Closing Date, the Purchaser shall, in accordance with applicable Law, any applicable rules and regulations of the SEC, Nasdaq and the Purchaser’s Organizational Documents, as applicable, cause the Domestication to become effective, including by (a) filing with the Delaware Secretary of State a certificate of domestication with respect to the Domestication, in form and substance reasonably acceptable to the Purchaser and the Company, together with the Purchaser Charter upon Domestication, in each case, in accordance with the provisions thereof and applicable Law, (b) adopting the Purchaser Bylaws upon Domestication, (c) completing and making and procuring all those filings required to be made with the Cayman Registrar in connection with the Domestication and file with the Cayman Registrar all applicable notices, declarations, affidavits, statements of assets and liabilities, shareholder approvals, undertakings and other documents required to be filed, pay all applicable fees required to be paid, and cause the satisfaction of all other conditions to deregistration required to be satisfied, in each case, under Section 206 of the Cayman Companies Act, and (d) the Purchaser shall obtain a certificate of de-registration from the Cayman Registrar.
(b) Effect on Purchaser Securities.
(i) Immediately prior to the Domestication, each then issued and outstanding Purchaser Class B Ordinary Share shall convert automatically, on a one-for-one basis, into one (1) Purchaser Class A Ordinary Share; and
(ii) Immediately following the Sponsor Share Conversion, in connection with the Domestication: (a) each then issued and outstanding Purchaser Class A Ordinary Share shall convert automatically, on a one-for-one basis, into one (1) share of Domesticated Purchaser Common Stock; (b) each then issued and outstanding Cayman Purchaser Warrant shall convert automatically into one (1) Domesticated Purchaser Warrant, pursuant to the Warrant Agreement; and (c) each then issued and outstanding Cayman Purchaser Unit shall convert automatically into one (1) Domesticated Purchaser Unit.
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Section 1.02 Merger. On the terms and subject to the conditions of this Agreement, at least one day following the Domestication, at the Effective Time, Merger Sub shall be merged with and into the Company, with the Company surviving the Merger (the Company being sometimes referred to in reference to the periods at and after the Effective Time as the “Surviving Company”). Contemporaneous with the Merger, the Surviving Company will change its name to a name to be mutually agreed by the parties prior to the Closing. Following the Merger the separate corporate existence of Merger Sub shall cease. The Merger shall be evidenced by a certificate of merger (the “Certificate of Merger”) and consummated in accordance with this Agreement and the DGCL and, upon the filing of the Certificate of Merger or at such later time as may be agreed by the Purchaser and the Company in writing and specified in the Certificate of Merger (the “Effective Time”).
Section 1.03 Effects of the Merger.
(a) The Merger shall have the effects set forth in this Agreement and the DGCL. By virtue of the Merger and without further act or deed, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Company, subject to the terms of this Agreement, including Section 10.14. In addition, all of the debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Company.
(b) At the Effective Time, the certificate of incorporation and bylaws of the Merger Sub as in effect immediately prior to the Effective Time shall by operation of law be the certificate of incorporation and bylaws of the Surviving Company, until thereafter amended in accordance with applicable Law.
(c) The Parties will take such actions as are necessary so that immediately following the Effective Time: (i) the directors of the Merger Sub will be the initial directors of the Surviving Company, each to serve in accordance with the certificate of incorporation and bylaws of the Surviving Company; and (ii) the officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Company, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Company.
Section 1.04 Effect of the Merger on Securities.
(a) Effect on Company Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the Parties or the holder of any Company Stock:
(i) Conversion of Merger Sub Common Stock. Each share of common stock of Merger Sub, par value $0.00001 per share, issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Company, par value $0.00001 per share.
(ii) Cancellation of Certain Company Stock. All Company Stock issued and outstanding immediately prior to the Effective Time held by the Company in treasury or owned by the Purchaser or Merger Sub (collectively, the “Cancelled Shares”) shall no longer be outstanding. All such shares shall be automatically canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor.
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(iii) Treatment of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (including Company Common Stock issued upon conversion of the Company Preferred Stock and the Company SAFEs immediately prior to the Effective Time), other than Cancelled Shares and Dissenting Shares, without any action on the part of the Parties or the Company Stockholders, shall be converted into the right to receive, without interest and subject to any applicable Tax withholding, the Per Share Merger Consideration.
(b) Effect on Domesticated Purchaser Units. At the Effective Time, by virtue of the Merger and without any action on the part of the Parties or the holder of Domesticated Purchaser Units, each then issued and outstanding Domesticated Purchaser Unit shall be cancelled and will thereafter entitle the holder thereof to one share of Domesticated Purchaser Common Stock and one-third of one Domesticated Purchaser Warrant.
Section 1.05 Equitable Adjustments. If, between the date of this Agreement and the Closing, the outstanding shares of Company Common Stock, Company Preferred Stock, Purchaser Class A Ordinary Shares or Purchaser Class B Ordinary Shares shall have been changed into a different number of shares or a different class or series, by reason of any share subdivision, stock split, reverse stock split, share consolidation, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change or transaction, then any number, value or amount contained in this Agreement which is based upon the number of shares of Company Common Stock, Company Preferred Stock, Purchaser Class A Ordinary Shares or Purchaser Class B Ordinary Shares will be appropriately adjusted to provide to the holders of Company Common Stock and Company Preferred Stock and the holders of Purchaser Class A Ordinary Shares and Purchaser Class B Ordinary Shares the same economic effect as contemplated by this Agreement. Notwithstanding the immediately preceding sentence, this Section 1.05 shall not be construed to permit any Party to take any action with respect to their respective securities that is prohibited by the terms and conditions of this Agreement.
Section 1.06 Allocation Schedule.
(a) Five Business Days prior to the Closing Date, the Company shall deliver to the Purchaser (and the Purchaser shall thereafter deliver to the Exchange Agent) an allocation schedule (the “Allocation Schedule”), setting forth:
(i) Equity Value Calculation and Per Share Merger Consideration:
(A) The Company’s good faith calculation of the Equity Value, including (1) the aggregate amount of Indebtedness of the Company and its Subsidiaries as of the anticipated Closing Date, and (2) the Net Working Capital of the Company and its Subsidiaries as of the anticipated Closing Date, together with reasonably detailed supporting calculations for each of the foregoing; and
(B) The Company’s good faith calculation of the Per Share Merger Consideration;
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(ii) Company Securityholders:
(A) The number of shares of Company Common Stock held by each Company Stockholder as of immediately prior to the Effective Time, on an as-converted to Company Common Stock basis (including the number of shares of Company Common Stock issuable to each Company Stockholder upon conversion of the Company Preferred Stock based on the then applicable Conversion Rate);
(B) The number of shares of Company Common Stock subject to each Company Option held by each holder of Company Options as of immediately prior to the Effective Time, and the exercise price of such Company Options;
(C) The number of shares of Company Common Stock subject to each Company Warrant that has not been exercised as of immediately prior to the Effective Time, and the exercise price of each such Company Warrant;
(D) With respect to each Company SAFE Investor, the number of shares of Company Common Stock issuable upon conversion of such Company SAFE Investor’s Company SAFE pursuant to the applicable SAFE Amendment;
(iii) Allocation of Aggregate Consideration; Exchanged Options; Assumed Warrants:
(A) The portion of the Aggregate Consideration to be allocated to each Company Stockholder and each Company SAFE Investor;
(B) (1) The number of shares of Domesticated Purchaser Common Stock that will be subject to each Exchanged Company Option; and (2) the exercise price of such Exchanged Company Option at the Effective Time;
(C) (1) The number of shares of Domesticated Purchaser Common Stock that will be subject to each Assumed Warrant; and (2) the exercise price of such Assumed Warrant at the Effective Time;
(iv) Company Transaction Costs: A good faith calculation of the aggregate amount of the Company Transaction Costs to be paid as of the Closing, including all invoices, wire instructions and applicable Tax forms for each Person owed (and any other supporting details reasonably requested by the Purchaser); and
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(v) Certificate: A certificate, duly executed by an authorized executive officer of the Company in his or her capacity as an executive officer of the Company that the information delivered in the Allocation Schedule is and as of immediately prior to the Effective Time will be true, complete and correct in all respects. The Company will review and consider any comments to the Allocation Schedule provided by the Purchaser or any of its Representatives in good faith.
Notwithstanding anything to the contrary in this Agreement, the aggregate number of shares of Domesticated Purchaser Common Stock that each Company Securityholder or other Person will have a right to receive under this Agreement as of the Effective Time will be rounded down to the nearest whole share. In no event shall the aggregate number of shares of Domesticated Purchaser Common Stock set forth on the Allocation Schedule exceed the Aggregate Consideration.
(b) The Purchaser, Merger Sub, the Exchange Agent and their respective Affiliates and Representatives shall be entitled to rely on the names, amounts and other information set forth in the Allocation Schedule without any independent investigation or inquiry. None of the Purchaser, Merger Sub, the Exchange Agent or their respective Affiliates or Representatives shall have any liability to any Company Securityholder or any other Person for relying on the Allocation Schedule. Further, the Purchaser, Merger Sub, the Exchange Agent and their respective Affiliates have no obligations, duty or liability with respect to the calculation of amounts or information set forth in the Allocation Schedule. Except with the Purchaser’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), the Allocation Schedule will not be formally modified for purposes of this Agreement after its initial delivery to the Purchaser except pursuant to a written instruction from the Company. To be valid, any such written instruction shall be accompanied by a certification from an authorized executive officer of the Company acting in his or her capacity as an executive officer of the Company that such modification is true, complete and correct. The Purchaser, the Exchange Agent and their respective Affiliates and Representatives shall then be entitled to rely, without any independent investigation or inquiry, on such modified Allocation Schedule.
Section 1.07 Treatment of Company Options.
(a) Ineligible Company Options. Immediately prior to the Effective Time, each Company Option that both (i) is outstanding and unexercised and (ii) held by a holder of such Company Option who is not an Eligible Participant as of immediately prior to the Effective Time (each, an “Ineligible Company Option”), shall not be assumed by Purchaser and shall automatically, and without any action on the part of the Parties or the holder of such Ineligible Company Option (such holder, an “Ineligible Participant”), be terminated and cancelled as of the Effective Time without the payment of any consideration at the Effective Time or thereafter. No Ineligible Company Option shall be substituted with any equivalent option or right to purchase or otherwise acquire any capital stock or other securities of Purchaser, the Surviving Company or any of their Affiliates or replaced with any other form of consideration. The Company shall notify in writing each Ineligible Participant not later than fifteen (15) Business Days prior to the Closing Date of the treatment of such Ineligible Participant’s Ineligible Company Option under this Agreement and provide such ineligible Person an opportunity to exercise such Ineligible Company Option in accordance with its terms for a period of not less than five (5) Business Days prior to the Closing Date (which period shall end no later than six (6) Business Days prior to the Closing Date).
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(b) All Other Company Options. At the Effective Time, each Company Option that is outstanding and unexercised immediately prior to the Effective Time and that is not an Ineligible Company Option (each, an “Eligible Option”), whether vested or unvested, automatically and without any action on the part of the Parties or the holder of such Company Option, shall be assumed and converted by Purchaser into an option to acquire Domesticated Purchaser Common Stock on the same terms and conditions as were applicable to each such Eligible Option immediately prior to the Effective Time, including applicable vesting and exercisability conditions (such option, an “Exchanged Company Option”), except (i) to the extent that such terms or conditions are rendered inoperative by the Transactions and (ii) that the number of Domesticated Purchaser Common Stock shares subject to such Exchanged Company Option shall be equal to: (A) the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time; multiplied by (B) the Per Share Merger Consideration (rounded down to the nearest whole share, with no cash being payable for any fractional share eliminated by such rounding) and the exercise price per share of Domesticated Purchaser Common Stock subject to each Exchanged Company Option shall be equal to: (x) the exercise price per share of Eligible Option immediately prior to the Effective Time divided by (y) the Per Share Merger Consideration (rounded up to the nearest whole cent). Notwithstanding anything in this Agreement to the contrary, (x) each Exchanged Company Option shall be subject to such adjustments as reasonably determined by the Post-Closing Purchaser Board or a committee thereof administering the Exchanged Options, in its sole discretion to be necessary or appropriate to give effect to the Transactions and (y) the treatment of Exchanged Company Options shall be subject to such modifications, if any, as reasonably determined by the Post-Closing Purchaser Board or a committee thereof administering the Exchanged Company Options and only to the extent commercially reasonable, in its sole discretion, as are required to cause the treatment of the Exchanged Company Options set forth in this Agreement to be made in a manner consistent with the requirements of Section 409A of the Code and, as applicable, Section 424 of the Code.
(c) At or prior to, and contingent upon, the Effective Time, the Company shall take all action reasonably necessary to terminate the Company Stock Plan such that (i) no further awards may be granted under the Company Stock Plan on or after the Effective Time, (ii) except with respect to shares of Domesticated Purchaser Common Stock to be issued on the exercise of the Exchanged Company Options, no further shares of capital stock of the Company, Purchaser or their respective Affiliates shall be issued under the Company Stock Plan on or after the Effective Time and (iii) to the extent (x) any shares of Domesticated Purchaser Common Stock are not issued to the holder of the Exchanged Company Option on the exercise or settlement of such Exchanged Company Option, or (y) the Exchanged Company Option expires unexercised, and in case of either (x) or (y), such shares would otherwise return to the share reserve of the Company Stock Plan pursuant to the terms of the Company Stock Plan, such shares of Domesticated Purchaser Common Stock shall not return to the share reserve of the Company Stock Plan and shall instead be returned to Purchaser and retired and not be made subject to awards under the Equity Incentive Plan or the 2026 MEP. All agreements, notices or other documents prepared by the Company in connection with the treatment of Company Options under this Agreement and the termination of the Company Stock Plan (including the board resolutions and the notice to the Ineligible Participants) shall be subject to the prior review, comment and approval of Purchaser (which approval shall not be unreasonably withheld, conditioned or delayed).
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(d) At or prior to the Effective Time, the Company and the board of directors of the Company shall: (i) adopt any resolutions and take any actions that are necessary to effectuate the treatment of the Company Options and the Company Stock Plan pursuant to this Section 1.07; and (ii) take all actions necessary to ensure that from and after the Effective Time the Purchaser will not be required to deliver Company Stock or other shares of capital stock of the Company to any Person pursuant to or in settlement of any Company Options or any promises to grant Company Options.
Section 1.08 Treatment of Company Warrants.
(a) Each Company Warrant that has not been exercised as of immediately prior to the Effective Time shall be assumed by the Purchaser (each resulting warrant, an “Assumed Warrant”).
(b) Each Assumed Warrant shall be subject to the same terms and conditions as were applicable to its predecessor Company Warrant immediately prior to the Effective Time (including applicable vesting conditions), except to the extent such terms or conditions are rendered inoperative by the Transactions. Accordingly, effective as of the Effective Time: (A) each Assumed Warrant shall be exercisable solely for shares of Domesticated Purchaser Common Stock; (B) the number of shares of Domesticated Purchaser Common Stock subject to each Assumed Warrant shall be determined by multiplying the number of shares of Company Common Stock subject to the predecessor Company Warrant, as in effect immediately prior to the Effective Time, by the Per Share Merger Consideration and rounding the resulting number down to the nearest whole number of shares of Domesticated Purchaser Common Stock; and (C) the per share exercise price for the Domesticated Purchaser Common Stock issuable upon exercise of each Assumed Warrant shall be determined by dividing the per share exercise price for the shares of Company Common Stock subject to the predecessor Company Warrant, as in effect immediately prior to the Effective Time by the Per Share Merger Consideration, and rounding the resulting exercise price up to the nearest whole cent.
Section 1.09 Treatment of Company SAFEs. Effective as of immediately prior to the Effective Time, each Company SAFE outstanding immediately prior to the Effective Time shall, pursuant to and in accordance with the terms of the applicable SAFE Amendment, be converted into the number of shares of Company Common Stock determined in accordance with the conversion price set forth in such SAFE Amendment. Each share of Company Common Stock received upon conversion of the Company SAFEs in accordance with the immediately preceding sentence shall be treated in the Merger as provided in Section 1.04(a)(iii), above (the “SAFE Consideration”). As of the Effective Time, each Company SAFE shall be terminated, and each Company SAFE Investor shall cease to have any rights with respect to its Company SAFE other than the right to receive the Aggregate Consideration in respect of the shares of Company Common Stock attributable to such Company SAFE as set forth in the Allocation Schedule.
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Section 1.10 Exchange of Company Certificates and Company Book Entry Shares.
(a) Exchange Agent. Prior to the Effective Time, the Company and the Purchaser shall appoint a bank or trust company to act as exchange agent (the “Exchange Agent”) for the payment and delivery of the Aggregate Consideration. At or immediately following the Effective Time, the Purchaser shall deposit (or cause to be deposited) with the Exchange Agent the number of shares of Domesticated Purchaser Common Stock and, if applicable, other Equity Securities of the Purchaser comprising the Aggregate Consideration or other consideration to be issued at Closing in respect of: (i) certificates that immediately prior to the Effective Time represented Company Stock, other than Cancelled Shares and Dissenting Shares (“Company Certificates”); and (ii) non-certificated outstanding Company Stock represented by book entry, other than Cancelled Shares and Dissenting Shares (“Company Book-Entry Shares”); and (iii) Company SAFEs converted into Company Stock as of immediately prior to the Effective Time, in the case of each of clauses (i) through (iii), in accordance with the Allocation Schedule, for exchange in accordance with this Section 1.10 through the Exchange Agent (the “Exchange Fund”). Pursuant to irrevocable instructions, the Exchange Agent shall deliver the Aggregate Consideration contemplated to be issued at the Closing pursuant to the Allocation Schedule out of the Exchange Fund. The Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. Promptly following the Effective Time, the Purchaser shall send, or shall cause the Exchange Agent to send, to each Company Stockholder a letter of transmittal in such form as the Exchange Agent customarily provides and reasonably acceptable to Purchaser and the Company (the “Letter of Transmittal”). The Letter of Transmittal shall specify that delivery shall be effected, and, in the case of Company Certificates, risk of loss and title shall pass, only upon delivery of a duly completed Letter of Transmittal and, if applicable, the surrender to the Company of Company Certificates covered by such Letter of Transmittal (or delivery of an affidavit of loss, theft or destruction in lieu of the surrender of such Company Certificates in accordance with Section 1.10(e)). Such Letter of Transmittal will include instructions for effecting the surrender of Company Certificates (or the provision of an affidavit of loss, theft or destruction in lieu of the surrender of such Company Certificates in accordance with Section 1.10(e)) in exchange for the Aggregate Consideration due in respect of such Company Certificates. Upon delivery to the Exchange Agent of a Letter of Transmittal, duly executed and in proper form with all required enclosures and attachments, together with the surrender to the Exchange Agent for cancellation of any Company Certificates covered by such Letter of Transmittal (or the provision of an affidavit of loss, theft or destruction in lieu of the surrender of such Company Certificates in accordance with Section 1.10(e)), each Company Securityholder shall be entitled to receive the Aggregate Consideration issuable at the Closing as set forth in the Allocation Schedule in respect of such Company Securityholder’s Company Certificates or Company Book-Entry Shares. If payment of any Aggregate Consideration is to be made to a Person other than the Person in whose name any surrendered Company Certificate is registered, it shall be a condition precedent to payment that: (x) the Company Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer; (y) the Person requesting such payment shall have paid any transfer and other similar Taxes required by reason of the delivery of the Aggregate Consideration in respect of such Company Certificate to a Person other than the registered holder of such Company Certificate; and (z) the Person requesting such payment shall have established to the satisfaction of the Purchaser that such Taxes either have been paid or are not required to be paid. Delivery of the Aggregate Consideration with respect to Company Certificates or Company Book-Entry Shares shall only be made to the Company Securityholder: (i) in whose name such Company Book-Entry Shares are registered; or (ii) to whom such Company Certificates have been issued. Until surrendered as contemplated by this Section 1.10(b), following the Effective Time, each Company Certificates or Company Book-Entry Share shall represent only the right to receive the Per Share Merger Consideration specified in Section 1.04(a)(iii), in accordance with the terms of this Agreement.
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(c) Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed. Thereafter, there shall be no further registration of transfers of Company Stock outstanding immediately prior to the Effective Time on the records of the Company. From and after the Effective Time, the holders of Company Certificates and Company Book-Entry Shares representing Company Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares except as otherwise provided for in this Agreement or by applicable Law. If, after the Effective Time, Company Certificates representing Company Stock are presented to the Purchaser for any reason, they shall be cancelled and, subject to the requirements of this Section 1.10, exchanged for the consideration specified in Section 1.04(a)(iii).
(d) Termination of Exchange Fund; Abandoned Property. At any time following the one-year anniversary of the Closing Date, the Purchaser shall be entitled to require the Exchange Agent to deliver to it any shares of Domesticated Purchaser Common Stock remaining in the Exchange Fund made available to the Exchange Agent and not delivered to Company Securityholders. Thereafter, but subject to abandoned property, escheat or other similar Laws, such Persons shall be entitled to look only to the Purchaser as general creditors of the Exchange Fund with respect to the Aggregate Consideration payable upon due surrender of their Company Certificates or Company Book-Entry Shares and compliance with the procedures in this Section 1.10. Notwithstanding the foregoing, none of the Purchaser, the Surviving Company or the Exchange Agent shall be liable to any Company Securityholder for any Per Share Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.
(e) Lost, Stolen or Destroyed Certificates. If any Company Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Company Certificates the Aggregate Consideration payable in respect of each of them pursuant to the Allocation Schedule upon the making of an affidavit of the loss, theft or destruction of such Company Certificates. Notwithstanding the immediately preceding sentence, in its reasonable discretion and as a condition precedent to the payment of the consideration specified under this Agreement, the Purchaser or the Exchange Agent may require the owners of any lost, stolen or destroyed Company Certificates to provide a customary indemnity against any claim that may be made against the Purchaser, the Surviving Company or the Exchange Agent or any of their respective Affiliates with respect to the Company Certificates alleged to have been lost, stolen or destroyed.
(f) Distributions with Respect to Unexchanged Shares. No dividends or other distributions declared or made after the Effective Time with respect to the Domesticated Purchaser Common Stock with a record date after the Effective Time shall be paid to the holder of any Company Certificates or Company Book-Entry Share with respect to the Domesticated Purchaser Common Stock issuable to such holder unless and until such holder shall have delivered a Letter of Transmittal covering such instruments and, if applicable, surrendered the Company Certificates covered by such Letter of Transmittal in exchange for the Aggregate Consideration in accordance with this Section 1.10. Subject to the effect of escheat, Tax or other applicable Laws, following the delivery of a Letter of Transmittal and, if applicable, the surrender of any Company Certificates covered by such Letter of Transmittal in accordance with this Section 1.10, there shall be paid by the Purchaser to the holder of whole shares of Domesticated Purchaser Common Stock issued in exchange therefor, without interest: (i) promptly, the amount of dividends or other distributions with a record date after the Effective Time previously paid with respect to such whole shares of Domesticated Purchaser Common Stock; and (ii) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of Domesticated Purchaser Common Stock.
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Section 1.11 Fractional Shares. Notwithstanding anything to the contrary contained in this Agreement, no certificates or scrip representing fractional shares of Domesticated Purchaser Common Stock shall be issued pursuant to this Article I. In lieu of the issuance of any such fractional share, each holder who would otherwise be entitled to receive a fractional share of Domesticated Purchaser Common Stock shall be entitled to receive, in lieu thereof, an amount in cash (rounded to the nearest whole cent), without interest, equal to the product of (x) such fractional share interest to which such holder would otherwise be entitled, multiplied by (y) $10.00.
Section 1.12 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, shares of Company Stock outstanding immediately prior to the Effective Time and held by a Company Stockholder, or owned by a Beneficial Owner of Company Stock, as applicable, who has not voted in favor of the Merger or consented thereto in writing or by electronic transmission and has properly demanded appraisal for such shares in accordance with, and who complies in all respects with, Section 262 of the DGCL (such shares, “Dissenting Shares”), shall not be converted into the right to receive the Aggregate Consideration and shall instead represent the right to receive payment of the fair value of such Dissenting Shares in accordance with and to the extent provided by Section 262 of the DGCL (any Company Stockholder or Beneficial Owner of shares of Company Stock who exercises such right, a “Dissenting Stockholder”). At the Effective Time: (a) all Dissenting Shares shall be cancelled, extinguished and cease to exist; and (b) each holder or owner of Dissenting Shares, in respect of such Dissenting Shares, shall be entitled only to such rights as may be granted to such holder under the DGCL. If any such Company Stockholder or Beneficial Owner of shares of Company Stock fails to perfect or otherwise waives, withdraws or loses such Company Stockholder’s or Beneficial Owner’s right to appraisal under Section 262 of the DGCL or a court of competent jurisdiction shall determine such holder or Beneficial Owner is not entitled to the relief provided by Section 262 of the DGCL, then, the right of such holder or Beneficial Owner shall be as specified in the DGCL. The Company shall give the Purchaser reasonably prompt notice of any demands received by the Company for appraisal of shares of Company Stock, purported withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company relating to rights to be paid the fair value of Dissenting Shares. Prior to the Effective Time, except with the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall not make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demands or waive any failure to timely deliver a written demand for appraisal or otherwise comply with the provisions under Section 262 of the DGCL, or agree or commit to do any of the foregoing.
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ARTICLE
II
CLOSING DATE PAYMENTS
Section 2.01 Closing Date Payments. Subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their terms are to be satisfied by actions taken at the Closing, but subject to such conditions being capable of being satisfied at the Closing), at or prior to the Closing, the Parties shall cause the consummation of the following transactions:
(a) No later than one Business Day prior to the Domestication, the Purchaser shall make any payments, by wire of immediately available funds from the Trust Account, required to be made by the Purchaser in connection with the Redemptions elected by the Purchaser Shareholders.
(b) The Purchaser shall pay or cause to be paid, by wire of immediately available funds from the Trust Account to the applicable payees, from the Available Purchaser Closing Cash, (i) all Purchaser Transaction Costs to the extent such Purchaser Transaction Costs are not paid prior to the Closing; and (ii) on behalf of the Company, all Company Transaction Costs, to the extent such Company Transaction Costs are not paid prior to the Closing, and the TPC Loan Amount.
(c) The Purchaser shall contribute to the Company all remaining Available Purchaser Closing Cash. Such Available Purchaser Closing Cash shall be used for working capital purposes.
Section 2.02 Withholding Taxes.
(a) Notwithstanding anything to the contrary in this Agreement, each of Purchaser, Merger Sub, the Company, the Surviving Company, the Exchange Agent and their respective Affiliates shall be entitled to deduct and withhold from any amounts or consideration otherwise payable or issuable pursuant to this Agreement such amounts as are required to be deducted and withheld under the Code or any other applicable Law. To the extent that amounts are so deducted, withheld and remitted to the applicable Governmental Authority in accordance with applicable Law, such amounts shall be treated for all purposes of this Agreement as having been paid or issued to the Person in respect of which such deduction and withholding were made. Notwithstanding the foregoing, except for (1) any payments made pursuant to the last sentence of this Section 2.02 or (2) any deduction or withholding arising out of any failure by any Person to provide a properly completed and duly executed IRS Form W-9 or applicable IRS Form W-8, the parties shall use commercially reasonable efforts to reduce or eliminate any such withholding to the extent permitted by applicable Law, including using commercially reasonable efforts to provide recipients of consideration not less than five (5) Business Days’ advance written notice of any anticipated withholding and a reasonable opportunity to provide documentation establishing exemptions from or reductions of such withholdings. In the case of any payment or consideration payable or issuable pursuant to this Agreement to any current or former employee of the Company or any of its Subsidiaries that are treated as compensation, the Parties shall reasonably cooperate to pay such amounts through the Company’s or the relevant Subsidiary’s payroll to facilitate applicable withholding and tax payments.
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(b) Notwithstanding Section 2.02(a), if, based on the valuation obtained under Section 8.03(e)(iv), the Purchaser reasonably determines that withholding on account of Tax is required under the provisions of the Indian Income-tax Act, 2025 (as amended or re-enacted from time to time, the “IT Act”) in connection with the Per Share Merger Consideration, the Purchaser shall be entitled, in its discretion to:
i. require the relevant Company Stockholder(s) to fund the applicable withholding Tax amount in cash prior to discharge of the Per Share Merger Consideration;
ii. withhold or direct the sale of a corresponding number of shares of Purchaser Common Stock otherwise issuable to such Company Stockholder(s) to fund such withholding Tax obligation;
iii. defer discharge of a portion of the Per Share Merger Consideration pending resolution of the withholding Tax obligation (including, if applicable, pending receipt of a nil/lower withholding certificate from the Indian tax authorities); or
iv. implement such other withholding, or escrow mechanism as the Purchaser and the Company may agree.
Section 2.03 Further Assurances. From time to time after the Closing Date, upon the reasonable request of any Party in writing, each Party shall execute, acknowledge and deliver such further instruments and documents, and take such additional action, to effect, consummate, confirm or evidence the Transactions and carry out the purpose this Agreement.
ARTICLE
III
CLOSING
Section 3.01 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VIII (other than those conditions that by their terms are to be satisfied by actions taken at the Closing, but subject to such conditions being capable of being satisfied at the Closing), the consummation of the Transactions (the “Closing”) shall take place by electronic exchange of documents and signatures at a time and date to be specified in writing by the Parties. The specified date shall be no later than the third Business Day after all the Closing conditions in Article VIII have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to such conditions being capable of being satisfied at the Closing), or at such other date, time or place (including remotely) as the Purchaser and the Company may agree (the date at which the Closing is actually held being the “Closing Date”).
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ARTICLE
IV
Closing Documents
Section 4.01 Purchaser Closing Certificate. No later than two Business Days prior to the Closing Date, the Purchaser shall deliver to the Company a written notice setting forth a good faith calculation of the following: (i) the aggregate amount of cash proceeds that was required to satisfy any exercise of the Redemptions; (ii) the aggregate amount of the Purchaser Transaction Costs as of the Closing; and (iii) the number of shares of Domesticated Purchaser Common Stock and Domesticated Purchaser Warrants, in each case, to be outstanding as of the Closing and after giving effect to the Redemptions, the Domestication, the issuance of securities in connection with the consummation of the Transactions and the PIPE Investments.
Section 4.02 Allocation Schedule. Five Business Days prior to the Closing Date, the Company shall deliver to the Purchaser, and the Purchaser shall thereafter deliver to the Exchange Agent, the Allocation Schedule in accordance with Section 1.06. In the event the Closing has not occurred within five Business Days following the delivery of the Allocation Schedule pursuant to Section 1.06, the Company shall deliver to the Purchaser an updated Allocation Schedule (the “Updated Allocation Schedule”). The Company shall review and consider in good faith any comments provided by the Purchaser or any of its Representatives with respect to the Allocation Schedule or Updated Allocation Schedule, as applicable.
ARTICLE
V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter dated as of the Signing Date delivered by the Company to the Purchaser (the “Company Disclosure Letter”), each section or subsection of which, subject to Section 10.18, qualifies only the correspondingly numbered and lettered representations in this Article V, the Company represents and warrants to the Purchaser as of the date of this Agreement and as of the Closing as follows:
Section 5.01 Organization and Standing. The Company is a Delaware corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where such failure to have all requisite power and authority would not, individually or in the aggregate, be material to the Company. The Company is duly qualified or licensed in the jurisdiction in which it is formed or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has provided to the Purchaser accurate and complete copies of its Organizational Documents, each as amended to date and as currently in effect. The Company is not in violation of any provision of its Organizational Documents.
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Section 5.02 Authorization; Binding Agreement. Subject to the receipt of the Requisite Stockholder Approval, the Company has all requisite power and authority to, and has taken all corporate or other legal action necessary in order to, execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations under this Agreement and each Ancillary Document to which it is or is required to be a party and to consummate the Transactions. The execution, delivery and performance of this Agreement and each Ancillary Document to which the Company is a party and the consummation of the Transactions: (a) have been duly and validly authorized by the Company’s board of directors in accordance with its Organizational Documents; and (b) other than the Requisite Stockholder Approval, no other proceedings on the part of the Company or its Subsidiaries are necessary to authorize the execution, delivery and performance of this Agreement and each Ancillary Document to which it is a party or to consummate the Transactions. This Agreement has been duly and validly executed and delivered by the Company. Assuming the due authorization, execution, delivery and performance of this Agreement by the Purchaser and Merger Sub, this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”). When delivered, each Ancillary Document to which the Company is a party shall be duly and validly executed and delivered by the Company. Assuming the due authorization, execution, delivery and performance, such Ancillary Document shall constitute the legal valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions. By resolutions duly adopted, the Company’s board of directors has unanimously: (i) determined that it is fair to and in the best interests of the Company and the Company Stockholders, and declared it advisable, for the Company to enter into this Agreement and consummate the Transactions, including the Merger; (ii) approved this Agreement and the Transactions, including the Merger, on the terms and subject to the conditions of this Agreement; (iii) directed that this Agreement be submitted to the Company Stockholders for their adoption and approval; and (iv) resolved to recommend the approval and adoption of this Agreement and the Transactions, including the Merger, by the Company Stockholders. The execution of the Written Consent by the Company Support Stockholders will constitute the Requisite Stockholder Approval.
Section 5.03 Capitalization.
(a) As of the Signing Date and immediately prior to the Effective Time, without giving effect to the conversion of Company Preferred Stock or Company SAFEs, the authorized capital stock of the Company consists of: (i) 30,000,000 shares of Company Common Stock, $0.00001 par value per share, of which 9,248,580 are issued and outstanding; (ii) 5,183,425 shares of Company Series A-1 Preferred Stock, $0.00001 par value per share, of which 5,183,425 are issued and outstanding; (iii) 205,530 shares of Company Series A-2 Preferred Stock, $0.00001 par value per share, of which 205,530 are issued and outstanding; (iv) 246,633 shares of Company Series A-3 Preferred Stock, $0.00001 par value per share, of which 246,633 are issued and outstanding; (v) 6,428,799 shares of Company Series B-1 Preferred Stock, $0.00001 par value per share, of which 6,428,799 are issued and outstanding; (vi) 29,048 shares of Company Series B-2 Preferred Stock, $0.00001 par value per share, of which 29,048 are issued and outstanding; and (vii) 5,324,329 shares of Company Series C Preferred Stock, $0.00001 par value per share, of which 5,324,329 are issued and outstanding. As of the Signing Date, the Conversion Rate for each series of Company Preferred Stock is as set forth in the Company’s Organizational Documents and on Section 5.03(a) of the Company Disclosure Letter (the “Current Conversion Rate”), the total number of shares of Company Common Stock outstanding, assuming conversion of all outstanding shares of Company Preferred Stock into Company Common Stock at the Current Conversion Rate, is 26,666,344 shares, and the total number of shares of Company Common Stock issuable upon conversion of all outstanding Company SAFEs, assuming conversion at the applicable conversion price set forth in each applicable SAFE Amendment, is 50,000 shares, as further described on Section 5.03(a) of the Company Disclosure Letter. Each share of Company Preferred Stock and each Company SAFE will be converted into Company Common Stock immediately prior to the Effective Time. Each issued and outstanding share of Company Stock: (v) is fully vested and not subject to any repurchase or redemption right held by the Company or its affiliates; (w) has been duly authorized and is validly issued, fully paid and nonassessable; (x) was issued in compliance in all material respects with applicable Laws; (y) was not issued in breach or violation of any preemptive rights or Contract to which the Company is a party; and (z) is owned free and clear of any Lien imposed by or resulting from any Contract to which the Company is party, other than the Company’s Organizational Documents and Contracts that have been provided to the Purchaser that set forth the Company Stockholders’ obligations to the Company.
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(b) Company Options. As of the Signing Date, the Company has reserved 2,554,072 shares of Company Common Stock under the Company Stock Plan, of which 1,865,079 shares are subject to outstanding and unexercised Company Options and 763,568 shares remain available for issuance thereunder. Except as set forth on Section 5.03(b) of the Company Disclosure Letter, no shares of Company Common Stock are subject to outstanding Company Options, no grants of Company Options have been made and remain outstanding that are not subject to the Company Stock Plan, and there are no outstanding promises to grant or rights to be granted Company Options.
(c) Set forth on Section 5.03(c)(i) of the Company Disclosure Letter is a true, correct and complete statement as of the Signing Date of (i) the number and class or series (as applicable) of all Equity Securities of the Company issued and outstanding (including warrants, notes, Company Options, Company SAFEs and other securities convertible into Equity Securities of the Company); (ii) the identity of the Persons that are the record holders and, if different, Beneficial Owners, of such Equity Securities; and (iii) with respect to each Company Option or securities convertible into Equity Securities of the Company: (A) the date of grant and applicable expiration date; (B) number of shares of Company Common Stock subject to the Company Option or securities convertible into Equity Securities of the Company; (C) any applicable exercise (or similar) price; (D) any applicable vesting schedule (including acceleration provisions), including the vested status of such derivative security; (E) any post-termination exercise period applicable to such Company Option that exceeds the explicitly stated periods set forth in the Company Stock Plan, (F) whether such Company Option is an incentive stock option as defined in Section 422 of the Code, and (G) whether such Company Option or securities convertible into Equity Securities of the Company is subject to Section 409A of the Code. Except as set forth in Section 5.03(c)(ii) of the Company Disclosure Letter, there are no preemptive or other outstanding rights, options, warrants, phantom interests, conversion rights, equity appreciation rights, other equity or equity-based rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments, promises or rights of any kind that obligate the Company to issue or to sell any shares of its capital stock or other Equity Securities of the Company, or any securities or obligations convertible or exchangeable into or exercisable for, valued by reference to or giving any Person a right to subscribe for or acquire, any Equity Securities of the Company or to vote with the stockholders of the Company on any matter, and no securities or obligations evidencing such rights are authorized, issued or outstanding.
(d) With respect to the Company Options, and except as set forth in Section 5.03(d) of the Company Disclosure Letter: (i) all Company Options were granted with a per share exercise price at least equal to the fair market value of the underlying share of Company Common Stock on the date such Company Option was granted (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated under Section 409A of the Code); (ii) no Company Option has had its grant date “dated as of the a date that is other than the last date on which all necessary corporate actions have been taken to effectuate such grant under applicable Law, including, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof); (iii) each Company Option was granted pursuant to the Company Stock Plan; (iv) no awards granted under the Company Stock Plan permitted the purchase of shares of Company Common Stock prior to the date such shares were fully vested; and (v) all Company Options have been issued in compliance in all material respects with the Company Stock Plan and all applicable Laws and properly accounted for in all material respects in accordance with GAAP.
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(e) Except as set forth in Section 5.03(e) of the Company Disclosure Letter, the Company is not party to any stockholders agreement, voting agreement, registration rights or similar agreement relating to its equity interests.
(f) Except as provided for in this Agreement, the Company Warrants or the Company SAFEs, as a result of the consummation of the Transactions, no shares of capital stock, warrants, options or other Equity Securities of the Company are issuable. Except as provided for in this Agreement, the Company Warrants or the Company SAFEs, as a result of the consummation of the Transactions, no rights in connection with any shares, warrants, options or other securities of the Company will accelerate or become vested, exercisable, convertible or otherwise triggered.
(g) There are no declared but unpaid dividends or distributions in respect of any Equity Securities of the Company. The Company has not made, declared, set aside, established a record date or paid any dividends or distributions.
(h) All Indebtedness of the Company, as of the Signing Date, is disclosed on Section 5.03(h) of the Company Disclosure Letter. No such Indebtedness of the Company is required to be repaid in connection with the Transactions. As of the Signing Date, the TPC Loan Amount is approximately $21,230,208, as further described on Section 5.03(h) of the Company Disclosure Letter.
Section 5.04 Subsidiaries and Investments. Set forth on Section 5.04 of the Company Disclosure Letter is a true and complete list of each Subsidiary of the Company, including its jurisdiction of organization and the percentage of equity interest held by the Company (directly or indirectly). Each Subsidiary of the Company is duly organized, validly existing and in good standing (or equivalent status, to the extent such concept is recognized) under the Laws of its respective jurisdiction of organization. All of the outstanding equity interests of each Subsidiary of the Company are owned, directly or indirectly, by the Company free and clear of any Lien (other than Permitted Liens), and have been duly authorized and validly issued.
Section 5.05 No Conflict; Governmental Consents and Filings.
(a) Except as set forth in Section 5.05(a) of the Company Disclosure Letter and for the applicable requirements, if any, of the HSR Act and the receipt of the Requisite Stockholder Approval, the execution, delivery and performance by the Company of this Agreement and the other Ancillary Documents to which the Company is a party and the consummation by the Company of the Transactions does not and will not: (i) violate any provision of, or result in the breach of, any applicable Law to which the Company or any of its Subsidiaries is subject or by which any property or asset of the Company or any of its Subsidiaries is bound; (ii) conflict with or violate the Organizational Documents of the Company; (iii) violate any provision of or result in a breach, default or acceleration of, require a consent under, create any right of modification to, right to payment or any posting of collateral (or the right to require the posting of collateral), or trigger vesting or increase in the amount of any compensation or benefit payable under any Company Material Contract or Material Current Government Contract, or terminate or result in the termination of any Company Material Contract or Material Current Government Contract, or result in the creation of any Lien (other than a Permitted Lien) under any Company Material Contract or Material Current Government Contract upon any of the properties or assets of the Company or any of its Subsidiaries, or constitute an event which, after notice or lapse of time or both, would result in any such violation, breach, default, acceleration, termination or creation of a Lien (other than a Permitted Lien); or (iv) result in a violation or revocation of any required Consents, except, in the case of clauses (i), (iii) and (iv) only, to the extent that the occurrence of any of the foregoing would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole.
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(b) Assuming the truth and completeness of the representations and warranties of the Purchaser contained in this Agreement and the receipt of the Requisite Stockholder Approval, no Consent is required with respect to the Company’s execution, delivery and performance of this Agreement, any of the other Ancillary Documents to which it is a party or the consummation by the Company of the Transactions, except for: (i) any Consents the absence of which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; (ii) compliance with any applicable requirements of the securities Laws; and (iii) compliance with the applicable requirements, if any, of the HSR Act.
Section 5.06 Financial Statements.
(a) The Company has provided to the Purchaser: (i) unaudited financial statements of the Company, consisting of the unaudited consolidated balance sheet and the statements of operations and comprehensive loss and cash flows of the Company and its Subsidiaries as of and for the three-month period ended April 30, 2026 (the “Interim Company Financials”); and (ii) the unaudited consolidated financial statements of the Company, consisting of the unaudited consolidated balance sheet of the Company and its Subsidiaries as of January 31, 2026 and January 31, 2025, and the related audited consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows of the Company and its Subsidiaries for the fiscal years then ended (the “Annual Company Financials” and, together with the Interim Company Financials, the “Company Financials”). The Company Financials were derived from and accurately reflect in all material respects the books and records of the Company and its Subsidiaries. Such books and records are, in all material respects, true, correct and complete and have been maintained in all material respects in accordance with commercially reasonable business practices and applicable legal requirements. The Company Financials (x) have been prepared in all material respects in accordance with GAAP consistently applied throughout the periods covered by such Company Financials; and (y) fairly present in all material respects the consolidated financial position, results of operations and comprehensive loss, and cash flows of the Company and its Subsidiaries as of the dates and for the periods referred to in such Interim Company Financials (subject to the absence of footnote disclosures and, for the Interim Company Financials, normal year-end adjustments). The Company has never been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.
(b) The Company and its Subsidiaries have established and maintain a system of internal controls. Such internal controls are designed to provide reasonable assurance that: (i) transactions are executed in all material respects in accordance with management’s authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for the Company’s and its Subsidiaries’ assets; and (iii) material information relating to the Company and its Subsidiaries is made known to the Company’s principal executive officer and principal financial officer. Such internal controls are sufficient in timely alerting the Company’s principal executive officer and principal financial officer to material information that would be required to be included in the Company Financials.
(c) Neither the Company nor any of its Subsidiaries has identified in writing, nor has any of them received notice from an independent auditor of: (i) any significant deficiency or material weakness in the system of internal controls utilized by the Company or any of its Subsidiaries; (ii) any fraud that involves the Company’s or any of its Subsidiaries’ management or other employees who have a significant role in the preparation of financial statements or the internal controls over financial reporting utilized by the Company or any of its Subsidiaries; or (iii) any claim or allegation regarding any of the foregoing.
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(d) There are no outstanding loans or other extensions of credit made by the Company or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company.
Section 5.07 Undisclosed Liabilities. Except as set forth on Section 5.07 of the Company Disclosure Letter, there is no material liability, debt, obligation, claim or judgment of the Company or any of its Subsidiaries of a type required to be reflected or reserved for on a balance sheet prepared in accordance with GAAP, except for liabilities, debts (including Indebtedness), obligations, claims or judgements: (a) provided for in, or otherwise reflected or reserved for on the Company Financials or disclosed in the notes to the Company Financials; (b) that have arisen since the date of the most recent balance sheet included in the Company Financials in the ordinary course of business of the Company and its Subsidiaries (none of which relates to or arises from any violation of Law, tort, breach of contract, infringement or misappropriation); (c) arising under this Agreement or incurred in connection with the Transactions; or (d) that, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries is party to any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K promulgated by the SEC).
Section 5.08 Absence of Certain Changes. Except for activities conducted in connection with this Agreement and the Transactions or as set forth on Section 5.08 of the Company Disclosure Letter, since January 31, 2026 through the Signing Date: (a) there has not been any Company Material Adverse Effect; and (b) the Company and its Subsidiaries (i) have conducted their business in all material respects in the ordinary course of business and (ii) have not:
(i) amended, waived or otherwise changed, in any respect, the Company’s Organizational Documents, except as required by applicable Law;
(ii) authorized for issuance, issued, granted, sold, pledged, disposed of or proposed to issue, grant, sell, pledge or dispose of, or accelerated the vesting of or waived any restriction applicable to or proposed to accelerate the vesting of or waive any restriction applicable to, any Equity Securities of the Company or its Subsidiaries except: (A) as required by existing Company Benefits Plans; (B) any issuances of Company Common Stock to employees or other services providers in the ordinary course of business pursuant to Company Options outstanding on the date of this Agreement; or (C) pursuant to any Contract (including any warrant, option or Company SAFE) outstanding as of January 31, 2026;
(iii) engaged in any hedging transaction with a third person with respect to Equity Securities of the Company or its Subsidiaries;
(iv) (A) split, combined, recapitalized or reclassified any shares or other Equity Securities of the Company or its Subsidiaries or issued any other securities in respect of such shares or other Equity Securities; (B) paid or set aside any dividend or other distribution (whether in cash, equity or property or any combination of cash, equity or property) in respect of shares or other Equity Securities of the Company or its Subsidiaries; or (C) directly or indirectly redeemed, purchased or otherwise acquired or offered to acquire any Equity Securities of the Company or its Subsidiaries, except purchases or redemptions pursuant to exercises or cancellations of Equity Securities in accordance with their terms or the withholding of shares to satisfy net settlement or Tax obligations with respect to Equity Securities;
(v) voluntarily incurred or guaranteed any Indebtedness for borrowed money, other than between or among the Company and any of its wholly owned Subsidiaries;
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(vi) (A) established, adopted, materially modified or amended, or terminated any Company Benefit Plan or any other benefit or compensation plan, policy, program, contract, agreement or arrangement; (B) increased or accelerated or committed to accelerate the funding, payment or vesting of the compensation or benefits provided to any of the current employees, officers, or directors of the Company or any of its Subsidiaries, other than ordinary course base compensation increases with respect to any such service provider whose annual base compensation does not exceed $250,000; (C) granted, promised or announced any cash or equity or equity-based incentive awards, bonus, retention, change in control, transaction, severance or similar compensation; (D) hired, promoted, or engaged, or otherwise entered into any employment or consulting agreement or arrangement with, any current employee, officer, or director of the Company or any of its Subsidiaries whose annual base salary exceeds $250,000; or (E) terminated any employee, officer, or director of the Company or any of its Subsidiaries, other than for cause, whose annual base salary exceeds $250,000;
(vii) (A) waived or released any noncompetition, nonsolicitation, nondisclosure or other restrictive covenants applying to any current or former employee or other individual service provider of the Company or any of its Subsidiaries; (B) planned, announced, implemented or effected the reduction in force, lay-off, furloughs, early-retirement program, severance program or other program or effort concerning the termination of a group of employees of the Company or any of its Subsidiaries (other than individual employee terminations for cause); or (C) taken other such actions that would reasonably be expected to implicate the WARN Act;
(viii) entered into, amended, modified, negotiated, terminated or extended any Labor Agreement, or recognized or certified any labor union, works council, labor organization, or group of employees of the Company or any of its Subsidiaries as the bargaining representative for any employees of the Company or any of its Subsidiaries;
(ix) (A) made, changed or rescinded any material election relating to Taxes; (B) settled any claim, suit, litigation, proceeding, arbitration, investigation, audit, examination, controversy or other Legal Proceeding relating to Taxes; (C) filed any amended Tax Return with respect to Income Taxes or other material Taxes; (D) voluntarily surrendered any right to claim a refund of material Taxes; (E) changed or requested to change any method of accounting for Tax purposes; (F) waived or extended any statute of limitations in respect of a period within which an assessment or reassessment of Taxes may be issued or in respect of any Tax attribute that would give rise to any claim or assessment of Taxes of or with respect to the Company or any of its Subsidiaries (other than as a result of any extension of time to file Tax Returns or pay Taxes that is automatically granted); (G) incurred any material liability for Taxes outside the ordinary course of business; (H) entered into any tax sharing, indemnification, allocation or similar agreement or arrangement (excluding any commercial contract entered into in the ordinary course of business and not primarily related to Taxes); or (I) entered into any “closing agreement” as described in Section 7121 of the Code or any other similar agreement or arrangement with any Governmental Authority with respect to Taxes;
(x) (A) transferred, sold, assigned, licensed, sublicensed, covenanted not to assert, subjected to a Lien (other than a Permitted Lien), abandoned, allowed to lapse, transferred or otherwise disposed of, any right, title or interest of the Company or any of its Subsidiaries in or to any Owned Intellectual Property material to the business of the Company and its Subsidiaries, taken as a whole (other than: (x) non-exclusive licenses of Intellectual Property granted in the ordinary course of business; or (y) abandoning, allowing to lapse or otherwise disposing of Owned Intellectual Property registrations at the end of their statutory term, or in the ordinary course of business where the Company has, in the exercise of reasonable business judgement, decided to abandon such registration or allow it to lapse);
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(xi) established any Subsidiary or entered into any new line of business;
(xii) failed to maintain their books, accounts and records in all material respects in the ordinary course of business;
(xiii) (A) failed to maintain in full force insurance policies or replacement or revised policies providing insurance coverage with respect to their assets, properties, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect; or (B) terminated without replacement or amended in a manner materially detrimental to the Company and its Subsidiaries, taken as a whole, any material insurance policy insuring the Company or any of its Subsidiaries;
(xiv) made any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP or changes that are made in accordance with PCAOB standards;
(xv) acquired, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination: (A) any corporation, partnership, limited liability company, other business organization or any division of any corporation, partnership, limited liability company or other business organization; or (B) any material amount of assets outside the ordinary course of business;
(xvi) sold, leased, licensed, transferred, exchanged or swapped, mortgaged or otherwise pledged or encumbered (including securitizations) or otherwise disposed of any material portion of their tangible properties, or tangible assets, other than pursuant to Permitted Liens in the ordinary course;
(xvii) entered into any agreement, understanding or arrangement with respect to the voting of Equity Securities of the Company;
(xviii) entered into, amended, waived or terminated (other than terminations in accordance with their terms) any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business);
(xix) authorized or agreed to do any of the foregoing actions.
Section 5.09 Compliance with Laws. During the last three years, the Company and each of its Subsidiaries have been in compliance in all material respects with, and are not currently in violation of, any applicable Law with respect to the conduct of their business, or the ownership or operation of their business except for failures to comply or violations which, individually or in the aggregate, have not been and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. No written notice of violation or of non-compliance with any applicable Law has been received by the Company or any of its Subsidiaries since their respective formations. To the Company’s Knowledge, no assertion or action of any violation or of non-compliance with any applicable Law is pending or currently threatened against the Company or any of its Subsidiaries.
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Section 5.10 Government Contracts.
(a) Section 5.10 of the Company Disclosure Letter sets forth a list of each Contract with a Governmental Authority in existence as of the Signing Date that involves aggregate payments to the Company or any of its Subsidiaries in excess of $100,000 (each, a “Material Current Government Contract”). Neither the Company nor any of its Subsidiaries has: (i) materially breached or violated any Law, clause or other material requirement pertaining to any Government Contract; (ii) been excluded from bidding by a Governmental Authority; (iii) been audited (other than normal course audits) or investigated by any Governmental Authority with respect to any Government Contract; (iv) conducted or initiated any internal investigation or made any disclosure with regard to any irregularity in connection with a Government Contract; (v) received any small business set aside contract or other order or contract requiring small business or other preferred bidder status; or (vi) received any written, or to the Company’s Knowledge, other, allegations of fraud, false claims or overpayments with respect to any of the Company’s or its Subsidiaries’ Government Contracts.
(b) The Company and its Subsidiaries have taken all necessary steps to preserve and protect, in all material respects, their rights in and title to all material Owned Intellectual Property delivered, deliverable or otherwise provided directly or indirectly through any other Person to any Governmental Authority in connection with any Government Contract, including by: (i) providing all notices required in connection with the development of any patentable invention for which the Company or any of its Subsidiaries has chosen to pursue patent protection; and (ii) properly asserting any applicable restricted, limited or government purpose rights in connection with the delivery of any data, including software and source code. To the extent applicable to any Material Current Government Contract involving covered defense information, the Company and its Subsidiaries have complied in all material respects with applicable U.S. Department of Defense requirements for safeguarding covered defense information and cyber incident reporting.
Section 5.11 Company Permits. The Company and its Subsidiaries hold all Permits required to own, lease and operate their assets and properties and carry on their businesses as they are now being conducted, except where the failure to have such Permits has not been, and would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole (collectively, the “Company Permits”). Section 5.11 of the Company Disclosure Letter sets forth a true, correct and complete list of all material Company Permits held by the Company or any of its Subsidiaries. Each Company Permit is in full force and effect and will, upon its termination or expiration, be timely renewed or reissued upon terms and conditions substantially similar to its existing terms and conditions, except where the failure to be in effect has not been, and would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. There are no Legal Proceedings pending or, to the Company’s Knowledge, threatened, that seek the revocation, cancellation, limitation, suspension, restriction, adverse modification or termination of any Company Permit. Neither the Company nor any of its Subsidiaries is in default or violation in any material respect of any Company Permit applicable to the Company or any of its Subsidiaries. No event has occurred with respect to any Company Permit that permits, or after the giving of notice or lapse of time or both would permit, revocation, cancellation or termination of any Company Permit or would result in any other impairment of the rights of the holder of any Company Permit, except as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
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Section 5.12 Litigation. Except as set forth on Section 5.12 of the Company Disclosure Letter, there are no, and for the past three years there have been no: (a) Legal Proceedings of any nature pending or, to the Company’s Knowledge, threatened, against the Company or any of its Subsidiaries or any of its or their properties or assets, or any of the directors or officers of the Company or any of its Subsidiaries with regard to their actions in such activities, in which the reasonably expected damages are in excess of $100,000 or which otherwise would reasonably be expected to result in an Order for specific performance, an injunction or other equitable relief; (b) pending or, to the Company’s Knowledge, threatened audits, examinations or investigations by any Governmental Authority against the Company or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole; (c) pending or, to the Company’s Knowledge, threatened Legal Proceedings by the Company or any of its Subsidiaries against any third party that, individually or in the aggregate, would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole; (d) settlements or similar agreements that impose any material ongoing obligations or restrictions on the Company or any of its Subsidiaries; or (e) Orders imposed or, to the Company’s Knowledge, threatened to be imposed upon the Company or any of its Subsidiaries or any of its or their properties or assets, or any of the directors or officers of the Company or any of its Subsidiaries with regard to their actions in such activities.
Section 5.13 Material Contracts.
(a) Section 5.13(a) of the Company Disclosure Letter sets forth a true, correct and complete list of all Contracts described in clauses (i) through (xvii) below to which, as of the Signing Date, the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries, or any of their respective properties or assets, are bound (each Contract required to be set forth on Section 5.13(a) of the Company Disclosure Letter, a “Company Material Contract”). True, complete and correct copies of the Company Material Contracts, including true, complete and correct copies of all amendments to such Company Material Contracts, have been delivered or made available to the Purchaser. The Company Material Contracts include:
(i) Each Contract that contains covenants that limit the ability of the Company or any of its Subsidiaries (or purports to bind any Affiliate of the Company): (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any employee, customer or other Person, including any covenants regarding non-competition, employee and customer non-solicitation, exclusivity, rights of first refusal or most-favored pricing, in each case, that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole; or (B) to purchase or acquire an interest in any other Person;
(ii) Each joint venture Contract, profit-sharing agreement, legal partnership, limited liability company agreement with a third party or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any legal partnership or joint venture;
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(iii) All Contracts that involve any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract based on any commodity, security, instrument, currency, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible;
(iv) All Contracts that involve the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $100,000 or Equity Securities of the Company or another Person;
(v) Each Company Real Property Lease or lease, rental agreement, installment and conditional sale agreement or other Contract that: (A) provides for the ownership of, leasing of, title to, use of, or any leasehold or other interest in any real or tangible personal property; and (B) involves aggregate payments in excess of $100,000 in any 12-month period;
(vi) Each Contract involving aggregate payments, receipts or expenditures by the Company or any of its Subsidiaries under such Contract or Contracts of at least $250,000 in any 12-month period or $500,000 in the aggregate (other than Contracts with any employee, independent contractor, or consultant);
(vii) All Contracts with any Top Customer or Top Supplier;
(viii) All Company Benefit Plans and Contracts related thereto;
(ix) Each Contract that is a collective bargaining agreement or other Contract with any labor union, works council, labor organization or other employee representative body (each, a “Labor Agreement”);
(x) All Contracts the primary purpose of which, is for the Company or any of its Subsidiaries to provide continuing indemnification or a guarantee of obligations of a third party after the Signing Date in excess of $250,000;
(xi) Any employment, independent contractor or consulting, deferred compensation, severance or bonus Contract with any current employee, officer, or director of the Company or any of its Subsidiaries that (A) provides for (1) annual compensation exceeding $100,000; (2) payment of any severance benefits; or (3) any change in control, retention or other payments that would be triggered solely by the consummation of the Transactions; or (B) cannot be terminated upon 60 days’ notice or less without further payment, liability or obligation;
(xii) Any Contract that obligates the Company or any of its Subsidiaries to make any capital commitment or expenditure in excess of $500,000 in any twelve-month period (including pursuant to any joint venture);
(xiii) All Contracts that relates to a material settlement entered into within three (3) years prior to the date of this Agreement or under which the Company or any Subsidiary has outstanding material obligations (other than customary confidentiality obligations);
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(xiv) All Government Contracts;
(xv) Any Contract: (A) that contains any assignment or license of, or any covenant not to assert or enforce, or other similar right in or to any Owned Intellectual Property; (B) pursuant to which any Intellectual Property is or was developed by, with or for the Company or any of its Subsidiaries; or (C) pursuant to which the Company or any of its Subsidiaries either: (1) grants to a third Person (I) a license, immunity or other right in or to any Owned Intellectual Property or (II) an exclusive license, immunity or other right in or to any Owned Intellectual Property; or (2) is granted by a third Person a license, immunity or other right in or to any Intellectual Property that is material to the business of the Company and its Subsidiaries, taken as a whole, but excluding, in the case of each of clauses (A), (B), and (C): (t) non-exclusive Trademark or feedback licenses that are incidental to the primary purpose of the Contract; (u) nondisclosure agreements; (v) non-exclusive licenses of Owned Intellectual Property granted in the ordinary course of business to customers or service providers; (w) licenses of Open Source Software; (x) non-exclusive licenses of Off-the-Shelf Software; and (y) non-exclusive licenses from employees, contractors and other service providers granted in the ordinary course of business in connection with providing services to the Company or any of its Subsidiaries;
(xvi) All Contracts involving transactions with an Affiliate, Related Person or equityholder of the Company or any of its Subsidiaries (other than employment agreements, employee confidentiality and invention assignment agreements, equity or incentive equity documents and Organizational Documents);
(xvii) All broker, distributor, agency, sales promotion, market research, marketing consulting and advertising Contracts or arrangements that are material to the business of the Company and its Subsidiaries, taken as a whole; and
(xviii) each other Contract that will be required to be filed with the Registration Statement under applicable SEC requirements or would otherwise be required to be filed by the Company as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities Act as if the Company was the registrant.
(b) Each Company Material Contract is valid, binding, in full force and effect and enforceable in all respects against the Company or its applicable Subsidiary and, to the Company’s Knowledge, each other party to such Company Material Contract, except as such enforcement may be limited by the Enforceability Exceptions. With respect to each Company Material Contract: (i) neither the Company nor any of its Subsidiaries is in breach of or default in any material respect under such Company Material Contract, and, to the Company’s Knowledge, no event has occurred that with the passage of time or giving of notice or both would constitute a material breach by the Company or any of its Subsidiaries of, default under, or permit termination or acceleration by the other party to, such Company Material Contract; (ii) no party to such Company Material Contract has given any written notice of any such breach, default or event described in clause (i); and (iii) neither the Company nor any of its Subsidiaries has received written or, to the Company’s Knowledge, oral notice of an intention by any party to any such Company Material Contract that provides for a continuing obligation by any party to such Company Material Contract to terminate such Company Material Contract or amend the terms of such Company Material Contract, other than modifications in the ordinary course of business that do not adversely affect the Company and its Subsidiaries, taken as a whole, in any material respect.
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Section 5.14 Intellectual Property; Data Privacy and Security.
(a) Section 5.14(a) of the Company Disclosure Letter sets forth, as of the Signing Date, a complete and accurate list of each U.S. and foreign issued or registered (i) Patent, (ii) Trademark, (iii) Copyright or (iv) internet domain name in which the Company or any of its Subsidiaries is the owner, applicant or assignee as of the Signing Date, in the case of each of clause (i) through (iii), including applications therefor (collectively, the “Company Registered IP”), indicating for each item, as applicable, the registration or application number, the applicable filing jurisdiction and the date of filing or issuance. Each item of Company Registered IP is valid (except for any pending applications included therein), and to the Company’s Knowledge, subsisting and enforceable.
(b) The Company and its Subsidiaries exclusively own all right, title and interest in and to all Owned Intellectual Property free and clear of all Liens (other than Permitted Liens) and have sufficient rights to use all other material Intellectual Property used in or necessary for the operation of their business as currently conducted. The Owned Intellectual Property, and all other Intellectual Property used in the operation of the Company’s and its Subsidiaries’ business will, immediately after the Closing, be owned by, licensed to or available for use by the Company or its Subsidiaries on the same or substantially the same terms and conditions to those immediately prior to the Closing, without any additional consideration.
(c) Except as set forth in Section 5.14(c) of the Company Disclosure Letter, no Legal Proceeding is pending nor, to the Company’s Knowledge, threatened in the past five years against the Company or any of its Subsidiaries alleging that the Company or any of its Subsidiaries has infringed, misappropriated, diluted or otherwise violated the Intellectual Property of any other Person in any material respect (including cease and desist letters or offers to take a license) or challenging the validity, registrability, enforceability, ownership, or right to use, sell, license or sublicense any Owned Intellectual Property, in each case, that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. There are no Orders to which the Company or any of its Subsidiaries is a party or is otherwise bound that: (i) restrict the rights of the Company or any of its Subsidiaries to use, transfer, license or enforce any Owned Intellectual Property; or (ii) restrict the conduct of the business of the Company or any of its Subsidiaries in order to accommodate a third Person’s Intellectual Property. The Company and its Subsidiaries, and the operations of their business, are not currently infringing, misappropriating, diluting or otherwise violating, or have, during the past six years, infringed, misappropriated, diluted or otherwise violated any Intellectual Property of any other Person. To the Company’s Knowledge, no third party is currently, or in the past six years has been, infringing, misappropriating, diluting or otherwise violating the Owned Intellectual Property in a manner that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
(d) Except as set forth on Section 5.14(d) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has disclosed, delivered, licensed or otherwise made available, or has a duty or obligation (whether present, contingent or otherwise) to disclose, deliver, license or otherwise make available, any material source code, weights, or parameters for any Software owned or purported to be owned by the Company or any of its Subsidiaries to any Person other than third parties engaged by the Company or any of its Subsidiaries to provide development, support or maintenance services to the Company.
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(e) The Company and its Subsidiaries have not used any Open Source Software in a manner that requires the Company or any of its Subsidiaries to (i) disclose or distribute the source code of any material Company Software, (ii) license any material Company Software for the purpose of making derivative works, (iii) make available any material Company Software at no charge, or (iv) grant any rights in or to any material Owned Intellectual Property (each such action, a “Copyleft Action”). Section 5.14(e) of the Company Disclosure Letter sets forth a complete and accurate list of all Open Source Software that is contained in, incorporated into, linked to, combined with, made available with, or distributed with any material Company Software, and identifies the applicable Open Source Software license for each such item.
(f) No present or former employee, officer, consultant, or contractor of the Company or any of its Subsidiaries has any ownership of, or license or other right, title, or interest in, any Owned Intellectual Property (other than pursuant to Contracts set forth on Section 5.14(f) of the Company Disclosure Letter or with respect to any Intellectual Property that was created by a consultant or contractor independent of the services such consultant or contractor performed for the Company or any Subsidiary). Each current and former employee, officer, consultant, and contractor of the Company or any of its Subsidiaries who is or has been involved in the creation (alone or with others) of any material Intellectual Property for the Company or any of its Subsidiaries has executed and delivered to the Company or a Subsidiary a written and enforceable Contract that presently assigns such Intellectual Property to the Company or a Subsidiary. No present or former employee, officer, consultant, or contractor of the Company or any of its Subsidiaries is, to the Company’s Knowledge, in violation of any such Contract. The Company and each of its Subsidiaries have used reasonable efforts to maintain the secrecy of all Trade Secrets and material confidential information that are held or used by the Company or its Subsidiaries (including, in each case, any information that would have been a Trade Secret or material confidential information but for any failure of any of the Company or its Subsidiaries to act in a manner consistent with this Section 5.14(f)).
(g) The IT Assets: (i) are in good working order and are sufficient for the Company and its Subsidiaries to conduct their businesses as currently conducted; (ii) are, to the Company’s Knowledge, free of any material defects, bugs and errors; and (iii) do not contain any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or code designed to permit unauthorized access to or to disable, erase or otherwise adversely affect the operation or functionality of any IT Asset or data contained therein. The Company and its Subsidiaries have taken commercially reasonable steps and implemented commercially reasonable safeguards designed to protect the confidentiality, integrity, and security of the IT Assets and all information processed thereby. To the Company’s Knowledge, no Person has gained unauthorized access to any IT Assets in a manner that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. During the past twenty-four (24) months, the IT Assets have not suffered any failures that have materially disrupted the operation of the Company’s and its Subsidiaries’ business.
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(h) The Company and each of its Subsidiaries are, and during the past three years have been, in compliance in all material respects with all applicable Data Privacy and Security Requirements with respect to the collection, use, storage, processing, transfer, and protection of Personal Information. The Company and its Subsidiaries have taken commercially reasonable measures designed to protect the confidentiality, integrity, and security of all Personal Information in their possession or control. There has been no unauthorized access to, use of, modification of, or other misuse of any Personal Information in the Company’s or its Subsidiaries’ possession or control. Neither the Company nor any of its Subsidiaries has been required by any Data Privacy and Security Requirements to issue or deliver any notice or report regarding any unauthorized access, use, disclosure, modification, or other misuse of any Personal Information, including any data breach reports or notices required under applicable Law. No Legal Proceeding is pending or, to the Company’s Knowledge, threatened against the Company or any of its Subsidiaries relating to the Processing of Personal Information or any Data Privacy and Security Requirements.
(i) The Company and its Subsidiaries have established and maintained written policies and procedures governing the development, training, testing, deployment, and use of AI Technology in connection with their business (the “Company AI Policies”). The Company and its Subsidiaries are, and during the past three years have been, in compliance in all material respects with the Company AI Policies and all applicable Laws relating to artificial intelligence, automated decision-making, and the use of AI Technology. The Company and its Subsidiaries have obtained and complied in all material respects with all licenses, consents, agreements, terms, conditions, and permissions required by applicable Law and applicable to any data used in the development, training, testing, deployment, operation, maintenance, or improvement of AI Technology used in their business. The Company and its Subsidiaries have implemented and maintained commercially reasonable controls, policies, procedures, and safeguards designed to mitigate material legal, regulatory, and operational risks arising from their use of AI Technology.
(j) The Company and its Subsidiaries comply and have at all times complied in all material respects with all Data Privacy and Security Requirements relating to the Processing of Company Data. The Company has sufficient rights and authority to permit the use of Company Data in connection with the development, offering, and provision of the Company AI Products as currently conducted in compliance with the Data Privacy and Security Requirements. The execution, delivery and performance of this Agreement comply with all Data Privacy and Security Requirements as they currently exist or as they existed at any time during which any Company Data was collected or obtained by or on behalf of the Company.
(k) The Company maintains, and has at all times within the last five (5) years maintained, monitored, and enforced, a written information security program that includes commercially reasonable and appropriate security measures designed to protect Company Data under its control or in its possession from and against Security Incidents. The Company’s hardware, Software, encryption, systems, policies and procedures are sufficient in all material respects to protect the privacy, security and confidentiality of all Company Data in accordance with the Data Privacy and Security Requirements. The Company has: (A) regularly conducted and regularly conducts vulnerability testing, risk assessments, and external audits of, and tracks security incidents related to the Company’s systems and products (collectively, “Information Security Reviews”); (B) timely corrected any material exceptions or vulnerabilities identified in such Information Security Reviews; (C) made available true and accurate copies of all Information Security Reviews; and (D) timely installed software security patches and other fixes to identified material technical information security vulnerabilities. The Company provides its employees with regular training on privacy and data security matters.
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(l) The Company has not suffered a Security Incident, nor, to the Company’s Knowledge, have any service providers or vendors Processing Company Data on the Company’s behalf suffered a Security Incident. The Company has not experienced any material disruption to, or material interruption in, the conduct of its business attributable to a defect, error, or other failure or deficiency of any IT Asset. The IT Assets have been properly maintained by technically competent personnel, in accordance with standards set by the manufacturers or otherwise in accordance with standards prudent in the industry, to ensure proper operation, monitoring and use, and are sufficient to operate the business of the Company and its Subsidiaries. The Company has appropriate backup and disaster recovery plans, procedures and facilities, has routinely tested such plans and has taken all reasonable steps to safeguard the IT Assets. There have been no unauthorized intrusions or breaches of the security of the IT Assets. The IT Assets are fully functional and operate in a reasonable manner and there has not been any material malfunction with the IT Assets that has not been remedied or replaced in all material respects, or any material unplanned downtime or material service interruption.
(m) The Company has not received any correspondence or notice relating to the Processing of Company Data from any Governmental Authority or other Person; there is no formal action, allegation, investigation or claim currently pending against the Company by any Governmental Authority or other Person with respect to the Processing of Company Data; and, to the Company’s Knowledge, there are no facts or circumstances which would reasonably be expected to give rise to any such action, allegation, investigation or claim.
(n) The Company has entered into valid, binding and enforceable written data processing agreements that require any third party Processing Company Data to: (1) comply with applicable Data Privacy and Security Requirements; (2) act only in accordance with the instructions of the Company; (3) take appropriate steps to protect and secure Personal Information from and against Security Incidents; (4) restrict access to Personal Information to those third party personnel required to provide the relevant service to the Company; and (5) certify or guarantee the return or adequate disposal or destruction of Personal Information.
(o) The Company’s use of AI Data, AI Training Data, and AI Technology, and the Company’s practices relating to the testing, improvement and development of Company AI Technology and Company AI Products, complies in all material respects with the Data Privacy and Security Requirements. The Company is not a “frontier developer” as that or similar terms are defined by the Data Privacy and Security Requirements. The Company maintains reasonable policies and procedures regarding Company AI Products, including a technical description of any and all neural networks used in or with any Company AI Products, that is sufficiently detailed so that such Company AI Products can be modified, debugged and improved from time to time by programmers skilled in the development of AI Technology. The Company has implemented and maintains commercially reasonable measures to detect, prevent, and mitigate the risks of error, discrimination or bias in the Company’s use of AI Technology and Company AI Products. The Company has made available to Purchaser true, correct and complete copies of all Company AI Policies. The Company has entered into valid and enforceable license agreements that authorize the Company’s use of all material AI Training Data. There have been no claims against the Company, and there are no pending or, to the Company’s Knowledge, threatened claims against the Company, relating to the Company’s use of AI Technology or AI Training Data.
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Section 5.15 Taxes and Tax Returns.
(a) Each of the Company and its Subsidiaries: (i) has filed, or caused to be filed, all Income Tax and other material Tax Returns required to be filed by it (taking into account all valid extensions of time to file) and all such filed Tax Returns are true, correct, accurate and complete in all material respects; and (ii) has paid, collected, withheld or remitted, or caused to be paid, collected, withheld or remitted, all Income Taxes and other material Taxes required to be paid, collected, withheld or remitted, whether or not such Taxes are shown as due and payable on any Tax Return (and complied in all material respects with applicable Law with respect to such Tax withholding or collection).
(b) There is no Legal Proceeding currently pending or, to the Company’s Knowledge, threatened or claimed against the Company or any of its Subsidiaries by a Governmental Authority in a jurisdiction where the Company or such Subsidiary, as applicable, does not file a particular type of Tax Return, or does not pay a particular type of Tax, that the Company or such Subsidiary, as applicable, is or may be subject to such Tax or required to file such Tax Return in that jurisdiction.
(c) There are no audits, examinations, investigations or other Legal Proceedings pending, currently contested or, to the Company’s Knowledge, threatened against the Company or any of its Subsidiaries in respect of any Tax. Neither the Company nor any of its Subsidiaries has been notified in writing of any proposed Tax claims, deficiencies or assessments against the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is currently contesting any Tax liability before any Governmental Authority.
(d) There are no Liens for any Taxes upon any of the Company’s or any of its Subsidiaries’ assets, other than statutory liens for current Taxes not yet due and payable.
(e) Neither the Company nor any of its Subsidiaries has requested or consented to any waivers or extensions of any applicable statute of limitations for the collection or assessment of any Taxes, which waiver or extension (or request for such waiver or extension) is outstanding or pending, other than any extension of time to file Tax Returns or pay Taxes that is automatically granted.
(f) Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion of any taxable period) beginning after the Closing Date, as a result of: (i) an installment sale or open transaction disposition entered into by the Company or any of its Subsidiaries on or prior to the Closing Date; (ii) any change in method of accounting made by the Company or any of its Subsidiaries on or prior to the Closing Date, including by reason of the application of Section 481 of the Code (or any analogous provision of state, local or foreign Law) or the use of an improper method of accounting by the Company or any of its Subsidiaries on or prior to the Closing Date; (iii) any prepaid amounts received or deferred revenue accrued or realized by the Company or any of its Subsidiaries on or prior to the Closing Date; (iv) any intercompany transaction described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Law) entered into by the Company or any of its Subsidiaries on or prior to the Closing Date, or any “excess loss account” within the meaning of Treasury Regulation Section 1.1502-19 (or any corresponding or similar provision of state, local or foreign Law) involving the Company or any of its Subsidiaries and in existence on or prior to the Closing Date; or (v) any “closing agreement” pursuant to Section 7121 of the Code, or any other similar agreement or arrangement with a Governmental Authority relating to Taxes, entered into by the Company or any of its Subsidiaries on or prior to the Closing Date. No election under Section 965 of the Code (or any comparable provision of other applicable Law) has been made by or with respect to the Company or any of its Subsidiaries.
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(g) Neither the Company nor any of its Subsidiaries has participated in or been a party to, or sold, distributed or otherwise promoted, any “listed transaction,” as defined in Treasury Regulations Section 1.6011-4 (or any similar or corresponding provision of state, local or foreign Law).
(h) Neither the Company nor any of its Subsidiaries has been a member of an affiliated, combined, consolidated, unitary or other group for Tax purposes (other than a group the common parent of which is the Company). Neither the Company nor any of its Subsidiaries has any Liability or potential Liability for the Taxes of another Person (other than the Company or any of its Subsidiaries): (i) under any applicable Tax Law (including Treasury Regulations Section 1.1502-6 (or any similar or corresponding provision of state, local or foreign Law)); (ii) as a transferee or successor; or (iii) by Contract, indemnity or otherwise by operation of Law (excluding customary commercial agreements entered into in the ordinary course of business the primary purpose of which is not related to Taxes). Neither the Company nor any of its Subsidiaries is a party to or bound by any Tax indemnity agreement, Tax sharing agreement, Tax reimbursement agreement or Tax allocation agreement or similar agreement, arrangement or practice with respect to Taxes (excluding customary commercial agreements entered into in the ordinary course of business the primary purpose of which is not related to Taxes, but including advance pricing agreements, closing agreements or other agreements relating to Taxes with any Governmental Authority).
(i) Since its formation, the Company is, and has at all times been classified as, a “C corporation” within the meaning of Section 1361(a)(2) of the Code for U.S. federal and applicable state and local income tax purposes.
(j) Except for interests in the Subsidiaries set forth on Section 5.04 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has ever owned any interest that is treated as equity for Tax purposes in any “business entity” within the meaning of Treasury Regulations Section 301.7701-2. Section 5.15(j) of the Company Disclosure Letter identifies (A) the classification of each Subsidiary of the Company for U.S. federal income and applicable state and local tax purposes and (B) each such Subsidiary for which an election under Treasury Regulation Section 301.7701-3(c) (or any similar or corresponding provision of applicable state or local Law) has been filed. The Company does not directly or indirectly own an interest in any “passive foreign investment company” within the meaning of Section 1297(a) of the Code (or any similar or corresponding provision of state, local or foreign Law).
(k) Neither the Company nor any of its Subsidiaries has, or has ever had, any permanent establishment (within the meaning of any applicable income tax treaty or under any applicable Law) or a fixed place of business in any country other than the country of its jurisdiction of formation. Neither the Company nor any of its Subsidiaries has engaged in a trade or business in any country other than the country of its jurisdiction of formation that subjected it to Tax in such country.
(l) Neither the Company nor any of its Subsidiaries (or, in each case, any predecessor thereof) has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 or Section 361 of the Code (or so much of Section 356 of the Code as relates to Section 355 of the Code) during the two-year period ending on the date of this Agreement.
(m) Neither the Company nor any of its Subsidiaries has knowingly taken any action, or is aware of any fact or circumstance, that would reasonably be expected to prevent the Transactions from qualifying for the Intended Tax Treatments.
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(n) Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(o) Neither the Company nor any of its Subsidiaries has requested or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request pending or outstanding.
(p) The Company and each of its Subsidiaries is in compliance in all material respects with all applicable transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Company. The prices for any property or services (or for the use of any property) provided by or to the Company, including the amounts of any cost-sharing payments pursuant to Section 1.482-7 of the Treasury Regulations, are arm’s length prices for purposes of all applicable transfer pricing laws, including Treasury Regulations promulgated under Section 482 of the Code and Section 85A of the Ordinance and the regulations promulgated thereunder.
Section 5.16 Real Property.
(a) Neither the Company nor any of its Subsidiaries owns or has ever owned any real property. Neither the Company nor any of its Subsidiaries is a party to any Contract or option to purchase any real property or interest therein.
(b) Section 5.16(b) of the Company Disclosure Letter contains a true, correct and complete list as of the Signing Date of: (i) the street address of all premises leased, subleased, licensed or otherwise used or occupied by the Company or any of its Subsidiaries for its offices, operations or other facilities used in the conduct of its business (collectively, the “Leased Real Property”); and (ii) all current leases, lease guarantees, agreements and documents related to such Leased Real Property, including all amendments, terminations and modifications or waivers of such current leases, lease guarantees, agreements and documents related to such Leased Real Property (collectively, the “Company Real Property Leases”). The Company has delivered to the Purchaser a true and complete copy of each Company Real Property Lease document. Each Company Real Property Lease is legal, valid, binding, in full force and effect and enforceable in all respects against the Company or any applicable Subsidiary, and, to the Company’s Knowledge, each other party to such Company Real Property Lease (except as such enforcement may be limited by the Enforceability Exceptions). With respect to each Company Real Property Lease: (A) neither the Company nor any of its Subsidiaries is in breach of, or default under, such Company Real Property Lease, and no event has occurred and no circumstance exists that, if not remedied, whether with or without notice or the passage of time or both, would result in such a breach or default, or permit the termination, modification or acceleration of rent under such Company Real Property Lease; (B) the Company’s or its applicable Subsidiary’s possession and quiet enjoyment of the Leased Real Property under such Company Real Property Leases has not been disturbed; (C) to the Company’s Knowledge, no disputes with respect to such Company Real Property Lease have arisen; (D) neither the Company nor any of its Subsidiaries has exercised, nor has the Company or any of its Subsidiaries received written notice of any other parties exercise of, any termination rights with respect to any Company Real Property Lease; (E) neither the Company nor any of its Subsidiaries has subleased, licensed, or otherwise granted any Person the right to use or occupy any of the Leased Real Property or any portion of such Leased Real Property; and (F) neither the Company nor any of its Subsidiaries has collaterally assigned or granted any other security interests in any Leased Real Property.
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Section 5.17 Personal Property. The Company and its Subsidiaries own and have good and marketable title to, or a valid leasehold interest in or contractual right to use, the material tangible personal property used in the conduct of their business as currently conducted, free and clear of all Liens other than: (a) Permitted Liens; and (b) the rights of lessors under any leases. The material tangible personal property of the Company and its Subsidiaries: (i) constitutes all of the tangible assets and personal property that are necessary for the operation of the business of the Company and its Subsidiaries as currently conducted; (ii) taken together, is adequate and sufficient for the operation of the business of the Company and its Subsidiaries as currently conducted; (iii) has been maintained in accordance with generally accepted industry practice; and (iv) is in good working order and condition and is not in need of material maintenance or repairs, except for ordinary wear and tear, except, in the case of each of clauses (i) through (iv), as would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
Section 5.18 Labor and Employment Matters.
(a) Neither the Company nor any of its Subsidiaries is or has ever been a party to, or bound by, any Labor Agreement. No employees of the Company or any of its Subsidiaries are represented by any labor union, works council, or other labor organization with respect to their employment with the Company or any of its Subsidiaries. To the Company’s Knowledge, in the past three years, there have been no activities or proceedings of any labor union or other party to organize or represent such employees. In the past three years, there has not occurred or, to the Company’s Knowledge, been threatened any unfair labor practice charge, material labor arbitration, material labor grievance, strike, slow-down, lockout, picketing, work-stoppage, or other similar labor activity or dispute against the Company or any of its Subsidiaries.
(b) The Company and its Subsidiaries are and have been in compliance in all material respects with all applicable Laws respecting labor, employment and employment practices. Such compliance in all material respects includes all Laws respecting terms and conditions of employment, health and safety and wages and hours (including the classification of independent contractors and exempt and non-exempt employees), discrimination, retaliation, harassment, disability rights and benefits, immigration (including the completion of Form I-9s for all employees and the proper confirmation of employee visas), labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, plant closures and layoffs (including the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar Laws (“WARN Act”)), employee trainings and notices, labor relations, paid time off, employee leave issues, automated employment decision tools and other artificial intelligence, affirmative action, unemployment insurance, workers’ compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave and employee terminations. There are no, and in the past three years there have been no, Legal Proceedings pending or, to the Company’s Knowledge, threatened against the Company or its Subsidiaries brought by or on behalf of any applicant for employment, any current or former employee or independent contractor, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment or other relationship, in each case, that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
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(c) The Company and its Subsidiaries have fully and timely paid all wages, salaries, overtime, wage premiums, commissions, bonuses, severance and termination payments, fees, and other compensation that have come due and payable to their current or former employees and independent contractors under applicable Law, Contract or company policy. Each individual who is providing or within the past five (5) years has provided services to the Company or any of its Subsidiaries and is or was classified and treated as an independent contractor, consultant, leased employee or other non-employee service provider, is and has been properly classified and treated as such for all applicable purposes. Any current and former employees of the Company or its Subsidiaries who have been classified as “exempt” under the Fair Labor Standards Act and all other applicable Laws have been properly classified within the past five (5) years.
(d) In the past three years, neither the Company nor any of its Subsidiaries has engaged in layoffs, furloughs or employment terminations sufficient to trigger application of the WARN Act and no actions are currently contemplated by the Company or any its Subsidiaries that could reasonably be expected to trigger application of the WARN Act.
(e) In the past five years: (i) no allegations of sexual harassment or sexual misconduct have been made, or, to the Company’s Knowledge, threatened to be made against or involving any current or former officer, director or other employee at the level of Vice President or above by any current or former officer, employee or individual service provider of the Company or any of its Subsidiaries; and (ii) neither the Company nor any of its Subsidiaries has entered into any settlement agreements resolving, in whole or in part, allegations of sexual harassment or sexual misconduct by any current or former officer, director or other key employee. The Company and its Subsidiaries have reasonably investigated all sexual harassment, or other discrimination, retaliation or policy violation allegations of which any of them is aware. With respect to each such allegation with potential merit, the Company and its Subsidiaries have taken corrective action that is reasonably calculated to prevent further improper action. The Company does not reasonably expect any Liabilities with respect to any such allegations.
(f) Section 5.18(f) of the Company Disclosure Letter lists all persons who are employees of the Company or any of its Subsidiaries, and sets forth their: (i) name; (ii) title or position; (iii) hire date; (iv) current annual base salary or hourly compensation rate, as applicable; (v) city and state of primary work location (residence, if employed remotely); (vi) full-or part-time status; (vii) exempt or non-exempt classification under applicable wage and hour laws; (viii) eligibility for participation in Company bonus plans and amount of bonus paid with respect to 2025, as applicable; (ix) eligibility for sales commission or other variable compensation; (x) work visa and expiration date, if applicable; and (xi) total accrued, unused paid time off available for use under any applicable policy of the Company or any its Subsidiaries. Except as listed in Section 5.18(f), all employees of the Company or any of its Subsidiaries are employed on an at-will basis.
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(g) Section 5.18(g) of the Company Disclosure Letter lists all individual independent contractors or consultants utilized by the Company or any of its Subsidiaries within the past three (3) years and sets forth for each contractor or consultant: (1) the name of the person or entity engaged; (2) the dates of the engagement; (3) description of the services provided; and (4) the rate or the basis of fee payment. The terms of engagement with all individual independent contractors or consultants engaged by the Company or any of its Subsidiaries are all in writing and have been made available to Purchaser.
(h) To the Company’s Knowledge, all employees and independent contractors of the Company or any of its Subsidiaries are authorized to work in the United States and have presented acceptable documentation of such authorization. The Company and its Subsidiaries have in their files complete and compliant copies of I-9 forms for each current and former employee in accordance with applicable Law.
(i) To the Company’s Knowledge: (i) no current employee of the Company or any of its Subsidiaries with annualized compensation at or above $150,000, intends to terminate his or her employment with the Company or any of its Subsidiaries prior to the one-year anniversary of the Closing; and (ii) no current or former employee or independent contractor of the Company or any of its Subsidiaries is in any material respect in violation of any term of any nondisclosure agreement, noncompetition agreement or restrictive covenant obligation owed to: (A) the Company or any of its Subsidiaries; or (B) any third party with respect to such person’s right to be employed or engaged by the Company or any of its Subsidiaries.
Section 5.19 Benefit Plans.
(a) Set forth on Section 5.19(a) of the Company Disclosure Letter is a true and complete list of each Company Benefit Plan (including any non-U.S. benefit plan, program or arrangement maintained for the benefit of employees located outside the United States). None of the Companies nor any ERISA Affiliates have any agreement, arrangement, commitment or obligation, whether formal or informal, whether written or unwritten and whether legally binding or not, to create, enter into or contribute to any additional Company Benefit Plan, or to continue, modify, or amend any existing Company Benefit Plan, except for amendments required by applicable Law with respect to which the amendment deadline has not yet lapsed. No Company Benefit Plan covers or provides benefits to any Person who is not a current or former employee of the Company or its Subsidiaries (or an eligible dependent of such current or former employee).
(b) With respect to each Company Benefit Plan: (i) such Company Benefit Plan was properly and legally established and is, and has been, documented, operated, administered, maintained, and funded at all times in compliance with its terms and all applicable Laws in all material respects, including ERISA and the Code; (ii) none of the Companies, any ERISA Affiliate, or any other Person has breached any fiduciary duty imposed upon it by ERISA or any other Law; (iii) no prohibited transaction within the meaning of Section 406 or 407 of ERISA or Section 4975 of the Code (and not otherwise exempt under Section 408 of ERISA and Section 4975(c)(2) or 4975(d) of the Code) has occurred; (iv) all contributions, premiums, distributions, and other payments that have become due or required have been timely made or paid or, to the extent not yet due as of the Closing, have been properly accrued in accordance with GAAP on the Company Financials; and (v) no Company has incurred (whether or not assessed), and there exists no condition or set of circumstances in connection with which any Company, Purchaser, or any of their respective Subsidiaries or Affiliates could incur, directly or indirectly, any penalty, Tax, fine, Lien or Liability under ERISA, the Code or any other Law, including, but not limited to, under Section 4980B, 4980D, 4980H, 5000, 6721 or 6721 of the Code.
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(c) With respect to each Company Benefit Plan required to be listed on Section 5.19(c) of the Company Disclosure Letter, the Company has provided to the Purchaser accurate and complete copies, if applicable, of: (i) all Company Benefit Plan documents (including any amendments, modifications or supplements) or, for any unwritten Company Benefit Plan, a written summary of the material terms of such unwritten Company Benefit Plan; (ii) the most recent summary plan descriptions and each summary of material modifications to such plan descriptions; (iii) the most recent Form 5500, if applicable, and annual report, including all schedules; (iv) the most recent determination letter (or opinion letter) received from the IRS, if any; (v) the most recent actuarial valuation; and (vi) all non-routine communications with any Governmental Authority within the last three years.
(d) With respect to each Company Benefit Plan, the Company has provided to the Purchaser current, accurate, and complete copies, if applicable, of: (i) all Company Benefit Plan documents (including any amendments, modifications or supplements) or, for any unwritten Company Benefit Plan, a written summary of the material terms of such unwritten Company Benefit Plan; (ii) the most recent summary plan descriptions and each summary of material modifications to such plan descriptions; (iii) all Contracts related to such Company Benefit Plan, including all trust agreements, insurance Contracts, annuity Contracts and service provider agreements; (iv) the most recent Form 5500, if applicable, and annual report, including all schedules and other attachments thereto; (iv) the most recent determination letter (or opinion letter) received from the IRS, if any; (v) the most recent actuarial valuation; (vi) all non-routine communications with any Governmental Authority within the last three years; and (vii) all nondiscrimination, top-heavy and Code Section 415 and other year-end compliance tests performed with respect to such Company Benefit Plan for the three most recently completed plan years.
(e) No Legal Proceeding or claim is pending, or to the Company’s Knowledge, threatened (other than routine claims for benefits arising in the ordinary course of administration and administrative appeals of denied claims) against or relating to any Company Benefit Plan or the assets any Company Benefit Plan. No investigation, audit or other proceeding by any Governmental Authority is pending or in progress with respect to any Company Benefit Plan.
(f) Neither the Company, any of its Subsidiaries nor any ERISA Affiliate currently sponsors, maintains, participates in, contributes to, or has an obligation to contribute to (or has ever sponsored, maintained, participated in, contributed to, or had an obligation to contribute to) or has (or could have) any current or future Liability or obligation (including any contingent Liability or obligation) under or with respect to, and no Company Benefit Plan is: (i) a “defined benefit plan” (as defined in Section 3(35) of ERISA); (ii) a plan that is or was subject to Section 302 or Title IV of ERISA or Section 412 or 430 of the Code; (iii) a “multiemployer plan” (as defined in Section 3(37) of ERISA); (iv) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA); and (v) or a “multiple employer plan” (as described in Section 413(c) of the Code or Section 210 of ERISA). Neither the Company nor any of its Subsidiaries has incurred any Liability or otherwise would reasonably be expected to have any Liability, contingent or otherwise, under Title IV of ERISA or as a consequence of at any time being considered a single employer under Section 414 of the Code with any other Person.
(g) Neither the execution and delivery of this Agreement, nor the consummation of the Transactions contemplated hereby, either alone or in combination with another event, could: (i) entitle any current or former employee, officer, director or other individual service provider of the Company or any of its Subsidiaries (or any dependent or beneficiary of any current or former employee, officer, director or other individual service provider of the Company or any of its Subsidiaries) to any payment of compensation or benefits (whether in cash, property or the vesting of property); (ii) increase the amount of compensation or benefits due or payable to any such person set forth in the preceding clause (i); (iii) accelerate the vesting, funding or time of payment of any compensation, equity award or other benefit; (iv) require a contribution by the Company or any of its Subsidiaries to any Company Benefit Plan; (v) restrict the ability of the Company or any of its Subsidiaries to merge, amend or terminate any Company Benefit Plan; or (vi) result in the forgiveness of any employee or service provider loan.
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(h) Neither the Company nor any of its Subsidiaries has any current or contingent obligation to provide any gross-up payment to or to indemnify, reimburse or otherwise make whole any Person for any Taxes.
(i) Except to the extent required by Section 4980B of the Code or similar state Law for which the recipient pays the full cost of coverage, neither the Company nor any of its Subsidiaries has any Liability to provide (or contribute toward the cost of), and no Company Benefit Plan provides, life insurance, health, or welfare benefits (within the meaning of Section 3(1) of ERISA) to any former or retired employee, owner, director, manager, officer, consultant, independent contractor, or other service provider of or to the Companies (or the spouse, domestic partner, dependent or beneficiary of any such individual), and none of the Companies nor any of their respective Subsidiaries are obligated to provide such benefits to any active employee or any other Person following such Person’s (or the spouse, domestic partner, dependent or beneficiary of any such individual) retirement or other termination of employment, ownership, or service.
(j) Each Company Benefit Plan that constitutes or provides, in any part, a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) subject to Section 409A of the Code has been operated and administered in all respects in operational compliance with, and is in all respects in documentary compliance with, Section 409A of the Code and all IRS guidance promulgated under Section 409A of the Code. No amount under any such plan, agreement or arrangement is, has been or could reasonably be expected to be subject to any additional Tax, interest or penalties under Section 409A of the Code. No amounts paid or payable by the Company or any of its Subsidiaries are subject to any Tax or penalty imposed under Section 457A of the Code.
(k) Except as set forth on Section 5.19(k) of the Company Disclosure Letter, no Company or any of their respective Subsidiaries maintain any Company Benefit Plans on behalf of current or former directors, officers, managers, employees or other service providers who reside or work primarily outside of the United States. With respect to any such non-U.S. Company Benefit Plan, the Company and its Subsidiaries are in compliance in all material respects with the terms of such plan and all applicable Laws of the relevant jurisdiction.
(l) Neither the execution and delivery of this Agreement, nor the consummation of the Transactions contemplated hereby, either alone or in combination with another event, could result in any “parachute payment” under Section 280G of the Code.
Section 5.20 Environmental Matters.
(a) Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are, and during the past five years have been, in compliance with all Environmental Laws applicable to their leased premises, office operations, information technology equipment and disposal of electronic equipment.
(b) Neither the Company nor any of its Subsidiaries has received any written notice, claim or Order alleging material Liability under Environmental Laws, and, to the Company’s Knowledge, no such Legal Proceeding is pending or threatened against the Company or any of its Subsidiaries.
(c) The Company has not treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, manufactured, sold, marketed, repaired, installed, distributed, released, exposed any Person to, or owned or operated any property or facility contaminated by, any Hazardous Materials, in each case so as has given or would give rise to any material Liability of the Company under Environmental Laws.
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(d) The Company has not assumed, undertaken, provided an indemnity with respect to, or otherwise become subject to, any material Liability of any other Person under Environmental Laws or regarding Hazardous Materials.
Section 5.21 Transactions with Related Persons. Section 5.21 of the Company Disclosure Letter contains a list of each transaction or Contract to which the Company or any of its Subsidiaries is a party with any: (a) present or former officer or director of the Company or any of its Subsidiaries; (b) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or Equity Securities of the Company; or (c) any Affiliate, “associate” or any member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing. Notwithstanding the foregoing, each of clauses (a), (b) and (c) shall exclude, in the case of an employee, officer or director of the Company or any of its Subsidiaries, any employment Contract made in the ordinary course of business or any Company Benefit Plans. No Related Person or any Affiliate of a Related Person has, directly or indirectly, an economic interest in any Contract, property or right (tangible or intangible) with the Company or any of its Subsidiaries (other than such Contracts that relate to any such Person’s ownership of the Company Stock or other Equity Securities of the Company as set forth on Section 5.21 of the Company Disclosure Letter or such Person’s employment or consulting arrangements with the Company or any of its Subsidiaries).
Section 5.22 Insurance.
(a) Section 5.22(a) of the Company Disclosure Letter lists as of the Signing Date, all material policies or binders of property, fire and casualty, product liability, workers’ compensation, and other forms of insurance held by, or for the benefit of, the business of the Company or any of its Subsidiaries (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy). Copies of such insurance policies have been provided to the Purchaser. As of the Signing Date, all premiums due and payable under all such insurance policies have been paid. As of the Signing Date, the Company and its Subsidiaries are otherwise in material compliance with the terms of such insurance policies. Each such insurance policy is legal, valid and binding, in full force and effect and enforceable in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions. Neither the Company nor any of its Subsidiaries has any self-insurance or co-insurance programs. In the past three years, neither the Company nor any of its Subsidiaries has received any written notice from, or on behalf of, any insurance carrier relating to or involving any: (i) adverse material change; (ii) notice of cancellation or termination; (iii) any change other than in the ordinary course of business in the conditions of insurance; (iv) any refusal to issue an insurance policy; or (v) non-renewal of a policy, and, to the Company’s Knowledge, no such action has been threatened. To the Company’s Knowledge, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies.
(b) Section 5.22(b) of the Company Disclosure Letter identifies each individual insurance claim made by the Company or any of its Subsidiaries in the past three years. The Company and its Subsidiaries have reported to their insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to be material to the Company and its Subsidiaries, taken as a whole. To the Company’s Knowledge, no event has occurred, and no condition or circumstance exists, that would reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the denial of any such insurance claim. Neither the Company nor any of its Subsidiaries has made any claim against an insurance policy as to which the insurer has denied coverage.
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Section 5.23 Top Customers and Suppliers.
(a) Section 5.23(a) of the Company Disclosure Letter lists as of the Signing Date, by aggregate dollar value of revenue of the business of the Company and its Subsidiaries with such counterparty, as applicable, the 10 largest customers of the Company and its Subsidiaries, taken as a whole, for the 12 months ended on each of January 31, 2026 and January 31, 2025 (the “Top Customers”). As of the Signing Date, no Top Customer has: (i) informed the Company or any of its Subsidiaries in writing or, to Company’s Knowledge, orally, of its intention, or has threatened in writing, or, to the Company’s Knowledge, orally, to cancel or otherwise terminate, or materially reduce, its present relationship with the Company or any of its Subsidiaries; or (ii) informed the Company or any of its Subsidiaries in writing or, to the Company’s Knowledge, orally, that the Company or any of its Subsidiaries is, as of the Signing Date, in material breach of the terms of any Contract to which it is a party with such Top Customer. To the Company’s Knowledge, as of the Signing Date, no Top Customer has asserted or threatened a force majeure event or provided notice of an anticipated inability to perform, in whole or in part, its obligations with respect to a material Contract to which the Company or any of its Subsidiaries is a party with such Top Customer.
(b) Section 5.23(b) of the Company Disclosure Letter lists as of the Signing Date, by aggregate dollar value of cost to the business of the Company and its Subsidiaries with such counterparty, as applicable, the 10 largest vendors, suppliers, service providers, cloud infrastructure providers, data providers, model providers, technology licensors, implementation partners and other material providers of goods or services to the Company and its Subsidiaries, taken as a whole, for the 12 months ended on each of January 31, 2026 and January 31, 2025 (the “Top Suppliers”). As of the Signing Date, no Top Supplier has: (A) informed the Company or any of its Subsidiaries in writing or, to the Company’s Knowledge, orally, of its intention, or, has threatened in writing, or, to the Company’s Knowledge, orally, to cancel or otherwise terminate, or materially reduce, its present relationship with the Company or any of its Subsidiaries; or (B) informed the Company or any of its Subsidiaries in writing or, to the Company’s Knowledge, orally, that the Company or any of its Subsidiaries is, as of the Signing Date, in material breach of the terms of any Contract to which it is a party with such Top Supplier. To the Company’s Knowledge, as of the Signing Date, no Top Supplier has asserted or threatened a force majeure event or provided notice of an anticipated inability to perform, in whole or in part, its obligations with respect to a material Contract to which the Company or any of its Subsidiaries is a party with such Top Supplier.
(c) As of the Signing Date, none of the Top Customers or Top Suppliers has notified the Company or any of its Subsidiaries in writing that it is in a material dispute with the Company, any of its Subsidiaries or their business.
Section 5.24 Certain Business Practices.
(a) To the Company’s Knowledge, the Company has not and none of the Company’s officers, directors, employees or any other of their respective Representatives acting on the Company’s behalf has, during the last five years, offered, given, paid, promised to pay, or authorized or received or accepted the payment of anything of value to or from: (i) an official or employee of a foreign or domestic Governmental Authority; (ii) a foreign or domestic political party or an official of a foreign or domestic political party; (iii) a candidate for foreign or domestic political office, in any such case under circumstances where the Company or Representative of the Company knew that all or a portion of such thing of value would be offered, given, or promised to an official or employee or a foreign or domestic Governmental Authority, a foreign or domestic political party, an official of a foreign or domestic political party, or a candidate for a foreign or domestic political office; or (iv) any other Person (in each case in violation of any Anti-Bribery Law). To the Company’s Knowledge, the Company has not conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Authority with respect to any alleged act or omission arising under or relating to any noncompliance with any Anti-Bribery Law. The Company has not received any written notice, request, or citation from any Governmental Authority for any actual or potential noncompliance with any Anti-Bribery Law.
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(b) The operations of the Company are and have been conducted during the past five (5) years in compliance with applicable economic Sanctions Laws, export and import control Laws and money laundering Laws and the rules and regulations under such Laws of the United States. Neither the Company nor any of its Subsidiaries has, and none of the Company’s or its Subsidiaries’ officers, directors, employees or, to the Company’s knowledge, any other of their respective Representatives acting on the Company’s or its Subsidiaries’ behalf has, during the last five years, offered, given, paid, promised to pay, or authorized or received or accepted the payment of anything of value to or from: (i) an official or employee of a foreign or domestic Governmental Authority; (ii) a foreign or domestic political party or an official of a foreign or domestic political party; (iii) a candidate for foreign or domestic political office, in any such case under circumstances where the Company, any of its Subsidiaries or any Representative of the Company or any of its Subsidiaries knew that all or a portion of such thing of value would be offered, given, or promised to an official or employee or a foreign or domestic Governmental Authority, a foreign or domestic political party, an official of a foreign or domestic political party, or a candidate for a foreign or domestic political office; or (iv) any other Person (in each case in violation of any Anti-Bribery Law). Neither the Company nor any of its Subsidiaries has conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Authority with respect to any alleged act or omission arising under or relating to any noncompliance with any Anti-Bribery Law. Neither the Company nor any of its Subsidiaries has received any written notice, request, or citation from any Governmental Authority for any actual or potential noncompliance with any Anti-Bribery Law.
(c) The operations of the Company and its Subsidiaries are and have been conducted during the past five (5) years, in compliance with applicable economic Sanctions Laws, export and import control Laws and money laundering Laws and the rules and regulations under such Laws of the United States and any other relevant jurisdictions. No Legal Proceeding involving the Company or any of its Subsidiaries with respect to any of the foregoing is pending or, to the Company’s Knowledge, threatened.
(d) No Company, Subsidiary, or officer, director or employee of the Company or any of its Subsidiaries, or, to the Company’s Knowledge, any of their Representatives acting on behalf of the Company or any of its Subsidiaries, is or has been during the past five (5) years: : (i) a Sanctioned Person; or (ii) in material violation of applicable Sanctions Laws or export or import control Laws during the applicable statute of limitation period.
Section 5.25 Investment Company Act. Neither the Company nor any of its Subsidiaries is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
Section 5.26 Finders and Brokers. Except as reflected on Section 5.26 of the Company Disclosure Letter, no broker, finder, financial advisor, investment banker or other Person is entitled to, nor will be entitled to, either directly or indirectly, any brokerage fee, finders’ fee or other similar commission, for which the Company or any of its Subsidiaries would be liable in connection with the Transactions. The Company shall be solely responsible for any such fees (which shall be included as a Company Transaction Cost to the extent not paid prior to the Closing).
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Section 5.27 Independent Investigation. The Company has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) and assets of the Purchaser and Merger Sub. The Company acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Purchaser and Merger Sub for such purpose. In making its decision to enter into this Agreement and to consummate the Transactions, the Company has relied solely upon its own investigation and the express representations and warranties of the Purchaser set forth in this Agreement (including the related portions of the Purchaser Disclosure Letter) and in any certificate delivered to the Company pursuant to this Agreement. None of the Purchaser or Merger Sub nor any of their respective Representatives have made any representation or warranty as to the Purchaser or Merger Sub or this Agreement, and the Company disclaims reliance upon any such representation or warranty, and the accuracy or completeness thereof, except as expressly set forth in this Agreement (including the related portions of the Purchaser Disclosure Letter) or in any certificate delivered to the Company pursuant to this Agreement.
Section 5.28 Information Supplied. None of the information the Company has supplied expressly for inclusion or incorporation by reference in: (a) any current report on Form 8-K, and any exhibits to such Form 8-K or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the Transactions or any Ancillary Documents or in the Proxy Statement/Registration Statement; or (b) any of the Signing Press Release, the Signing Filing (including information provided for inclusion in the presentation that the Parties have agreed to file with the SEC in connection with the Signing Filing), the Closing Press Release, the Closing Filing and any other press releases or prospectuses filed under Rule 425 of the Securities Act in connection with the Transactions or any Ancillary Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated in such documents or necessary in order to make the statements in such documents, in light of the circumstances under which they are made, not misleading at: (i) the time such information is filed with or furnished to the SEC (but if such information is revised by any subsequently filed amendment or supplement, this clause (i) shall solely refer to the time of such subsequent revision); (ii) the time the Proxy Statement/Registration Statement is declared effective by the SEC; (iii) the time the Proxy Statement/Registration Statement or any amendment or supplement to such Proxy Statement/Registration Statement is first disseminated to the Purchaser Shareholders; or (iv) the time of the Purchaser Shareholders’ Meeting. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by or on behalf of the Purchaser or its respective Affiliates. All forward looking financial information or unit economics calculations with respect to the Company and its Subsidiaries that: (A) were delivered by or on behalf of the Company, its Subsidiaries or their respective Representatives for inclusion in the presentation that the Parties have agreed to file with the SEC in connection with Signing Filing; or (B) will be delivered by the Company, its Subsidiaries or their respective Representatives for inclusion in the Proxy Statement/Registration Statement were or will be, as the case may be, prepared in good faith using assumptions the Company believes to be reasonable.
Section 5.29 No Additional Representations or Warranties. Except as provided in this Article V, in any Ancillary Document to which the Company is a party or in any certificate or instrument delivered pursuant to this Agreement or an Ancillary Document, Purchaser and Merger Sub agree that none of the Company, any of its Subsidiaries or any of their respective Affiliates, or any of their respective directors, managers, officers, employees, equityholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to the Purchaser or its Affiliates. No such Person shall be liable in respect of the accuracy or completeness of any information provided to the Purchaser or its Affiliates.
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ARTICLE
VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB
Except as set forth in: (i) any Purchaser SEC Reports filed or submitted on or prior to the Signing Date (excluding (a) any disclosures in any “risk factors” section that do not constitute statements of fact, disclosures in any forward-looking statements disclaimers and other disclosures that are generally cautionary, predictive or forward-looking in nature and (b) any exhibits or other documents appended to such Purchaser SEC Reports); or (ii) in the disclosure letter dated as of the Signing Date delivered by the Purchaser to the Company (the “Purchaser Disclosure Letter”), each section or subsection of which, subject to Section 10.18, qualifies only the correspondingly numbered and lettered representations in this Article VI, the Purchaser and Merger Sub represent and warrant to the Company as follows:
Section 6.01 Organization and Standing. Each of the Purchaser and Merger Sub is duly formed, validly existing and in good standing under the laws of its jurisdiction of incorporation. Each of the Purchaser and Merger Sub has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where such failure to have all requisite corporate power and authority would not, individually, or in the aggregate, be material to the Purchaser and Merger Sub, taken as a whole. Each of the Purchaser and Merger Sub is duly qualified or licensed in the jurisdiction in which it is formed or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect. Each of the Purchaser and Merger Sub has provided to the Company accurate and complete copies of its Organizational Documents each as amended to date and as currently in effect. Neither the Purchaser nor Merger Sub is in violation of any provision of its Organizational Documents.
Section 6.02 Authorization; Binding Agreement. Each of the Purchaser and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations under this Agreement and each Ancillary Document to which it is a Party and to consummate the Transactions, subject to obtaining the Purchaser Shareholder Approval. The execution, delivery and performance of this Agreement and each Ancillary Document to which it is a party and the consummation of the Transactions: (a) have been duly and validly authorized by the board of directors of the Purchaser and the board of directors of Merger Sub; and (b) other than the Purchaser Shareholder Approval and the proceedings described in Section 7.13, no other corporate proceedings on the part of the Purchaser or Merger Sub are necessary to authorize the execution, delivery and performance of this Agreement and each Ancillary Document to which the Purchaser or Merger Sub is a party or to consummate the Transactions. This Agreement has been duly and validly executed and delivered by each of the Purchaser and Merger Sub. Assuming the due authorization, execution and delivery of this Agreement by the Company, this Agreement constitutes the valid and binding obligation of each of the Purchaser and Merger Sub, enforceable against each of the Purchaser and Merger Sub in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions. When delivered, each Ancillary Document to which the Purchaser or Merger Sub is or is required to be a party shall be duly and validly executed and delivered by the Purchaser or Merger Sub, as applicable. Assuming the due authorization, execution, delivery and performance, such Ancillary Document, shall constitute the legal, valid and binding obligation of the Purchaser or Merger Sub, as applicable, enforceable against the Purchaser or Merger Sub, as applicable, in accordance with its terms except as such enforcement may be limited by the Enforceability Exceptions.
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Section 6.03 Governmental Approvals. Assuming the truth and completeness of the representations and warranties of the Company contained in this Agreement, no Consent of or with any Governmental Authority on the part of the Purchaser or Merger Sub is required to be obtained or made in connection with the execution, delivery or performance by the Purchaser or Merger Sub of this Agreement and each Ancillary Document to which Purchaser or Merger Sub is a party or the consummation by each of the Purchaser and Merger Sub of the Transactions, other than: (a) such filings as contemplated by this Agreement; (b) any filings required with Nasdaq or the SEC with respect to the Transactions; (c) applicable requirements, if any, of the Securities Act, the Exchange Act or any state “blue sky” securities Laws, and the rules and regulations under the Securities Act, the Exchange Act or any state “blue sky” securities Laws; (d) applicable requirements, if any, of the HSR Act or other Antitrust Laws; and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Purchaser Material Adverse Effect.
Section 6.04 Non-Contravention. Assuming the truth and completeness of the representations and warranties of the Company contained in this Agreement, the execution, delivery and performance by each of the Purchaser and Merger Sub of this Agreement and each Ancillary Document to which Purchaser or Merger Sub is a party, the consummation by the Purchaser or Merger Sub of the Transactions, and compliance by the Purchaser or Merger Sub with any of the provisions those documents, do not and will not: (a) conflict with or violate any provision of the Purchaser’s or Merger Sub’s Organizational Documents; (b) violate any provision of, or result in the breach of, any applicable Law to which the Purchaser or Merger Sub is subject or by which any property or asset of the Purchaser or Merger Sub is bound; (c) violate any provision of or result in a breach, default or acceleration of, require a consent under, create any right to payment or any posting of collateral (or the right to require the posting of collateral), or trigger vesting or increase in the amount of any compensation or benefit payable under any material Contract of Purchaser or Merger Sub, or terminate or result in the termination of any material Contract of the Purchaser or Merger Sub, or result in the creation of any Lien (other than a Permitted Lien) under any material Contract of the Purchaser or Merger Sub upon any of the properties or assets of the Purchaser or Merger Sub, or constitute an event which, after notice or lapse of time or both, would result in any such violation, breach, default, acceleration, termination or creation of a Lien (other than a Permitted Lien); or (d) result in a violation or revocation of any required Consents, except to the extent that the occurrence of any of the foregoing items set forth in clauses (b), (c) or (d) would not, individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect.
Section 6.05 Capitalization.
(a) As of the Signing Date, the authorized share capital of Purchaser is US$55,500 divided into: (i) 500,000,000 Class A Ordinary Shares of a par value of US$0.0001 per share, 17,250,000 of which are issued and outstanding but subject to Redemption; (ii) 50,000,000 Class B Ordinary Shares of a par value of US$0.0001 per share, of which 5,750,000 shares are issued and outstanding; and (iii) 5,000,000 Preference Shares of a par value of US$0.0001 per share, of which no shares are issued and outstanding as of the Signing Date. All outstanding Purchaser Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable. The outstanding Purchaser Ordinary Shares are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act, the Purchaser’s Organizational Documents or any Contract to which the Purchaser is a party. None of the outstanding Purchaser Ordinary Shares have been issued in violation of any applicable securities Laws.
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(b) Subject to the terms and conditions of the Warrant Agreement and in connection with the Domestication, the Cayman Purchaser Warrants will be converted into Domesticated Purchaser Warrants. The Domesticated Purchaser Warrants will be exercisable after giving effect to the Transactions for one share of Domesticated Purchaser Common Stock at an exercise price of $11.50 per share. As of the Signing Date, 10,250,000 Cayman Purchaser Warrants, consisting of 5,750,000 public warrants and 4,500,000 private placement warrants, are issued and outstanding. All outstanding Cayman Purchaser Warrants are duly authorized, validly issued, fully paid and non-assessable. The outstanding Cayman Purchaser Warrants are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act, the Purchaser’s Organizational Documents or any Contract to which the Purchaser is a party. None of the outstanding Cayman Purchaser Warrants have been issued in violation of any applicable securities Laws.
(c) Other than the Redemption or as expressly set forth in this Agreement, there are no outstanding obligations of the Purchaser to repurchase, redeem or otherwise acquire any shares of the Purchaser or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Other than as disclosed in the Purchaser SEC Reports, there are no shareholders agreements, voting trusts or other agreements or understandings to which the Purchaser is a party with respect to the voting of any shares of the Purchaser.
(d) All Indebtedness of the Purchaser, as of the Signing Date, of the type set forth in clauses (a) or (c) of the definition of Indebtedness (or clause (n) of the definition of Indebtedness as it would relate to clauses (a) or (c) of the definition of Indebtedness) is disclosed on Section 6.05(d) of the Purchaser Disclosure Letter. No such Indebtedness of the Purchaser contains any restriction upon: (i) the prepayment of any of such Indebtedness; (ii) the incurrence of Indebtedness by the Purchaser; or (iii) the ability of the Purchaser to grant any Lien on its properties or assets.
(e) Since the date of incorporation of the Purchaser, and except as otherwise contemplated by this Agreement, the Purchaser has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares. The Purchaser’s board of directors has not authorized any of the foregoing.
(f) On or prior to the Signing Date, Purchaser entered into the Initial PIPE Agreements. True and correct copies of the Initial PIPE Agreements have been provided to the Company on or prior to the date of this Agreement. The Initial PIPE Agreements are in full force and effect with respect to, and binding on, Purchaser and, to Purchaser’s Knowledge, on each Initial PIPE Investor party to an Initial PIPE Agreement, in accordance with their terms, subject to the Enforceability Exceptions.
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Section 6.06 SEC Filings and Purchaser Financials; Internal Controls.
(a) Since the IPO, the Purchaser has filed all forms, reports, schedules, statements and other documents required to be filed or furnished by the Purchaser with the SEC under the Securities Act or the Exchange Act, together with any amendments, restatements or supplements (all of the foregoing filed prior to the Signing Date, the “Purchaser SEC Reports”). The Purchaser will use its best efforts to have filed all such forms, reports, schedules, statements and other documents required to be filed subsequent to the Signing Date through the Closing Date (the “Additional Purchaser SEC Reports”). All of the Purchaser SEC Reports, Additional Purchaser SEC Reports, any correspondence from or to the SEC (other than such correspondence in connection with the IPO of the Purchaser or the Proxy Statement/Registration Statement) and all certifications and statements required by Rule 13a-14 or 15d-14 under the Exchange Act or 18 U.S.C. § 1350 (Section 906) of the Sarbanes-Oxley Act with respect to any of the foregoing (collectively, the “Public Certifications”) are available on the SEC’s Electronic Data-Gathering, Analysis and Retrieval system (EDGAR) in full without redaction. The Purchaser SEC Reports were prepared in accordance with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations under the Securities Act, the Exchange Act and the Sarbanes-Oxley Act as in effect at the time of filing. Subject to Section 6.17, the Additional Purchaser SEC Reports will be prepared in accordance with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations under the Securities Act, the Exchange Act and the Sarbanes-Oxley Act as in effect at the time of filing. The Purchaser SEC Reports did not, at the time they were filed with the SEC, or, if amended, at the time of such amendment, which shall be deemed to supersede such original filing, contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Purchaser SEC Reports or necessary in order to make the statements made in such Purchaser SEC Reports, in light of the circumstances under which they were made, not misleading. The Additional Purchaser SEC Reports will not, at the time they are filed with the SEC, or, if amended, at the time of such amendment, which shall be deemed to supersede such original filing, contain any untrue statement of a material fact or omit to state a material fact required to be stated in the Additional Purchaser SEC Reports or necessary in order to make the statements made in the Additional Purchaser SEC Reports, in light of the circumstances under which they were made, not misleading. Each director and executive officer of the Purchaser has filed with the SEC on a timely basis all statements required with respect to the Purchaser by Section 16(a) of the Exchange Act and the rules and regulations under Section 16(a) of the Exchange Act. The Public Certifications are, or will be, true and correct as of their respective dates of filing. As used in this Section 6.06, a document or information will be deemed to have been “filed” if such document or information has been furnished, supplied or otherwise made available to the SEC.
(b) The financial statements and notes contained or incorporated by reference in the Purchaser SEC Reports fairly present in all material respects the financial condition and the results of operations, changes in shareholders’ equity and cash flows of the Purchaser as at the respective dates of, and for the periods referred to, in such financial statements. The financial statements and notes to be contained in or to be incorporated by reference in the Additional Purchaser SEC Reports will fairly present the financial condition and the results of operations, changes in shareholders’ equity and cash flows of the Purchaser as at the respective dates of, and for the periods referred to, in such financial statements. Such financial statements were prepared in accordance with: (i) GAAP; and (ii) Regulation S-X or Regulation S-K, as applicable, subject, in the case of interim financial statements, to normal recurring year-end adjustments and the omission of notes to the extent permitted by Regulation S-X or Regulation S-K, as applicable.
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(c) The Purchaser has no off-balance sheet arrangements that are not disclosed in the Purchaser SEC Reports. No financial statements other than those of the Purchaser are required by GAAP to be included in the consolidated financial statements of the Purchaser.
(d) The issued and outstanding Cayman Purchaser Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “BLRKU.” The issued and outstanding Purchaser Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “BLRK.” The issued and outstanding Purchaser Public Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “BLRKW.” The Purchaser is a listed company in good standing with Nasdaq. Since the consummation of the IPO, the Purchaser has complied in all material respects with the applicable listing and corporate governance rules and regulations of Nasdaq. There is no Legal Proceeding pending or, to the Purchaser’s Knowledge, threatened against the Purchaser by Nasdaq or the SEC with respect to: (i) deregistering the Cayman Purchaser Units; (ii) deregistering the Purchaser Class A Ordinary Shares; (iii) deregistering the Purchaser Public Warrants; or (iv) terminating the listing of the Purchaser on Nasdaq. None of the Purchaser or any of its Affiliates has taken any action in an attempt to terminate the registration of the Cayman Purchaser Units, the Purchaser Class A Ordinary Shares or Purchaser Public Warrants under the Exchange Act.
(e) Except as not required in reliance on exemptions from various reporting requirements by virtue of Purchaser’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), the Purchaser has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are reasonably designed to ensure that material information relating to the Purchaser is made known to the Purchaser’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. Such disclosure controls and procedures are effective in timely alerting the Purchaser’s principal executive officer and principal financial officer to information required to be included in the Purchaser’s periodic reports required under the Exchange Act.
Section 6.07 Absence of Certain Changes. As of the Signing Date and since the date of its formation, neither the Purchaser nor Merger Sub has: (a) conducted any business other than as is or was incidental to its formation, or, in the case of the Purchaser, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Company and the negotiation and execution of agreements related to a Business Combination, including this Agreement) and related activities; or (b) been subject to a Purchaser Material Adverse Effect.
Section 6.08 Undisclosed Liabilities. Except for any fees, costs or expenses payable by the Purchaser as a result of or in connection with the consummation of the Transactions, there is no material liability, debt, obligation, claim or judgment against the Purchaser or Merger Sub of a type required to be reflected or reserved for on a balance sheet prepared in accordance with GAAP, except for liabilities and obligations: (a) reflected or reserved for on the financial statements or disclosed in the notes to such financial statements included in the Purchaser SEC Reports; (b) that have arisen since the date of the most recent balance sheet included in the Purchaser SEC Reports in the ordinary course of business of the Purchaser or Merger Sub; or (c) arising under this Agreement or incurred in connection with the Transactions.
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Section 6.09 Compliance with Laws. Since its inception, each of the Purchaser and Merger Sub has complied with, and is not currently in violation of, any applicable Law with respect to the conduct of its business, or the ownership or operation of its business, except for failures to comply or violations which, individually or in the aggregate, have not been and would not reasonably be expected to have a Purchaser Material Adverse Effect. No written notice of violation or of non-compliance with any applicable Law has been received by the Purchaser or Merger Sub since Purchaser’s or Merger Sub’s inception, as applicable. To the Purchaser’s Knowledge, no assertion or action of any violation or of non-compliance with any applicable Law is currently threatened against the Purchaser or Merger Sub.
Section 6.10 Legal Proceedings; Orders; Permits. There is no Legal Proceeding pending or, to the Purchaser’s Knowledge, threatened to which the Purchaser or Merger Sub is subject that would reasonably be expected to have a Purchaser Material Adverse Effect. There is no material Legal Proceeding that the Purchaser or Merger Sub has pending against any other Person. Neither the Purchaser nor Merger Sub is subject to any material Orders of any Governmental Authority, nor are any such Orders pending. Each of the Purchaser and Merger Sub holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties. All such material Permits are in full force and effect, except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Purchaser Material Adverse Effect.
Section 6.11 Taxes and Tax Returns.
(a) Each of the Purchaser and Merger Sub: (i) has filed, or caused to be filed, all Income Tax and other material Tax Returns required to be filed by it (taking into account all valid extensions of time to file), and all such filed Tax Returns are true, correct, accurate and complete in all material respects; and (ii) has paid, collected, withheld or remitted, or caused to be paid, collected, withheld or remitted, all Income Taxes and other material Taxes required to be paid, collected, withheld or remitted, whether or not such Taxes are shown as due and payable on any Tax Return (and complied in all material respects with applicable Law with respect to such Tax withholding or collection).
(b) There is no Legal Proceeding currently pending or, to the Purchaser’s Knowledge, threatened or claimed against the Purchaser or Merger Sub by a Governmental Authority in a jurisdiction where the Purchaser or Merger Sub, as applicable, does not file a particular type of Tax Return, or does not pay a particular type of Tax, that the Purchaser or Merger Sub, as applicable, is or may be subject to such Tax or required to file such Tax Return in that jurisdiction.
(c) There are no audits, examinations, investigations or other Legal Proceedings pending, currently contested or, to the Purchaser’s Knowledge, threatened against the Purchaser or Merger Sub in respect of any Tax. Neither the Purchaser nor Merger Sub has been notified in writing of any proposed Tax claims, deficiencies or assessments against the Purchaser or Merger Sub. Neither the Purchaser nor Merger Sub is currently contesting any Tax liability before any Governmental Authority.
(d) There are no Liens for any Taxes upon any of the Purchaser’s or Merger Sub’s assets, other than statutory liens for current Taxes not yet due and payable.
(e) Neither the Purchaser nor Merger Sub has requested or consented to any waivers or extensions of any applicable statute of limitations for the collection or assessment of any Taxes, which waiver or extension (or request for such waiver or extension) is outstanding or pending, other than any extension of time to file Tax Returns or pay Taxes that is automatically granted.
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(f) Neither the Purchaser nor Merger Sub will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion of any taxable period) beginning after the Closing Date, as a result of: (i) an installment sale or open transaction disposition entered into by the Purchaser or Merger Sub on or prior to the Closing Date; (ii) any change in method of accounting made by the Purchaser or Merger Sub on or prior to the Closing Date, including by reason of the application of Section 481 of the Code (or any analogous provision of state, local or foreign Law) or the use of an improper method of accounting by the Purchaser or Merger Sub on or prior to the Closing Date; (iii) any prepaid amounts received or deferred revenue accrued or realized by the Purchaser or Merger Sub on or prior to the Closing Date; (iv) any intercompany transaction described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Law) entered into by the Purchaser or Merger Sub on or prior to the Closing Date, or any “excess loss account” within the meaning of Treasury Regulation Section 1.1502-19 (or any corresponding or similar provision of state, local or foreign Law) involving the Purchaser or Merger Sub and in existence on or prior to the Closing Date; or (v) any “closing agreement” pursuant to Section 7121 of the Code, or any other similar agreement or arrangement with a Governmental Authority relating to Taxes, entered into by the Purchaser or Merger Sub on or prior to the Closing Date.
(g) Neither the Purchaser nor Merger Sub has participated in or been a party to, or sold, distributed or otherwise promoted, any “listed transaction,” as defined in Treasury Regulations Section 1.6011-4 (or any similar or corresponding provision of state, local or foreign Law).
(h) Neither the Purchaser nor Merger Sub has been a member of an affiliated, combined, consolidated, unitary or other group for Tax purposes (other than a group the common parent of which is the Purchaser). Neither the Purchaser nor Merger Sub has any Liability or potential Liability for the Taxes of another Person (other than the Purchaser or Merger Sub): (i) under any applicable Tax Law (including Treasury Regulations Section 1.1502-6 (or any similar or corresponding provision of state, local or foreign Law)); (ii) as a transferee or successor; or (iii) by Contract, indemnity or otherwise by operation of Law (excluding customary commercial agreements entered into in the ordinary course of business the primary purpose of which is not related to Taxes). Neither the Purchaser nor Merger Sub is a party to or bound by any Tax indemnity agreement, Tax sharing agreement, Tax reimbursement agreement or Tax allocation agreement or similar agreement, arrangement or practice with respect to Taxes (excluding customary commercial agreements entered into in the ordinary course of business the primary purpose of which is not related to Taxes, but including advance pricing agreements, closing agreements or other agreements relating to Taxes with any Governmental Authority).
(i) Since its formation or incorporation, as applicable, each of the Purchaser and Merger Sub is, and has at all times been classified as, a “C corporation” within the meaning of Section 1361(a)(2) of the Code for U.S. federal and applicable state and local income tax purposes.
(j) Neither the Purchaser nor Merger Sub has ever owned any interest that is treated as equity for Tax purposes in any “business entity” within the meaning of Treasury Regulations Section 301.7701-2 (other than the Purchaser’s ownership of Merger Sub).
(k) Neither the Purchaser nor Merger Sub has, or has ever had, any permanent establishment (within the meaning of any applicable income tax treaty or under any applicable Law) or a fixed place of business in any country other than the country of its jurisdiction of formation. Neither the Purchaser nor Merger Sub has engaged in a trade or business in any country other than the country of its jurisdiction of formation that subjected it to Tax in such country.
(l) Neither the Purchaser nor Merger Sub (or, in each case, any predecessor thereof) has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 or Section 361 of the Code (or so much of Section 356 of the Code as relates to Section 355 of the Code) during the two-year period ending on the date of this Agreement.
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(m) Neither the Purchaser nor Merger Sub has knowingly taken any action, or is aware of any fact or circumstance, that would reasonably be expected to prevent the Transactions from qualifying for the Intended Tax Treatments.
(n) Neither the Purchaser nor Merger Sub has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(o) Neither the Purchaser nor Merger Sub has requested or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request pending or outstanding.
Section 6.12 Properties. Neither the Purchaser nor Merger Sub owns, license or otherwise has any right, title or interest in any Intellectual Property. Neither the Purchaser nor Merger Sub owns or lease any material real property or material Personal Property.
Section 6.13 Investment Company Act. Neither the Purchaser nor Merger Sub is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company” or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended. As of the Signing Date, the Purchaser constitutes an “emerging growth company” within the meaning of the JOBS Act.
Section 6.14 Trust Account. As of the Signing Date, the Purchaser has at least $172,500,000, plus interest earned thereon and less amounts released in accordance with the Trust Agreement, in the Trust Account. Trust Account funds are held in cash or invested in United States government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act pursuant to the Trust Agreement. Whether written or unwritten, express or implied, there are no separate Contracts, side letters or other arrangements or understandings that would cause the description of the Trust Agreement in the Purchaser SEC Reports to be inaccurate or that would entitle any Person (other than Purchaser Shareholders who shall have properly elected to redeem their Purchaser Class A Ordinary Shares pursuant to the Purchaser’s Organizational Documents and the underwriters of the IPO with respect to deferred underwriting commissions) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released other than to pay Taxes and payments with respect to the Redemption of Purchaser Class A Ordinary Shares (including any excise Taxes payable in connection with such Redemptions) properly submitted in connection with a shareholder vote to amend the Purchaser’s Organizational Documents to: (A) modify the substance or timing of its obligation to allow redemption in connection with its initial business combination; (B) to redeem 100% of its Purchaser Class A Ordinary Shares if it has not consummated an initial business combination by December 12, 2027; or (C) with respect to any other material provisions related to shareholders’ rights or pre-initial business combination activity. The Trust Agreement has not been amended or modified and is a valid and binding obligation of Purchaser. The Trust Account is in full force and effect and is enforceable in accordance with its terms except as such enforcement may be limited by the Enforceability Exceptions. There are no claims or proceedings pending or, to the Purchaser’s Knowledge, threatened with respect to the Trust Account. The Purchaser has performed all material obligations required to be performed by it to date under the Trust Agreement. The Purchaser is not in default, breach or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement. No event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach under the Trust Agreement. As of the Closing, the obligations of the Purchaser to dissolve or liquidate pursuant to the Purchaser’s Organizational Documents shall terminate. To the Purchaser’s Knowledge, as of the Signing Date, following the Closing, no Purchaser Shareholder shall be entitled in its capacity as a Purchaser Shareholder to receive any amount from the Trust Account except to the extent such Purchaser Shareholder is exercising their option to redeem Purchaser Class A Ordinary Shares in connection with the Redemption. As of the Signing Date, assuming the accuracy of the representations and warranties of the Company contained in this Agreement, the compliance by the Company with its obligations under this Agreement and the satisfaction of the conditions to the Closing set forth in Article VIII and Section 8.03, the Purchaser does not have any reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to the Purchaser on the Closing Date.
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Section 6.15 Finders and Brokers. Except as reflected on Section 6.15 of the Purchaser Disclosure Letter, no broker, finder, financial advisor, investment banker or other Person is entitled to, nor will be entitled to, either directly or indirectly, any brokerage fee, finders’ fee or other similar commission, for which the Purchaser would be liable in connection with the Transactions based upon arrangements made by the Purchaser or any of their Affiliates.
Section 6.16 Insurance. Section 6.16 of the Purchaser Disclosure Letter lists all material insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by the Purchaser or Merger Sub or relating to the Purchaser or Merger Sub or their respective business, properties, assets, directors, officers and employees. Copies of such insurance policies have been provided to the Company. All premiums due and payable under all such insurance policies have been timely paid and the Purchaser or Merger Sub, as applicable is otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect. To the Purchaser’s Knowledge there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by the Purchaser or Merger Sub. Each of the Purchaser and Merger Sub has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to have a Purchaser Material Adverse Effect.
Section 6.17 Information Supplied. None of the information supplied by or on behalf of the Purchaser or Merger Sub expressly for inclusion or incorporation by reference in: (a) any current report on Form 8-K, and any exhibits to such Form 8-K or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the Transactions or any Ancillary Documents or in the Proxy Statement/Registration Statement; or (b) any of the Signing Press Release, the Signing Filing, the Closing Press Release, the Closing Filing and any other press releases or prospectuses filed under Rule 425 of the Securities Act in connection with the Transactions or any Ancillary Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated in such documents or necessary in order to make the statements in such documents, in light of the circumstances under which they are made, not misleading at: (i) the time such information is filed with or furnished to the SEC (but if such information is revised by any subsequently filed amendment or supplement, this clause (i) shall solely refer to the time of such subsequent revision); (ii) the time the Proxy Statement/Registration Statement is declared effective by the SEC; (iii) the time the Proxy Statement/Registration Statement or any amendment or supplement to such Proxy Statement/Registration Statement is first disseminated to the Purchaser Shareholders; or (iv) the time of the Purchaser Shareholders’ Meeting. Notwithstanding the foregoing, neither the Purchaser nor Merger Sub makes any representation, warranty or covenant with respect to any information supplied by or on behalf of the Company or its respective Affiliates.
Section 6.18 Independent Investigation. Each of the Purchaser and Merger Sub has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company. In making its decision to enter into this Agreement and to consummate the Transactions, Purchaser and Merger Sub have relied solely upon: (a) their own investigation and the express representations and warranties of the Company set forth in this Agreement and the Ancillary Documents (including the related portions of the Company Disclosure Letter) and in any certificate delivered to the Purchaser or Merger Sub pursuant to this Agreement or any Ancillary Document; and (b) the information provided by or on behalf of the Company for the Registration Statement. Neither the Company nor its Representatives have made any representation or warranty as to the Company or this Agreement, and Purchaser and Merger Sub disclaim reliance upon any such representation or warranty, and the accuracy or completeness thereof, except as: (i) expressly set forth in this Agreement (including the related portions of the Company Disclosure Letter) or any Ancillary Document or in any certificate delivered to the Purchaser or Merger pursuant to this Agreement or any Ancillary Document; or (ii) with respect to the information provided by or on behalf of the Company for the Registration Statement. Notwithstanding anything to the contrary in this Agreement, claims by Purchaser or Merger Sub shall not be limited in any respect in the event of Fraud.
Section 6.19 Employees; Benefit Plans. Neither the Purchaser nor Merger Sub has had any employees and neither the Purchaser nor Merger Sub has any unsatisfied material liability with respect to any employee. Neither the Purchaser nor Merger Sub currently maintains or has any direct liability under any benefit plan.
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Section 6.20 Transactions with Purchaser Related Persons. Section 6.20 of the Purchaser Disclosure Letter contains a true, correct and complete list of each transaction or Contract to which either the Purchaser or Merger Sub is a party with any: (a) present or former officer or director of any of the Purchaser or Merger Sub; (b) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or Equity Securities of any of the Purchaser; or (c) any Affiliate, “associate” or any member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing Persons referred to in clauses (a) and (b) (including any agreements, arrangements or understandings between the Sponsor and any PIPE Investor, forward purchaser, or other investor in connection with the Transactions). To the Purchaser’s Knowledge, no Purchaser Related Person or any Affiliate of a Purchaser Related Person has, directly or indirectly, an economic interest in any Contract, property or right (tangible or intangible) with the Purchaser or Merger Sub (other than such Contracts that relate to any such Person’s ownership of the Equity Securities of the Purchaser). There are no side letters, agreements, contracts, arrangements or understandings (whether written or oral) between or among the Purchaser, Merger Sub, the Sponsor or any of their respective Affiliates, on the one hand, and any Purchaser Shareholder, PIPE Investor, prospective PIPE Investor, financing source or other investor, on the other hand, including any non-redemption, voting, backstop, incentive, founder-share transfer, warrant transfer, forfeiture, commitment-share, leak-out, lock-up, fee, expense reimbursement or similar arrangement, that have not been disclosed to the Company and set forth on Section 6.20 of the Purchaser Disclosure Letter.
Section 6.21 No Additional Representation or Warranties. Except as provided in this Article VI, neither the Purchaser, Merger Sub nor any of their respective Affiliates, nor any of their respective directors, managers, officers, employees, stockholders, shareholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to any other Party or its Affiliates. No Persons listed in the preceding sentence shall be liable in respect of the accuracy or completeness of any information provided to the Company or its Affiliates.
ARTICLE
VII
COVENANTS
Section 7.01 Access and Information; Cooperation.
(a) During the period from the Signing Date and continuing until the earlier of the termination of this Agreement in accordance with Section 9.01 or the Closing (the “Interim Period”), subject to Section 7.16, the Company shall give, and shall cause its Representatives to give, the Purchaser, Merger Sub and its Representatives reasonable access during normal business hours to the personnel, properties, books and records of the Company upon reasonable advance notice and under reasonable circumstances. The Company shall cause each of the Company’s Representatives to reasonably cooperate with the Purchaser, Merger Sub and their respective Representatives in their investigation. Such reasonable access shall be provided at reasonable times during normal business hours and upon reasonable intervals and notice and shall not include any invasive or intrusive investigations or other testing, sampling or analysis of any properties, facilities or equipment of the Company without the prior written consent of the Company. The Purchaser, Merger Sub and their Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Company. Notwithstanding the foregoing, the Company shall not be required to provide, or cause to be provided, to the Purchaser, Merger Sub or any of their respective Representatives any information if and to the extent doing so would: (i) violate any Law to which the Company is subject; (ii) result in the disclosure of any trade secrets of third parties in breach of any Contract with such third party; (iii) violate any legally-binding obligation of the Company with respect to confidentiality, non-disclosure or privacy; or (iv) jeopardize protections afforded to the Company under the attorney-client privilege or the attorney work product doctrine. In the case of each of clauses (i) through (iv) in the preceding sentence, the Company shall: (x) provide Purchaser with written notice that it is withholding requested access or information stating the general nature of the access or information so withheld and the reasons for withholding such access or information; (y) provide such access or information as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) without violating such privilege, doctrine, Contract, obligation or Law; and (z) to the extent reasonably practicable, provide such information in a manner without violating such privilege, doctrine, Contract, obligation or Law. The Company shall not be required to provide, or cause to be provided, to the Purchaser, Merger Sub or any of their respective Representatives any information if the Company or any of its Representatives, on the one hand, and the Purchaser, Merger Sub or any of their respective Representatives, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent to such litigation. All information obtained by Purchaser, Merger Sub or any of their respective Representatives pursuant to this Section 7.01(a) shall be subject to the Mutual Non-Disclosure Agreement.
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(b) During the Interim Period, subject to Section 7.16, the Purchaser and Merger Sub shall give, and shall cause their respective Representatives to give, the Company and its Representatives reasonable access during normal business hours to the personnel, properties, books and records of Purchaser and Merger Sub upon reasonable advance notice and under reasonable circumstances. The Purchaser and Merger Sub shall cause each of their respective Representatives to reasonably cooperate with the Company and its Representatives in their investigation. Such reasonable access shall be provided at reasonable times during normal business hours and upon reasonable intervals. The Company and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Purchaser, Merger Sub or any of their respective Subsidiaries. Notwithstanding the foregoing, neither the Purchaser or Merger Sub shall be required to provide, or cause to be provided, to the Company or any of its Representatives any information if and to the extent doing so would: (i) violate any Law to which the Purchaser or Merger Sub is subject; (ii) violate any legally-binding obligation of the Purchaser or Merger Sub with respect to confidentiality, non-disclosure or privacy; or (iii) jeopardize protections afforded to the Purchaser or Merger Sub under the attorney-client privilege or the attorney work product doctrine. In the case of each of clauses (i) through (iii) in the preceding sentence, the Purchaser and Merger Sub shall: (x) provide the Company with written notice that it is withholding requested access or information stating the general nature of the access or information so withheld and the reasons for withholding such access or information; (y) provide such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) without violating such privilege, doctrine, Contract, obligation or Law; and (z) to the extent reasonably practicable, provide such information in a manner without violating such privilege, doctrine, Contract, obligation or Law. Neither the Purchaser nor Merger Sub shall be required to provide, or cause to be provided, to Company or any of its Representatives any information if the Purchaser or Merger Sub or any of their respective Representatives, on the one hand, and the Company or any of its Representatives, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent to such litigation. All information obtained by the Company or its Representatives pursuant to this Section 7.01(b) shall be subject to the Mutual Non-Disclosure Agreement.
(c) During the Interim Period, each of the Company, Purchaser and Merger Sub shall, and shall cause their respective Representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the Parties mutually agree to seek in connection with the Transactions (including in connection with the PIPE Investments), including: (i) by providing such information and assistance as another Party may reasonably request; (ii) granting such access to another Party and its Representatives as may be reasonably necessary for their due diligence; and (iii) participating in a reasonable number of meetings, presentations, road shows, drafting sessions, and due diligence sessions with respect to such financing efforts. Such cooperation shall include direct contact between senior management and other Representatives of the Company at reasonable times and locations. All such cooperation, assistance and access shall be granted during normal business hours and shall be granted under conditions that shall not unreasonably interfere with the business and operations of the Company, the Purchaser, Merger Sub or their respective Representatives.
Section 7.02 Conduct of Business of the Company.
(a) During the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, as required by applicable Law, as set forth on Section 7.02 of the Company Disclosure Letter or as consented to in writing by the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall use commercially reasonable efforts to: (i) conduct its business in the ordinary course of business; (ii) comply with all Laws applicable to the Company and its business, assets and employees; (iii) preserve intact the Company’s business organizations and ongoing business; and (iv) maintain the Company’s existing relations and goodwill with its customers, suppliers, distributors and creditors.
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(b) Without limiting Section 7.02(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents, as required by applicable Law or as set forth on Section 7.02(b) of the Company Disclosure Letter, during the Interim Period, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed except in the case of clause (xxvi) in respect of which Purchaser may withhold or grant consent in its sole discretion), the Company shall not:
(i) amend, waive or otherwise change, in any respect, its Organizational Documents, except as required by applicable Law;
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of, or accelerate the vesting of or waive any restriction applicable to or propose to accelerate the vesting of or waive any restriction applicable to, any of its Equity Securities except (A) as required by existing Company Benefits Plans or (B) any issuances to employees or other services providers as set forth on Section 7.02(b)(ii)(B) of the Company Disclosure Letter, or (C) any Contract (including any warrant or option) outstanding as of the Signing Date;
(iii) engage in any hedging transaction with a third person with respect to its Equity Securities;
(iv) (A) split, combine, recapitalize or reclassify any of its shares or other Equity Securities or issue any other securities in respect of such shares or other Equity Securities; (B) pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination of cash, equity or property) in respect of its shares or other Equity Securities; or (C) directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its Equity Securities, except, in the case of this clause (C), for: purchases or redemptions pursuant to exercises or cancellations of Equity Securities outstanding as of the Signing Date or issued thereafter in compliance with the terms of this Agreement;
(v) voluntarily incur or guarantee any Indebtedness for borrowed money (whether absolute, accrued, contingent or otherwise); provided, that this clause (v) shall not restrict the Company from (A) drawing on existing credit facilities in the ordinary course of business; provided that the Company provide the Purchaser with prompt written notice (and in any event within two Business Days) of any drawdown on existing credit facilities (B) incurring Indebtedness between the Company and any of its Subsidiaries, or (C) incurring trade payables or purchase money obligations in the ordinary course of business;
(vi) (A) establish, adopt, materially amend or modify, or terminate any Company Benefit Plan or any other benefit or compensation plan, policy, program, contract, agreement or arrangement that would be a Company Benefit Plan if in effect on the Signing Date; (B) increase or accelerate or commit to accelerate the funding, payment or vesting of the compensation or benefits provided to any of the current or former employees, officers, directors or other service providers of the Company, including under any Company Benefit Plan or any other benefit or compensation plan, agreement, contract, program, policy or arrangement other than (x) as set forth on Section 7.02(b)(vi)(B) of the Company Disclosure Letter or (y) ordinary course annual merit-based compensation increases and promotions for employees consistent with past practice; (C) grant, promise or announce any cash or equity or equity-based incentive awards, bonus, retention, change in control, transaction, severance or similar compensation or any increase in the salaries, bonuses or other compensation and benefits payable to any of the current or former employees, officers, directors or other individual service providers of the Company (or any of their respective dependents or beneficiaries), except as otherwise permitted by clause (B)(y) above; (D) hire, promote or engage, or otherwise enter into any employment or consulting agreement or arrangement with, any current or former employee, officer, director or other service provider of the Company, other than in the ordinary course of business with respect to any such service provider whose annual base compensation does not exceed $100,000; or (E) terminate any employee, officer, director or other service provider of the Company, other than for cause or in the ordinary course of business with respect to any such service provider whose annual base compensation does not exceed $100,000;
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(vii) (A) waive or release any noncompetition, nonsolicitation, nondisclosure or other restrictive covenants applying to any current or former employee or other individual service provider; (B) plan, announce, implement or effect the reduction in force, lay-off, furloughs, early-retirement program, severance program or other program or effort concerning the termination of a group of employees of the Company (other than individual employee terminations for cause permitted under clause (E) of Section 7.02(b)(vi)); or (C) take other such actions that would reasonably be expected to implicate the WARN Act;
(viii) enter into, amend, modify, negotiate, terminate or extend any Labor Agreement, or recognize or certify any labor union, works council, labor organization, or group of employees of the Company as the bargaining representative for any employees of the Company;
(ix) (A) make, change or rescind any material election relating to Taxes; (B) settle any claim, suit, litigation, proceeding, arbitration, investigation, audit, examination, controversy or other Legal Proceeding relating to Taxes; (C) file any amended Tax Return with respect to Income Taxes or other material Taxes; (D) voluntarily surrender any right to claim a refund of material Taxes; (E) change or request to change any method of accounting for Tax purposes; (F) waive or extend any statute of limitations in respect of a period within which an assessment or reassessment of Taxes may be issued or in respect of any Tax attribute that would give rise to any claim or assessment of Taxes of or with respect to the Company or any of its Subsidiaries (other than as a result of any extension of time to file Tax Returns or pay Taxes that is automatically granted); (G) incur any material liability for Taxes outside the ordinary course of business; (H) enter into any tax sharing, indemnification, allocation or similar agreement or arrangement (excluding any commercial contract entered into in the ordinary course of business and not primarily related to Taxes); (I) enter into any “closing agreement” as described in Section 7121 of the Code or any other similar agreement or arrangement with any Governmental Authority with respect to Taxes;
(x) (A) transfer, sell, assign, license, sublicense, covenant not to assert, subject to a Lien (other than a Permitted Lien), abandon, allow to lapse, transfer or otherwise dispose of, any right, title or interest of the Company in or to any Owned Intellectual Property (other than: (x) non-exclusive licenses of Owned Intellectual Property granted in the ordinary course of business; or (y) abandoning, allowing to lapse or otherwise disposing of Owned Intellectual Property registrations at the end of their statutory term); (B) disclose, divulge, furnish to or make accessible any material Trade Secrets constituting Owned Intellectual Property to any Person who has not entered into a commercially reasonable confidentiality agreement, (except for patent applications submitted to the United States Patent and Trademark Office, or similar office of another jurisdiction); or (C) include, incorporate or embed in, link to, combine, make available or distribute with, or use in the development, operation, delivery or provision of any material Company Software any Open Source Software in a manner that requires the Company to take a Copyleft Action;
(xi) other than in the ordinary course of business: (A) terminate, waive any material provisions of, amend or assign any Company Material Contract; or (B) enter into any Contract that would be a Company Material Contract if it had been entered into prior to the Signing Date;
(xii) establish any Subsidiary or enter into any new line of business;
(xiii) fail to maintain its books, accounts and records in all material respects in the ordinary course of business;
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(xiv) (xiv) (A) fail to maintain in full force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, properties, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect; or (B) terminate without replacement or amend in a manner detrimental to the Company any material insurance policy insuring the Company;
(xv) make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP or changes that are made in accordance with PCAOB standards;
(xvi) waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the Transactions), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Company or its Affiliates) not in excess of $500,000 individually or $1,500,000 in the aggregate;
(xvii) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination (A) any corporation, partnership, limited liability company, other business organization or any division of any corporation, partnership, limited liability company or other business organization; or (B) any material amount of assets outside the ordinary course of business;
(xviii) other than (A) capital expenditures in the ordinary course of business consistent with past practice, (B) capital expenditures as reflected in the Company’s capital expenditure budget previously provided to the Purchaser and set forth on Section 7.02(b)(xviii) of the Company Disclosure Letter, or (C) capital expenditures for product development, research and development, or information technology infrastructure in the ordinary course of business, make individual capital expenditures in excess of $1,000,000 or aggregate capital expenditures in excess of $2,500,000;
(xix) (A) fail to pay within a reasonable amount of time following the time due and payable, material amounts of accounts payable (other than any account payable that is, at such time, subject to a bona fide dispute) or (B) other than in the ordinary course of business, fail to use commercially reasonable efforts to collect within a reasonable amount of time following the time due, discount or otherwise reduce any account receivable, in each case, in a manner that would reasonably be expected to materially reduce the Company’s working capital;
(xx) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(xxi) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations) or otherwise dispose of any material tangible properties, or tangible assets, other than pursuant to Permitted Liens in the ordinary course;
(xxii) enter into any agreement, understanding or arrangement with respect to the voting of Equity Securities of the Company;
(xxiii) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement or that would impede the Transactions;
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(xxiv) enter into, amend, waive or terminate any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business);
(xxv) (A) limit the right of the Company to: (w) engage in any line of business; (x) operate in any geographic area; (y) develop, market or sell products or services; or (z) compete with any Person or (B) grant any exclusive or similar rights to any Person, in each case, except where such limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the business of the Company;
(xxvi) except as permitted by clauses Section 7.02(b)(ii)(A), (B) or (C) or as set forth in Section 7.02(b)(vi)(B) or (C) of the Company Disclosure Letter, issue any Equity Security at a price per share or with a conversion price per share that is less than the price per share of Company Common Stock implied by the Transactions;
(xxvii) enter into any new Contract with any broker, finder, financial advisor, investment banker, placement agent or other Person under which such Person is or will be entitled to any brokerage fee, finder’s fee, success fee or other similar commission constituting a Company Transaction Cost, or materially amend or modify any existing such Contract; or
(xxviii) authorize or agree to do any of the foregoing actions.
(c) To permit the timely closing of the Transactions, the Company shall prohibit the exercise of any Company Options in the five Business Days prior to the Closing Date. The Company shall provide notice to any Company Option that may be cancelled without the payment of any consideration at least ten Business Days in advance of the Closing Date that such Company Options may be exercised to the extent vested until the close of business on the day that is six Business Days prior to the Closing Date.
(d) If any Company Stockholder has not executed and delivered the Lock-Up Agreement as of the date hereof, the Company shall use all commercially reasonable efforts to obtain such Lock-Up Agreement from such Company Stockholder within seven (7) Business Days of the date hereof.
(e) From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, if any Person becomes a Company Stockholder who had not previously executed and delivered the Lock-Up Agreement, then the Company shall, within 3 Business Days, cause to be executed and delivered the Lock-Up Agreement by such Company Stockholder.
Section 7.03 Conduct of Business of the Purchaser.
(a) During the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, as required by applicable Law, as required to effect the Domestication, Redemptions or the PIPE Investments, as set forth on Section 7.03(a) of the Purchaser Disclosure Letter or as consented to in writing by the Company (such consent not to be unreasonably withheld, conditioned or delayed), each of the Purchaser and Merger Sub shall: (i) conduct its business, in all material respects, in the ordinary course of business; (ii) comply in all material respects with all Laws applicable to it and its business, assets and employees; and (iii) use commercially reasonable efforts to preserve intact, in all material respects, its business organizations.
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(b) Without limiting Section 7.03(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents, as required by applicable Law or as set forth on Section 7.03(b) of the Purchaser Disclosure Letter, or as required to effect the Domestication, Redemptions or a PIPE Investment, during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), neither Purchaser or Merger Sub shall:
(i) amend, waive or otherwise change, in any respect, its Organizational Documents except as required by applicable Law;
(ii) (A) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its Equity Securities or other security interests of any class and any other equity-based awards; or (B) engage in any hedging transaction with a third Person with respect to such securities;
(iii) (A) split, combine, recapitalize or reclassify any of its shares or other Equity Securities or issue any other securities in respect of such shares or other Equity Securities; (B) pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination of cash, equity or property) in respect of its shares or other Equity Securities; or (C) directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its Equity Securities;
(iv) (A) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise), other than working capital loans in an amount not to exceed $100,000 in the aggregate; (B) make a loan or advance to or investment in any third party; or (C) guarantee or endorse any Indebtedness, Liability or obligation of any Person, in the case of each of clauses (A), (B) and (C);
(v) (A) make, change or rescind any material election relating to Taxes; (B) settle any claim, suit, litigation, proceeding, arbitration, investigation, audit, examination, controversy or other Legal Proceeding relating to material Taxes; (C) file any amended Tax Return with respect to Income Taxes or other material Taxes; (D) voluntarily surrender any right to claim a refund of material Taxes; (E) change or request to change any method of accounting for Tax purposes; (F) waive or extend any statute of limitations in respect of a period within which an assessment or reassessment of Taxes may be issued or in respect of any Tax attribute that would give rise to any claim or assessment of Taxes of or with respect to the Purchaser (other than as a result of any extension of time to file Tax Returns or pay Taxes that is automatically granted); (G) incur any material liability for Taxes outside the ordinary course of business; (H) enter into any tax sharing, indemnification, allocation or similar agreement or arrangement (excluding any commercial contract entered into in the ordinary course of business and not primarily related to Taxes); or (I) enter into any “closing agreement” as described in Section 7121 of the Code or any other similar agreement or arrangement with any Governmental Authority with respect to Taxes;
(vi) waive or otherwise change the Trust Agreement;
(vii) terminate, waive or assign any material right under any material Contract of the Purchaser or Merger Sub;
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(viii) fail to maintain its books, accounts and records in all material respects in the ordinary course of business;
(ix) establish any Subsidiary or enter into any new line of business;
(x) fail to maintain in full force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations, properties and activities in such amount and scope of coverage substantially similar to that which is currently in effect;
(xi) make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP or PCAOB standards;
(xii) waive, release, assign, settle or compromise any claim, action or proceeding (other than any Transaction Litigation), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Purchaser, Merger Sub or their respective Subsidiaries) not in excess of $250,000 (individually or in the aggregate);
(xiii) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division of any corporation, partnership, limited liability company or other business organization, or any material amount of assets outside the ordinary course of business;
(xiv) make any capital expenditures;
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(xvi) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its tangible properties, assets or rights;
(xvii) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement; or
(xviii) authorize or agree to do any of the foregoing actions.
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Section 7.04 Additional Financial Information and Financing Cooperation.
(a) During the Interim Period, the Company shall use commercially reasonable efforts to deliver to the Purchaser: (i) with respect to the fiscal years ended January 31, 2026 and 2025, as promptly as practicable following the Signing Date; (ii) with respect to the fiscal quarters ending April 30, 2026 and 2025, as promptly as practicable following the Signing Date; (iii) within 35 days following the end of each of the fiscal quarters ending April (other than the fiscal quarter ending April 30, 2026), July 31 and October 31; and (iv) within 35 days following the end of each fiscal year ending January 31 (other than the fiscal year ending January 31, 2026) (collectively, the deadlines referred to in each of clauses (i) through (iv), “Staleness Deadlines”) the financial statements required to be included in the Proxy Statement/Registration Statement and any other filings to be made by the Company or the Purchaser with the SEC in connection with the Transactions. If the Company determines that it will be unable to deliver the financial statements required by this Section 7.04(a) by the applicable Staleness Deadline, the Company shall promptly notify the Purchaser of such determination. Upon delivery of the updated financial statements by the Company in accordance with clauses (i) through (iv) above, the representations and warranties with respect to the Annual Company Financials set forth in Section 5.06 shall be deemed to apply to such financial statements (in the case of quarterly financial statements, with allowance for the absence of footnote disclosures and for year-end adjustments that are not expected to be material). The Company will use commercially reasonable efforts to cause such financial statements, together with any audited or unaudited consolidated balance sheet and the related statements of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows of the Company as of and for any year-to-date period ended as of the end of a fiscal quarter (or solely in the case of any audited financial statements, the fiscal year) that are required to be included in the Proxy Statement/Registration Statement, including any applicable comparative period in the preceding fiscal year, and any other filings to be made by the Company or the Purchaser with the SEC in connection with the Transactions, to, in each case: (A) be prepared in accordance with GAAP consistently applied throughout the periods covered (except for the absence of footnote disclosures and for year-end adjustments that are not expected to be material); (B) fairly present in all material respects the consolidated financial position, results of operations and comprehensive loss, changes in stockholders’ equity (deficit) and cash flows of the Company as of the dates and for the periods referred to in such financial statements in conformity with GAAP (except for the absence of footnote disclosures and for year-end adjustments that are not expected to be material); (C) be derived from and accurately reflect in all material respects the books and records of the Company; and (D) solely in the case of any such audited financial statements, be audited in accordance with the standards of the PCAOB.
(b) During the Interim Period, the Company shall use its commercially reasonable efforts: (i) to assist, upon advance written notice, during normal business hours and in a manner such as to not unreasonably interfere with the normal operation of the Company, the Purchaser in causing to be prepared in a timely manner any other financial information or statements (including customary pro forma financial statements) that are required to be included in the Proxy Statement/Registration Statement, the Current Report on Form 8-K pursuant to the Exchange Act and any other filings to be made by the Company or the Purchaser with the SEC in connection with the Transactions, including: (A) all business information and summary financial information of the Company provided for inclusion in the Proxy Statement/Registration Statement and the Current Report on Form 8-K pursuant to the Exchange Act in connection with the Transactions; and (B) management’s discussion and analysis of financial condition and results of operations prepared in accordance with Item 303 of Regulation S-K of the SEC as necessary for inclusion in the Proxy Statement/Registration Statement and the Current Report on Form 8-K pursuant to the Exchange Act in connection with the Transactions (including customary pro-forma financial information); and (ii) to obtain the consents of its auditors as may be required by applicable Law or required or requested by the SEC.
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(c) The Company’s use of commercially reasonable efforts pursuant to this Section 7.04 shall include the incurrence of reasonable fees, costs and expenses that may be required in order to timely comply with the Company’s obligations to deliver the financial statements and related information pursuant to this Section 7.04(c).
(d) During the Interim Period, each of the Company, Purchaser and Merger Sub shall, and shall cause their respective Representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the Parties mutually agree to seek in connection with the Transactions (including in connection with the PIPE Investments), including: (i) by providing such information and assistance as another Party may reasonably request; (ii) granting such access to another Party and its Representatives as may be reasonably necessary for their due diligence; (iii) participating in a reasonable number of meetings, presentations, road shows, drafting sessions and due diligence sessions with respect to such financing efforts; and (iv) using commercially reasonable efforts to deliver, or cause their respective Representatives to deliver, documents reasonably required by any financial advisor to the Company or the Purchaser (the “Financial Advisors”), in form and substance reasonably satisfactory to the Financial Advisors, to facilitate the PIPE Investments or the consummation of the Transactions. Notwithstanding the foregoing, such cooperation shall not require the Company or its Representatives to deliver any legal opinion, negative assurance letter, comfort letter, certificate or other document except to the extent customary for the applicable financing, required by the definitive PIPE Agreements approved by the Company, requested on reasonable advance notice, and in form and substance reasonably satisfactory to the Company and its applicable counsel, auditors or other advisors. The Company shall not be required to provide information or assistance that would unreasonably interfere with its business, require disclosure of competitively sensitive information, or require public disclosure of material nonpublic information except in accordance with applicable Law and the PIPE Agreements. Such cooperation shall include direct contact between senior management and other Representatives of the Company at reasonable times and locations. All such cooperation, assistance and access shall be granted during normal business hours and shall be granted under conditions that shall not unreasonably interfere with the business and operations of the Company, the Purchaser, Merger Sub or their respective Representatives.
Section 7.05 Purchaser Public Filings. During the Interim Period, the Purchaser will use commercially reasonable efforts to keep current all of its public filings with the SEC and otherwise comply in all material respects with applicable securities Laws. During the Interim Period, the Purchaser will use its commercially reasonable efforts prior to the Closing, maintain the listing of the Purchaser Class A Ordinary Shares and the Purchaser Public Warrants on Nasdaq. Notwithstanding the foregoing, from and after the Closing, the Parties intend to list on Nasdaq only the Domesticated Purchaser Common Stock and the Domesticated Purchaser Warrants.
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Section 7.06 No Solicitation.
(a) During the Interim Period (and, solely with respect to the Purchaser and Merger Sub, until the earliest of (i) the Closing, (ii) the termination of this Agreement in accordance with Article IX, and (iii) an S-4 Filing Delay (as defined below)), in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the Transactions, each Party shall not, and shall cause its Representatives not to, without the prior written consent of the Company, on the one hand, and the Purchaser and Merger Sub, on the other, directly or indirectly: (i) solicit, assist, initiate, engage or facilitate the making, submission or announcement of or knowingly encourage, any Acquisition Proposal; (ii) furnish any non-public information to any Person or group (other than a Party or its Representatives) in connection with or in response to, or that would reasonably be expected to lead to, an Acquisition Proposal; (iii) engage, encourage or participate in discussions or negotiations with any Person or group with respect to, or that would reasonably be expected to lead to, an Acquisition Proposal; (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal; (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement or arrangement related to any Acquisition Proposal or that would reasonably be expected to lead to an Acquisition Proposal; (vi) release any third Person from, or waive any provision of, any confidentiality agreement to which such Party is a party; (vii) otherwise knowingly encourage, facilitate or cooperate in any way with any such inquiries, proposals, discussions, or negotiations or any effort or attempt by any Person to make an Alternative Transaction; (viii) enter into any agreement, arrangement or understanding that would reasonably be expected to adversely affect the ability of the Parties or their respective Affiliates to consummate the Transaction in a timely manner; (ix) solely with respect to the Company, prepare or take any steps in connection with a public offering of any securities of the Company or any of its Subsidiaries (or any Affiliate or successor of the Company or any of its Subsidiaries), other than in connection with the Transactions; or (x) agree or otherwise commit to enter into or engage in any of the foregoing.
(b) Each Party shall notify the others as promptly as practicable (and in any event within two Business Days) in writing of the receipt by such Party or any of its Representatives of: (i) any inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal; (ii) any inquiries, proposals or offers, requests for information or requests for discussions or negotiations that would reasonably be expected to result in an Acquisition Proposal; and (iii) any request for non-public information relating to such Party or its Affiliates in connection with any Acquisition Proposal, specifying in each case, the material terms and conditions of such Acquisition Proposal (including a copy of such Acquisition Proposal if in writing or a written summary of such Acquisition Proposal if oral). Each Party shall keep the other Party promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal. During the Interim Period, each Party shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.
Section 7.07 No Trading. The Company is aware of the restrictions imposed by U.S. federal securities Laws and the rules and regulations of the SEC and the Nasdaq promulgated under the U.S. federal securities Laws or otherwise (the “Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. While the Company is in possession of such material nonpublic information, it shall not, and it will cause its directors, officers and direct Affiliates not to: (a) purchase or sell any securities of the Purchaser (unless otherwise explicitly contemplated in this Agreement); (b) communicate such information to any third party; (c) take any other action with respect to the Purchaser in violation of such Laws; or (d) cause or encourage any third party to do any of the foregoing.
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Section 7.08 Notification of Certain Matters. During the Interim Period, each Party shall give prompt written notice to the other Parties if such Party or its Affiliates: (a) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging: (i) that the Consent of such third party is or may be required in connection with the Transactions; or (ii) any material non-compliance with any Law by such Party or its Affiliates; (b) receives any notice or other communication from any Governmental Authority in connection with the Transactions; or (c) becomes aware of the commencement or threat of any Legal Proceeding against such Party or any of its Affiliates, or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager of such Party or of its Affiliates, in each case, in such person’s capacity as such, with respect to this Agreement, any Ancillary Document or the consummation of the Transactions (other than demands for appraisal, which are discussed in Section 1.12) (any such Legal Proceeding, “Transaction Litigation”). Any such notice shall not constitute an acknowledgement or admission by the Party providing the notice regarding whether or not: (x) any of the conditions to the Closing have been satisfied; or (y) any of the representations, warranties or covenants contained in this Agreement have been breached. If prior to the Closing a third party brings, or to any Party’s knowledge, threatens any Transaction Litigation, against a Party, or the board of directors (or similar governing body) of such Party or its Subsidiaries or Affiliates or Representatives, such Party shall promptly notify the other Party of any such litigation and keep the other Party reasonably informed with respect to the status of any such litigation. Each Party shall provide the other Party the opportunity to participate in (subject to a customary joint defense agreement), but not control, the defense of any such litigation. Each Party shall in good faith also give due consideration to the other Party’s advice with respect to such litigation. The Company shall not settle or agree to settle any Transaction Litigation without the prior written consent of the Purchaser, which consent shall not to be unreasonably withheld, conditioned or delayed.
Section 7.09 Efforts.
(a) In furtherance and not in limitation of Section 7.12, to the extent required under any Antitrust Laws, each Party agrees to make any required filing or application under the HSR Act with respect to the Transactions as promptly as practicable, but in no event later than 25 Business Days after the Signing Date, and make any required filing or application under other Antitrust Laws, as applicable, with respect to the Transactions as promptly as practicable after the Signing Date. With respect to any filing under the HSR Act, such filing and application fees shall be borne fifty percent (50%) by Purchaser as a Purchaser Transaction Cost and fifty percent (50%) by the Company as a Company Transaction Cost (except that the Purchaser will advance and pay when due all filing fees in connection with the HSR Act or charged by any Governmental Authorities relating to such filings or applications, and the Company shall promptly reimburse the Purchaser for fifty percent (50%) of such fees). Each Party also agrees to: (i) supply as promptly as reasonably practicable any additional information and documentary material that may be reasonably requested pursuant to Antitrust Laws; (ii) use reasonable best efforts to take all other actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under Antitrust Laws; and (iii) obtain any Consents under applicable Antitrust Laws, including by requesting early termination of the waiting period provided for under the Antitrust Laws. In connection with its efforts to obtain the expiration or termination of the applicable waiting periods under Antitrust Laws, and to obtain any Consents under applicable Antitrust Laws, each Party shall use its reasonable best efforts to: (A) keep the other Parties reasonably informed of any material communication received by such Party or its Representatives from, or given by such Party or its Representatives to, any Governmental Authority; (B) keep the other Parties reasonably informed of any material communication received or given in connection with any proceeding by a private Person, in each case regarding any of the Transactions; (C) permit a Representative of the other Party and its outside counsel to review (and consider their views in good faith) any material communication given by it to, and consult with each other in good faith in advance of any material meeting or conference with, any Governmental Authority or, in connection with any proceeding by a private Person, with any other Person; (D) to the extent permitted by such Governmental Authority or other Person, give a Representative or Representatives of the other Parties the opportunity with reasonable advance notice to attend and participate in such meetings and conferences; (E) if a Party’s Representative is prohibited from participating in or attending any meetings or conferences, the other Parties shall keep such Party promptly and reasonably apprised of such meetings or conferences; and (F) use reasonable best efforts to cooperate in the preparation and filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the Transactions, articulating any regulatory or competitive argument, or responding to requests or objections made by any Governmental Authority. Any such disclosures, rights to participate or provisions of information by one Party to the other under this Section 7.09 may be made on an outside counsel-only basis to the extent required under applicable Law or as appropriate to satisfy contractual confidentiality obligations. Notwithstanding the foregoing, in any event, even when sharing information on a counsel-only basis, each Party may redact: (x) any information related to valuation of the Company; and (y) information that benefits from attorney- client privilege where disclosure would cause such information to cease to benefit from attorney-client privilege.
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(b) As soon as reasonably practicable following the Signing Date, the Parties shall reasonably cooperate with each other and use their respective reasonable best efforts to prepare and file with Governmental Authorities any requests for approval, to the extent applicable or required, of the Transactions. The Parties shall use their reasonable best efforts to have such Governmental Authorities approve the Transactions. Each Party shall give prompt written notice to the other Party if such Party or any of its Representatives receives any notice from such Governmental Authorities in connection with the Transactions. Each Party shall promptly furnish the other Party with a copy of such Governmental Authority notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the Transactions, whether prior to the Closing or after the Closing, each Party shall arrange for Representatives of such Party to be present for such hearing or meeting. If any objections are asserted with respect to the Transactions under any applicable Law or if any Legal Proceeding is instituted (or threatened to be instituted) by any applicable Governmental Authority or any private Person challenging any of the Transactions or any Ancillary Document as violative of any applicable Law or which would otherwise prevent, materially impede or materially delay the consummation of the Transactions, the Parties shall use their reasonable best efforts to resolve any such objections or Legal Proceedings so as to timely permit consummation of the Transactions. The foregoing obligations shall include using reasonable best efforts to resolve such objections or Legal Proceedings that if not resolved, would reasonably be expected to prevent, materially impede or materially delay the consummation of the Transactions. If any Legal Proceeding is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the Transactions, or any Ancillary Document, the Parties shall, and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective reasonable best efforts to (i) contest and resist any such Legal Proceeding; and (ii) have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Transactions or the Ancillary Documents.
(c) Purchaser shall not, and shall cause its controlled affiliates not to, enter into any transaction, or any agreement, whether oral or written to effect any transaction (including any merger or acquisition) that might reasonably be expected to make it more difficult, or to increase the time required, to: (i) obtain the expiration or termination of the waiting period under the HSR Act applicable to the Transactions or (ii) avoid the entry of, the commencement of litigation seeking the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order that would materially delay or prevent the consummation of the Transactions.
(d) Prior to the Closing, each Party shall use its reasonable best efforts to obtain any Consents of Governmental Authorities or other third Persons as may be necessary for the consummation by the Purchaser, Merger Sub and the Company of the Transactions or required as a result of the execution or performance of, or consummation of the Transactions by the Purchaser, Merger Sub and the Company. The Parties shall provide reasonable cooperation with each other in connection with such efforts.
(e) The Purchaser will lead all meetings, discussions, and communications with any Governmental Authority relating to obtaining antitrust approval for the Transactions. Notwithstanding the foregoing, the Purchaser will consult with and consider in good faith the comments of the Company in connection with any filing, communication, defense, litigation, negotiation, or strategy. The Purchaser shall not, without the prior approval of the Company, have the right to stay, toll or extend any applicable waiting period under any Antitrust Laws. Notwithstanding anything to the contrary, none of the Parties or their respective Affiliates shall be required to propose, negotiate, commit to or effect, by consent decree, hold separate order, or otherwise, the sale, divestiture or disposition of such of its assets, properties or businesses or of the assets, properties or business to be acquired by Purchaser pursuant hereto, terminating any existing relationships, contractual rights or obligations, otherwise impairing any material product, customer relationship, data, dataset, model, algorithm, source code, model weight, parameter, AI Technology, Intellectual Property or other material asset, or agree to the entrance into such other arrangements, in order to avoid the entry of, and the commencement of litigation seeking the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding, except with such Party’s prior written consent.
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Section 7.10 Trust Account. Upon satisfaction or waiver of the conditions set forth in Article VIII and provision of notice of such satisfaction or waiver to the Trustee then, at the Closing, the Purchaser shall: (i) cause any documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered; and (ii) use its commercially reasonable efforts to cause the Trustee to pay all remaining amounts then available in the Trust Account to the Purchaser for immediate use, subject to this Agreement and the Trust Agreement. Purchaser’s notice to the Trustee of satisfaction or waiver as referenced in the preceding sentence shall be in accordance with the terms of the Trust Agreement. Thereafter, the Trust Agreement shall terminate in accordance with its terms, except as otherwise provided under the Trust Agreement.
Section 7.11 Tax Matters.
(a) The Parties agree and acknowledge that, for U.S. federal, and applicable state and local, income Tax purposes, it is intended that the Transactions qualify for the Intended Tax Treatments. The Parties agree and acknowledge that: (i) this Agreement constitutes, and is hereby adopted by the Purchaser as, a separate “plan of reorganization” within the meaning of Section 368 of the Code, Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) for each of the Domestication and the Sponsor Share Conversion for purposes of Sections 354, 361 and 368 of the Code and the Treasury Regulations promulgated under Sections 354, 361 and 368 of the Code; and (ii) this Agreement constitutes, and is hereby adopted by the Purchaser, Merger Sub, and the Company as, a separate “plan of reorganization” within the meaning of Section 368 of the Code, Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) for the Merger for purposes of Sections 354, 361 and 368 of the Code and the Treasury Regulations promulgated under Sections 354, 361 and 368 of the Code. No Party shall (and no Party shall cause or permit their respective Affiliates to) knowingly take or knowingly cause to be taken, or knowingly fail to take or knowingly cause to be failed to be taken, any action, if such action or failure to act would reasonably be expected to prevent or impede the Transactions from qualifying for the Intended Tax Treatments. The Parties agree to file all Tax Returns on a basis consistent with the Intended Tax Treatments unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any similar or analogous Law) or a change in applicable Law. Each Party agrees to use reasonable best efforts to promptly notify all other Parties of any challenge to the qualification of any relevant portion of the Transactions for its Intended Tax Treatment by any Governmental Authority.
(b) All transfer, documentary, sales, use, stamp, registration, recording, registration, value added and other such similar Taxes and fees (including any penalties and interest, but excluding, for the avoidance of doubt, any income, employment, payroll or similar Taxes) that become payable by any of Purchaser, Merger Sub, the Company or the Company’s Subsidiaries in connection with or by reason of the execution of this Agreement and the Transactions (“Transfer Taxes”) shall be borne and paid 50% by the Purchaser and 50% by the Company. The Company shall, at its own expense, timely file all necessary Tax Returns or other documentation with respect to such Transfer Taxes. If required by applicable Law, the other Parties shall join in the execution of any such Tax Returns or other documentation.
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(c) Each Party shall terminate or cause to be terminated all of the Tax sharing, reimbursement, allocation, indemnification or similar agreements, arrangements or undertakings to which such Party is a party to or bound by, or under which such Party has any obligation in effect on the Closing Date for any Tax liability of another Person, regardless of the period in which such Tax liability arises. The foregoing obligation to terminate any such agreements or arrangements shall apply regardless of whether they are written or unwritten. There shall be no continuing obligation for any Party to make any payments under any such agreements, arrangements or undertakings. Notwithstanding the foregoing, there shall be no such termination obligation with respect to customary commercial agreements entered into in the ordinary course of business the primary purpose of which is not related to Taxes.
(d) Each of the Parties shall (and shall cause their respective Affiliates to) use commercially reasonable efforts to cooperate, as and to the extent reasonably requested by another Party, in connection with filing of the relevant Tax Returns, and any audit or tax proceeding. Such cooperation shall include, in each case, solely to the extent commercially reasonable, the retention and (upon the other Party’s request) the provision (with the right to make copies) of records and information reasonably relevant to any tax proceeding or audit, making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Following the Closing Date, to the extent applicable as a result of Purchaser’s status as a PFIC or a CFC for any taxable period ending on or prior to the Closing, the Purchaser shall use commercially reasonable efforts to (i) provide a “PFIC Annual Information Statement”, within the meaning of Treasury Regulations Section 1.1295-1(g), to Persons that were Purchaser Shareholders prior to the Closing Date (each, a “Pre-Domestication Purchaser Shareholder”) and that reasonably requests such information, to enable such Pre-Domestication Purchaser Shareholder to make a “Qualifying Electing Fund” election under Section 1295 of the Code with respect to Purchaser for any taxable year of Purchaser ending on or prior to the date of the Domestication; (ii) provide information reasonably requested by a Pre-Domestication Purchaser Shareholder to enable such Person to report its allocable share of “subpart F” income under Section 951 of the Code for taxable years of Purchaser ending on or prior to the date of the Domestication; and (iii) provide information reasonably requested by a Pre-Domestication Purchaser Shareholder to enable such Person to comply with Treasury Regulations Section 1.367(b)-3(b) or make the election described in Treasury Regulations Section 1.367(b)-3(c)(3), in each case, with respect to the Domestication.
(e) On the Closing Date, the Company shall deliver to Purchaser (i) a certificate certifying that no interest in the Company is a “United States real property interest” within the meaning of Section 897(c) of the Code and otherwise satisfying the requirements of Treasury Regulation Section 1.1445-2(c)(3) and 1.897-2(h) and (ii) a notice of such certification to the Internal Revenue Service pursuant to Treasury Regulations Section 1.897-2(h)(2), in each case, in substantially the form attached hereto as Exhibit D, dated as of the Closing Date and duly signed by a responsible corporate officer of the Company.
Section 7.12 Further Assurances. Except as set forth in Section 7.09, the Parties shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the Transactions as soon as reasonably practicable. The foregoing shall include preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings, unless otherwise set forth in Section 7.09.
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Section 7.13 The Preparation of Proxy Statement/Registration Statement; Shareholders’ Meeting and Approvals.
(a) Registration Statement and Prospectus.
(i) As promptly as practicable after the execution of this Agreement and receipt by the Purchaser of all audited and unaudited financial statements of the Company that are required by applicable Law to be included in the Proxy Statement/Registration Statement, the Purchaser and the Company shall jointly prepare, and the Purchaser and the Company shall jointly file with the SEC, mutually acceptable materials that shall include the proxy statement to be filed with the SEC as part of the Registration Statement and sent to the Purchaser Shareholders relating to the Purchaser Shareholders’ Meeting (such proxy statement, together with any amendments or supplements, the “Proxy Statement”). In connection with the registration under the Securities Act of the shares of (A) Domesticated Purchaser Common Stock and Domesticated Purchaser Warrants to be issued in exchange for the issued and outstanding shares of the Purchaser Class A Ordinary Shares and the Purchaser Common Warrants, respectively, in the Domestication, and (B) other than to the extent prohibited by the SEC, the shares of Domesticated Purchaser Common Stock that constitute the Aggregate Consideration to be received by Company Securityholders (collectively, the “Registration Statement Securities”), the Purchaser and the Company shall prepare and file with the SEC the Registration Statement, in which the Proxy Statement will be included as a prospectus (the “Proxy Statement/Registration Statement”). The Company and its Representatives shall reasonably cooperate with the Purchaser in the preparation of the Proxy Statement/Registration Statement. The Purchaser, Merger Sub and the Company shall use their respective commercially reasonable efforts to cause the Proxy Statement/Registration Statement to: (i) comply with the rules and regulations promulgated by the SEC; (ii) have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing; and (iii) keep the Registration Statement effective as long as is necessary to consummate the Transactions. Without prejudice to Section 8.01(e), notwithstanding anything to the contrary in this Agreement, neither the Company’s counsel nor its other tax advisors nor the Purchaser’s counsel nor its other tax advisors shall be required to provide a tax opinion as a condition to the Closing. If there is any tax opinion required by the SEC (or its staff) to be provided in connection with the Proxy Statement/Registration Statement, the Parties shall use their respective commercially reasonable efforts to cause such opinion to be provided by a tax counsel, subject to customary assumptions and limitations. Such commercially reasonable efforts shall include cooperating, and causing their Affiliates to cooperate, in order to facilitate the issuance of any such tax opinion and, to the extent requested by such counsel, execute and deliver customary tax representation letters to such tax counsel in form and substance reasonably satisfactory to such counsel for purposes of delivering such opinion. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall require (x) any counsel to the Company or its other tax advisors to provide an opinion with respect to any Tax matters relating to or affecting Purchaser (other than with respect to the Merger) or the Purchaser Shareholders, including that the Domestication and the Sponsor Share Conversion qualify for the Purchaser Intended Tax Treatments and (y) any counsel to Purchaser or its other tax advisors to provide an opinion with respect to any Tax matters relating to or affecting the Company or the Company Securityholders, including that the Merger qualifies for the Company Intended Tax Treatment. The Purchaser and Merger Sub also agree to use commercially reasonable efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the Transactions. The Company shall furnish all information concerning the Company and the Company Stockholders as may be reasonably requested in connection with any such action. Each of the Purchaser, Merger Sub and the Company agrees to use commercially reasonable efforts to furnish to the other parties: (x) all information concerning itself, its Subsidiaries, officers, directors, managers, stockholders and other equityholders; and (y) information regarding such other matters, in each case, as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Proxy Statement/Registration Statement, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the Transactions, or any other statement, filing, notice or application made by or on behalf of the Purchaser, Merger Sub or the Company to any regulatory authority (including Nasdaq, as applicable) in connection with the Transactions (the “Offer Documents”).
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(ii) To the extent not prohibited by Law, the Purchaser will advise the Company, reasonably promptly after the Purchaser receives notice (but in any event no later than two Business Days thereafter), of: (A) the time when the Proxy Statement/Registration Statement has become effective or any supplement or amendment has been filed; (B) the issuance of any stop order or the suspension of the qualification of the Domesticated Purchaser Common Stock for offering or sale in any jurisdiction; (C) the initiation or written threat of any proceeding for any such purpose; or (D) any request by the SEC for the amendment or supplement of the Proxy Statement/Registration Statement or for additional information. To the extent not prohibited by Law, the Company and its counsel shall be given a reasonable opportunity to review and comment on the Proxy Statement/Registration Statement and any Offer Document each time before any such document is filed with the SEC. The Purchaser shall give reasonable and good faith consideration to any comments made by the Company and its counsel. To the extent not prohibited by Law, the Purchaser shall provide the Company and their counsel with any comments or other communications, whether written or oral, that the Purchaser or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement/Registration Statement or Offer Documents promptly after receipt of those comments or other communications. Each of the Purchaser and the Company shall reasonably cooperate with respect to any response to comments of the SEC or its staff with respect to the Proxy Statement/Registration Statement and any Offer Document and any amendments thereto.
(iii) Each of the Purchaser, Merger Sub and the Company shall use commercially reasonable efforts to ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in: (A) the Registration Statement will, at the time the Registration Statement is filed with the SEC, at each time at which it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated in the Registration Statement or necessary to make the statements in the Registration Statement, not misleading; or (B) the Proxy Statement will, at the date it is first disseminated to the Purchaser Shareholders and at the time of the Purchaser Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated in the Proxy Statement or necessary in order to make the statements in the Proxy Statement, in light of the circumstances under which they are made, not misleading.
(iv) If, at any time prior to the Closing, any information relating to the Company, the Purchaser or any of their respective Subsidiaries, Affiliates, directors or officers is discovered by the Company or the Purchaser, which is required to be set forth in an amendment or supplement to the Proxy Statement or the Registration Statement so that neither of such documents would include any misstatement of a material fact or omit to state any material fact necessary to make the statements in such documents, with respect to the Proxy Statement, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other parties. In such event, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the Purchaser Shareholders.
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(b) Purchaser Shareholder Approval.
(i) As promptly as reasonably practicable after the Registration Statement is declared effective under the Securities Act, the Purchaser shall: (1) cause the Proxy Statement to be disseminated to Purchaser Shareholders in compliance with applicable Law; (2) duly (x) give notice of and (y) convene and hold an extraordinary general meeting of Purchaser Shareholders (the “Purchaser Shareholders’ Meeting”) in accordance with the Purchaser’s Organizational Documents and applicable Law, as promptly as reasonably practicable following the date the Registration Statement is declared effective; and (3) solicit proxies from the holders of Purchaser Ordinary Shares to vote in favor of each of the Transaction Proposals. Unless the board of directors of the Purchaser have made a Modification in Recommendation, the Purchaser, through its board of directors, shall recommend to the Purchaser Shareholders: (A) the adoption and approval of this Agreement in accordance with applicable Law and exchange rules and regulations; (B) the adoption and approval of the Domestication; (C) the adoption and approval of the Purchaser Charter upon Domestication and the Purchaser Bylaws upon Domestication; (D) the approval of any separate or unbundled non-binding advisory proposals as are required to implement the foregoing; (E) the approval of the issuance of shares of Domesticated Purchaser Common Stock as required by listing rules of Nasdaq; (F) the approval of the adoption by the Purchaser of the 2026 MEP and the Equity Incentive Plan; (G) the election of the members of the Post-Closing Purchaser Board in accordance with Section 7.17; (H) the adoption and approval of any other proposals as the SEC (or staff members of the SEC and Nasdaq, as applicable) may indicate are necessary in its comments to the Registration Statement or correspondence; (I) the adoption and approval of any other proposals the Purchaser reasonably considers to be necessary or appropriate in connection with the Transactions (following consultation with the Company), including, to the extent required, an extension to the deadline set out in the Purchaser Organizational Documents for consummating a Business Combination; and (K) the adjournment of the Purchaser Shareholders’ Meeting to a later date or dates, if (w) necessary or appropriate, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, any of the foregoing (such proposals in clauses (A) through (H), together, the “Transaction Proposals”); (x) the Purchaser determines that one or more of the conditions to Closing is not satisfied or waived; (y) up to three times, in each instance for a period not exceeding 10 Business Days, if the Purchaser determines in its reasonable discretion that adjournment is otherwise required; or (z) mutually agreed by Purchaser and the Company. Unless the board of directors of the Purchaser has made a Modification in Recommendation prior to its dissemination, the Purchaser shall include such recommendation in the Proxy Statement. Subject to the following sentence, the board of directors of the Purchaser shall not, except as required by applicable Law, withdraw, amend, qualify or modify its recommendation to the Purchaser Shareholders that they vote in favor of the Transaction Proposals (together with any withdrawal, amendment, qualification or modification of its recommendation to the Purchaser Shareholders described in the Recitals to this Agreement, a “Modification in Recommendation”). Notwithstanding anything to the contrary contained in this Agreement, at any time prior to, but not after, the Domestication, the board of directors of the Purchaser may make a Modification in Recommendation if they shall have concluded in good faith, after consultation with its outside legal advisors and financial advisors, that the failure to make a Modification in Recommendation would be a breach of its fiduciary duties under applicable Law. To the fullest extent permitted by applicable Law, the Purchaser’s obligations to establish a record date for, duly call, give notice of, convene and hold the Purchaser Shareholders’ Meeting shall not be affected by any Modification in Recommendation. The Purchaser may only adjourn the Purchaser Shareholders’ Meeting: (1) to solicit additional proxies for the purpose of obtaining the Purchaser Shareholder Approval; (2) for the absence of a quorum; (3) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that the Purchaser has determined in good faith after consultation with outside legal counsel is required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Purchaser Shareholders prior to the Purchaser Shareholders’ Meeting; or (4) in order to engage with investors. Notwithstanding the foregoing, without the consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), the Purchaser Shareholders’ Meeting may not be adjourned to a date that is more than 30 days after the date for which the Purchaser Shareholders’ Meeting was originally scheduled (excluding any adjournments required by applicable Law). The Purchaser shall provide the holders of Purchaser Class A Ordinary Shares the opportunity to elect redemption of such Purchaser Class A Ordinary Shares in connection with the Purchaser Shareholders’ Meeting, as required by the Purchaser’s Organizational Documents (the “Redemption”), which Redemption shall occur at least one day prior to the Domestication.
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Section 7.14 Employee Matters.
(a) Equity Incentive Plan. Prior to the Closing Date, but subject to the approval of the Purchaser Shareholders, Purchaser shall adopt an equity incentive plan that provides for grants of awards to eligible service providers, in a form that is mutually agreed upon between the Company and the Purchaser (which agreement shall not be unreasonably withheld, conditioned or delayed) (the “Equity Incentive Plan”). The Equity Incentive Plan shall have an initial share reserve equal to 10% of the aggregate number of shares of Domesticated Purchaser Common Stock outstanding immediately following the Effective Time, on a fully diluted, as-converted and as-exercised basis (calculated after giving effect to the Transactions) and shall include an annual automatic increase provision (an “evergreen”) pursuant to which, on the first day of each fiscal year of the Purchaser beginning in 2028 and ending on (and including) the eighth (8th) anniversary of the Closing, the number of shares of Domesticated Purchaser Common Stock reserved for issuance under the Equity Incentive Plan shall automatically increase by a number of shares equal to the lesser of (i) 5% of the total number of shares of Domesticated Purchaser Common Stock outstanding on the last day of the immediately preceding fiscal year, (ii) 4,500,000 shares of Domesticated Purchaser Common Stock, or (iii) such lesser number of shares as determined by the Post-Closing Purchaser Board.
(b) 2026 Milestone Equity Plan. Prior to the Closing Date, but subject to the approval of the Purchaser Shareholders, Purchaser shall adopt an equity incentive plan to be called the 2026 Milestone Equity Plan (the “2026 MEP”) in a form that only provides for awards on terms and conditions that are consistent with those set forth on the 2026 Milestone Equity Plan Term Sheet, with any material changes or modifications to the 2026 Milestone Equity Plan Term Sheet subject to mutual agreement of the Company and Purchaser (such agreement not to be unreasonably withheld, conditioned or delayed by either the Company or Purchaser, as applicable), in the manner prescribed under applicable Laws, effective as of the Effective Time. As set forth in the 2026 Milestone Equity Plan Term Sheet, the share reserve of the 2026 MEP shall equal 17,500,000 shares of Domesticated Purchaser Common Stock (the “MEP Reserve”) for issuance under the 2026 MEP. To the extent any awards issued under the 2026 MEP fail to vest by the last date possible for vesting under the 2026 MEP (as described in the 2026 Milestone Equity Plan Term Sheet), all shares subject to such awards that fail to vest shall be removed from the 2026 MEP Reserve and no longer be authorized for issuance under the 2026 MEP or any other equity plan of Purchaser or its Affiliates.
(c) Notwithstanding anything in this Agreement to the contrary, all provisions contained in this Section 7.14 are included for the sole benefit of the Purchaser, Merger Sub and the Company. Nothing in this Agreement, whether express or implied: (i) shall be construed to establish, amend, or modify any employee benefit plan, program, agreement or arrangement; (ii) shall limit the right of the Purchaser or its respective Affiliates (including, following the Closing, the Surviving Company) to amend, terminate or otherwise modify any Company Benefit Plan or other employee benefit plan, agreement or other arrangement following the Closing Date; or (iii) shall confer upon any Person who is not a Party any right to continued or resumed employment or recall, any: (x) right to compensation or benefits; or (y) third-party beneficiary or other right of any kind or nature whatsoever. Without limiting the generality of the foregoing, the prohibitions set forth in the preceding sentence shall apply to any holder of Equity Securities, any current or former director, manager, officer, employee or independent contractor of the Company or its Affiliates, or any participant or Person eligible to participate in any Company Benefit Plan or other employee benefit plan, agreement or other arrangement (or any dependent or beneficiary of such participant).
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Section 7.15 Public Announcements.
(a) During the Interim Period no public release, filing or announcement concerning this Agreement, the Ancillary Documents or the Transactions shall be issued by any Party or any of their Affiliates without the prior written consent of the Purchaser and the Company, except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange. In the event any such release, filing or announcement is required in accordance with the preceding sentence, the applicable Party shall use its commercially reasonable efforts, to the extent permitted by applicable Law, to allow the other Party reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.
(b) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within four Business Days thereafter), issue a press release announcing the execution of this Agreement (the “Signing Press Release”). Promptly after the issuance of the Signing Press Release, the Purchaser shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws. The Company shall have an opportunity to review and comment upon the Signing Filing prior to filing and Purchaser shall not file the Signing Filing without the consent of the Company (which approval shall not be unreasonably withheld, conditioned or delayed, and must be provided in advance of the filing deadline or deemed waived). As promptly as practicable after the Closing (but in any event within four Business Days thereafter), the Parties shall mutually agree upon and issue a press release announcing the consummation of the Transactions (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, the Purchaser shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal Securities Laws. The Company shall have an opportunity to review and comment upon the Closing Filing prior to filing and Purchaser shall not file the Closing Filing without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed, and must be provided in advance of the filing deadline or deemed waived).
Section 7.16 Confidential Information.
(a) The Company acknowledges and agrees that, during the Interim Period and, if this Agreement is terminated in accordance with Article IX, until the expiration of the term under the Confidentiality Agreement, the Purchaser Confidential Information being provided to it in connection with this Agreement and the consummation of the Transactions are subject to the terms of the Confidentiality Agreement, the terms of which are incorporated in this Agreement by reference. The Confidentiality Agreement shall survive the execution, delivery and performance of this Agreement.
(b) The Purchaser acknowledges that the Company Confidential Information being provided to it in connection with this Agreement and the consummation of the Transactions are subject to the terms of the Confidentiality Agreement, the terms of which are incorporated in this Agreement by reference. The Confidentiality Agreement shall survive the execution, delivery and performance of this Agreement. Notwithstanding the foregoing, the Purchaser shall have the right to share PIPE Materials (i) with potential Additional PIPE Investors in connection with any Additional PIPE Investment, subject to customary non-disclosure agreements, and (ii) as required to be disclosed by applicable Law and SEC rules, including the Exchange Act. This Section 7.16 is not intended to restrict Purchaser’s Representatives or their respective Affiliates’ ability to compete with the Company or the Purchaser or Merger Sub, but only to prohibit disclosure and knowing use of Company Confidential Information by the Purchaser, Merger Sub or their respective Representatives.
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Section 7.17 Post-Closing Board of Directors and Executive Officers.
(a) The Parties shall take all necessary action, including causing the directors of the Purchaser to resign, so that effective as of the Closing, the Purchaser’s board of directors (the “Post-Closing Purchaser Board”) will consist of a three-class “staggered” board of nine individuals (appointed in accordance with Stock Exchange rules). The Post-Closing Purchaser Board shall consist of eight directors chosen by the Company (the “Company Directors”) and one director chosen by the Sponsor (the “Sponsor Director”). The Sponsor Director shall serve as a class III director. Subject to the terms of the Purchaser’s Organizational Documents, the Purchaser Charter upon Domestication and the Purchaser Bylaws upon Domestication, the Parties shall take all such action within their power as may be necessary or appropriate such that immediately following the Closing Date, the Post-Closing Purchaser Board shall initially include such director nominees to be designated by the Company and Sponsor pursuant to written notice to the Purchaser following the Signing Date. The Parties shall cause the composition of the Post-Closing Purchaser Board and each committee thereof to comply with applicable Nasdaq and SEC independence and governance requirements as of the Closing, subject to any available phase-in periods. At or prior to the Closing, the Company and the Purchaser shall provide each initial director with a customary director indemnification agreement, in form and substance reasonably acceptable to such director, the Company and the Purchaser.
(b) The Parties shall take all action necessary, including causing the officers of the Purchaser to resign, so that the individuals serving as the officers of the Purchaser immediately after the Closing will be individuals the Company desires to appoint to such role.
(c) The Company shall designate the Company Directors and the Sponsor shall designate the Sponsor Director by written notice to Purchaser, in each case, delivered prior to the effectiveness of the Registration Statement. If any of the directors designated by the parties shall be unable or unwilling to serve at the Closing, the Company or the Purchaser, respectively, shall promptly designate a replacement director and provide any relevant information about such appointee as the other party may reasonably request.
Section 7.18 Indemnification of Directors and Officers; Tail Insurance.
(a) For a period of six years from the Closing Date, the Parties shall, and shall cause the Purchaser and the Surviving Company to, maintain in effect, in favor of the D&O Indemnified Parties, the exculpation, indemnification and advancement of expenses provisions, of the Purchaser’s, Merger Sub’s and the Company’s respective Organizational Documents as in effect immediately prior to the Closing Date or in any indemnification agreements of the Purchaser, Merger Sub or the Company, on the one hand, with any D&O Indemnified Party, on the other hand, as in effect immediately prior to the Closing Date. The Parties shall not, and shall cause the Purchaser and the Company not to, amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights of any D&O Indemnified Party under the respective Organizational Documents and indemnification agreements described in the preceding sentence. Notwithstanding the foregoing, all rights to indemnification or advancement of expenses in respect of any Legal Proceedings pending or asserted or any claim made within such period shall continue until the disposition of such Legal Proceeding or resolution of such claim. From and after the Closing Date, the Purchaser shall honor, and shall cause the Surviving Company to honor, in accordance with their respective terms, each of the covenants contained in this Section 7.18 without limit as to time.
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(b) At or prior to the Closing, the Purchaser shall obtain a “tail” directors’ and officers’ liability insurance policy (the “D&O Tail”) in respect of acts or omissions occurring prior to the Closing. Such tail policy shall cover each Person that is or was a director or officer of the Purchaser, Merger Sub or the Company at any time prior to or at the Closing and who was covered by any directors’ and officers’ liability insurance policy of the Purchaser, Merger Sub or the Company at any time during the policy periods being tailed, including any Person who departed the Purchaser, Merger Sub or the Company prior to the Closing but was covered under such policies during his or her service. True, correct and complete copies of such policies have been made available to each of the Purchaser and the Company. With respect to coverage, deductibles and amounts for the six-year period following the Closing, the D&O Tail shall be on terms no less favorable than those of such applicable policy in effect on the Signing Date. Notwithstanding the foregoing, in no event shall the Purchaser be required to expend on the premium of such D&O Tail in excess of 300% of the sum of the aggregate annual premiums currently payable by the Purchaser and the aggregate annual premiums currently payable by the Company, in each case with respect to their respective directors’ and officers’ liability insurance policies in effect as of the Signing Date (the “Premium Cap”). If the D&O Tail providing the coverage required by this Section 7.18(b) is unavailable at the Premium Cap, then any such D&O Tail shall contain the maximum coverage available at the Premium Cap. The Purchaser shall maintain the D&O Tail in full force and effect for its full term and cause all obligations under the D&O Tail to be honored by the Surviving Company, as applicable. No other party shall have any further obligation to purchase or pay for such insurance pursuant to this Section 7.18(b). No claims made under or in respect of the D&O Tail related to any fiduciary or employee of the Company shall be settled without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed).
(c) The rights of each D&O Indemnified Party under this Agreement shall be in addition to, and not in limitation of, any other rights such Person may have under the Organizational Documents of the Purchaser, Merger Sub or the Company, any other indemnification arrangement, any Law or otherwise. The obligations of the Purchaser and the Company under this Section 7.18(c) shall not be terminated or modified after the Closing in such a manner as to materially and adversely affect any D&O Indemnified Party without the consent of such D&O Indemnified Party. The provisions of this Section 7.18 shall survive the Closing and expressly are intended to benefit, and are enforceable by, each of the D&O Indemnified Parties, each of whom is an intended third-party beneficiary of this Section 7.18.
(d) If, prior to the sixth anniversary of the Closing Date, the Purchaser or, after the Closing, the Surviving Company, or any of their respective successors or assigns: (i) consolidates with or merges into any other Person and shall not be the continuing or surviving entity of such consolidation or merger; or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, in each such case, proper provision shall be made so that the successors and assigns of the Purchaser or the Company, as applicable, assume the obligations set forth in this Section 7.18.
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Section 7.19 PIPE Investment. Unless otherwise approved in writing by each of the Purchaser and the Company (which approval shall not be unreasonably withheld, conditioned or delayed), none of the Purchaser, Merger Sub or the Company shall: (a) enter into any agreements with additional PIPE Investors (such investors, “Additional PIPE Investors,” and such agreements, “Additional PIPE Agreements”, and together with the Initial PIPE Agreements, the “PIPE Agreements”); or (b) with respect to any PIPE Agreement, amend, modify, supplement, waive or terminate, or agree or provide consent to amend, modify, supplement, waive or terminate any provision or remedy under, or any replacement of, such PIPE Agreement, other than, in each case, any assignment or transfer contemplated in such PIPE Agreement or expressly permitted by such PIPE Agreement (without any further amendment, modification or waiver to such assignment or transfer provision). Following execution of any PIPE Agreement, each of the Parties shall use its commercially reasonable efforts to take, or to cause to be taken, all actions required or necessary, or that it otherwise deems to be proper or advisable, to consummate the transactions contemplated by such PIPE Agreement on the terms described in such PIPE Agreement. Without limiting the generality of the foregoing, such actions by each of the Parties shall include each of the Parties using commercially reasonable efforts to enforce their rights, as applicable, under such PIPE Agreement to cause the other parties to such PIPE Agreement, as applicable, to fund to (or as directed by) the Purchaser or the post-Closing company the applicable purchase price, principal amount, commitment consideration, warrant consideration or other funding amounts or obligations under such PIPE Agreement in accordance with its terms, and to issue or deliver, as applicable, any convertible notes, shares, warrants, commitment securities or other securities contemplated by such PIPE Agreement. Each of the Purchaser and the Company, as applicable, shall give the other party prompt written notice (e-mail being acceptable): (i) of the receipt of any request from any other party to any PIPE Agreement for an amendment to, modification of, supplement to, waiver under or termination of such PIPE Agreement; (ii) of any breach or default to the Knowledge of such Party that (or any event or circumstance that, to the Knowledge of such Party, with or without notice, lapse of time or both) would give rise to any breach or default, by any party to any PIPE Agreement; (iii) of the receipt by such Party of any written notice or other written communication with respect to any actual or potential threatened or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation of any PIPE Agreement by another party to such PIPE Agreement; and (iv) if such Party does not expect to receive all or any portion of the applicable funding amount under any PIPE Agreement in accordance with its terms.
Section 7.20 [Reserved].
Section 7.21 Affiliate Agreements. Except as set forth on Section 7.21 of the Company Disclosure Letter, all agreements with Related Persons (other than (a) any employment agreement, consulting agreement, or employee benefit arrangement in effect as of the date of this Agreement, (b) indemnification agreements with directors and officers in effect as of the date of this Agreement, and (c) the Organizational Documents of the Company in effect as of the date of this Agreement) shall be terminated or settled at or prior to the Closing without further liability to the Purchaser, Merger Sub or the Company.
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Section 7.22 Requisite Stockholder Approval.
(a) As promptly as practicable following the date upon which the Proxy Statement/Registration Statement has been declared effective by the SEC and the prospectus relating to such Proxy Statement/Registration Statement has been filed with the SEC, the Company shall use commercially reasonable efforts to: (i) (x) promptly distribute such prospectus to all holders of Company Stock; (y) solicit from all holders of Company Stock entitled to vote thereon a duly executed counterpart to the Written Consent; and (z) obtain the Requisite Stockholder Approval; and (ii) deliver such Requisite Stockholder Approval to the Purchaser no later than the Written Consent Deadline. The Company will prepare (subject to the reasonable approval of the Purchaser) and deliver, to each applicable Company Stockholder that did not execute and deliver the Written Consent, the notice required by Section 228(e) of the DGCL, which notice shall include a description of the appraisal rights of such holders available under Section 262 of the DGCL, along with such other information as is required under Section 228(e) and Section 262 of the DGCL and pursuant to other applicable Law.
(b) In the event the Company is not able to obtain and deliver to Purchaser the Requisite Stockholder Approval as set forth in clause (a), above, and the Purchaser does not elect to exercise its right to terminate this Agreement pursuant to Section 9.01(h), the Company shall duly convene a meeting of the stockholders of the Company (the “Company Stockholder Meeting”) for the purpose of voting solely upon the adoption and approval of this Agreement and the Transactions, including the Merger, and the other matters set forth in the Written Consent, as soon as reasonably practicable after the Written Consent Deadline. The Company shall provide the Purchaser with notice of the time and location of the Company Stockholder Meeting reasonably in advance of, and in any event not less than ten Business Days prior to, the Company Stockholder Meeting, which notice shall contain sufficient information and other materials to enable the Purchaser to exercise its right to vote the shares of Company Stock subject to the Company Support Agreements pursuant to the irrevocable proxies granted to the Purchaser set forth in such Agreements. Notwithstanding the foregoing, the Company shall have no obligation to call or hold a Company Stockholder Meeting if a Written Consent executed by or on behalf of the Requisite Stockholders shall have previously been delivered to and accepted by the Company and subsequently delivered to the Purchaser.
ARTICLE
VIII
CLOSING CONDITIONS
Section 8.01 Conditions to Each Party’s Obligations. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction or written waiver (where permissible) by the Company and the Purchaser of the following conditions:
(a) Purchaser Shareholder Approval. The Purchaser Shareholder Approval shall have been obtained with respect to each Transaction Proposal and any other proposal set forth in Section 7.13(b)(i) that is required by applicable Law, the Purchaser’s Organizational Documents, Nasdaq or the SEC to consummate the Transactions.
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(b) Company Stockholder Approval. The Requisite Stockholder Approval shall have been obtained.
(c) Regulatory Approvals. Any applicable waiting period or any extension of any applicable waiting period under the HSR Act in respect of the Transactions shall have expired or been earlier terminated without the imposition of burdensome conditions.
(d) No Adverse Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the Transactions illegal or which otherwise prevents or prohibits consummation of the Transactions.
(e) Registration Statement. The Registration Statement shall have been declared effective under the Securities Act by the SEC and shall remain effective as of the Closing. No stop order or similar order suspending the effectiveness of the Registration Statement shall have been issued and be in effect with respect to the Registration Statement. No proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn.
(f) Nasdaq Listing. The shares of Domesticated Purchaser Common Stock to be issued in connection with the Transactions shall be approved for listing upon the Closing on Nasdaq subject only to notice of issuance.
Section 8.02 Conditions to Obligations of the Company. The obligations of the Company to consummate the Transactions shall also be subject to the satisfaction or written waiver (where permissible) by the Company of the following conditions:
(a) Representations and Warranties.
(i) The Purchaser Fundamental Representations shall be true and correct in all respects (other than de minimis inaccuracies), in each case on and as of the Signing Date and on and as of the Closing Date, as if made on the Closing Date, except for: (A) those representations and warranties that address matters only as of a particular date (which representations and warranties shall be true and correct in all respects (other than de minimis inaccuracies) as of such date) and (B) such changes after the Signing Date that are expressly contemplated by this Agreement.
(ii) Each of the representations and warranties of the Purchaser and Merger Sub set forth in this Agreement and in any certificate delivered by or on behalf of the Purchaser or Merger Sub pursuant to this Agreement other than the Purchaser Fundamental Representations shall be true and correct on and as of the Signing Date and on and as of the Closing Date as if made on the Closing Date, except for: (x) those representations and warranties that address matters only as of a particular date (which representations and warranties shall be true and correct as of such date, subject to the following clause (y)); and (y) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality, Purchaser Material Adverse Effect or any similar qualification or exception), individually or in the aggregate, have not had and would not reasonably be expected to have a Purchaser Material Adverse Effect.
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(b) Agreements and Covenants. The Purchaser and Merger Sub shall have performed in all material respects all of their respective obligations and complied in all material respects with all of their respective agreements and covenants under this Agreement to be performed or complied with by them on or prior to the Closing Date.
(c) No Purchaser Material Adverse Effect. No Purchaser Material Adverse Effect shall have occurred with respect to the Purchaser or Merger Sub since the Signing Date that is continuing.
(d) Domestication. The Domestication shall have been completed as provided in Section 1.01 and a time-stamped copy of the certificate issued by the Secretary of State of Delaware in relation thereto shall have been delivered to the Company.
(e) Closing Deliveries.
(i) Officer Certificate. The Purchaser shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer of the Purchaser in such capacity, certifying as to the satisfaction of the conditions specified in Section 8.02(a), Section 8.02(b) and Section 8.02(c).
(f) 2026 Milestone Equity Plan. The Purchaser shall have adopted the 2026 MEP in accordance with Section 7.14.
Section 8.03 Conditions to Obligations of the Purchaser. The obligations of the Purchaser and Merger Sub to consummate the Transactions shall also be subject to the satisfaction or written waiver (where available) of the following conditions:
(a) Representations and Warranties.
(i) The Company Fundamental Representations shall be true and correct in all respects (other than de minimis inaccuracies), in each case on and as of the Signing Date and on and as of the Closing Date, as if made on the Closing Date, except for: (A) those representations and warranties that address matters only as of a particular date (which representations and warranties shall be true and correct in all respects (other than de minimis inaccuracies) as of such date) and (B) such changes after the Signing Date that are expressly contemplated by this Agreement.
(ii) Each of the representations and warranties of the Company set forth in this Agreement and in any certificate delivered by or on behalf of the Company pursuant to this Agreement other than the Company Fundamental Representations shall be true and correct on and as of the Signing Date and on and as of the Closing Date as if made on the Closing Date, except for: (x) those representations and warranties that address matters only as of a particular date (which representations and warranties shall be true and correct as of such date, subject to the following clause (y)); and (y) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality, Company Material Adverse Effect or any similar qualification or exception), individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
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(b) Agreements and Covenants. The Company shall have performed in all material respects all of its obligations and complied in all material respects with all of the agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Company Material Adverse Effect. No Company Material Adverse Effect shall have occurred with respect to the Company since the Signing Date that is continuing.
(d) Lock-Up Agreement. Each Company Stockholder shall have executed and delivered the Lock-Up Agreement.
(e) Closing Deliveries.
(i) Officer Certificate. The Purchaser shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Section 8.03(a), Section 8.03(b) and Section 8.03(c).
(ii) Secretary Certificate. The Company shall have delivered to the Purchaser a certificate, signed by the Company’s secretary or other executive officer in such capacity, certifying as to the validity and effectiveness of, and attaching: (A) copies of the Company’s Organizational Documents as in effect as of the Closing Date (immediately prior to the Closing); and (B) the requisite resolutions of the Company’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each Ancillary Document to which the Company is or is required to be a party or bound, and the consummation of the Transactions.
(iii) SAFE Amendments. Each SAFE Amendment shall be in full force and effect as of the Closing Date.
(iv) Valuation Report. The Purchaser shall have received a valuation report obtained in a form reasonably acceptable to the Purchaser from a reputed Indian chartered accountancy firm issued on a reliance basis to the Purchaser, certifying: (i) the value of the Company as on the specified date determined under Section 9 of the IT Act and the rules framed thereunder, (ii) the value of the Indian assets of the Company (including its Subsidiary in India) as on the specified date determined under Section 9 of the IT Act and the rules framed thereunder, and (iii) the percentage of value derived by the Company from its Indian assets (including its Subsidiary in India) under Section 9 of the IT Act and the rules framed thereunder.
(v) The Purchaser shall have received a 499 Tax Status Report from each of the Company Stockholders.
(f) Pre-Closing Actions. The Company shall have completed, or caused to be completed, each of the actions set forth on Schedule 8.03(f).
Section 8.04 Frustration of Conditions. Notwithstanding anything to the contrary contained in this Agreement, no Party may rely on the failure of any condition set forth in this Article VIII to be satisfied if such failure was primarily caused by the failure of such Party or the failure of such Party’s Affiliates to comply with or perform any of its covenants or obligations set forth in this Agreement.
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ARTICLE
IX
TERMINATION AND EXPENSES
Section 9.01 Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing as follows:
(a) by mutual written consent of the Purchaser and the Company;
(b) by the Company by written notice to the Purchaser if at any time prior to the receipt of the Purchaser Shareholder Approval there has been a Modification in Recommendation;
(c) by the Company or Purchaser by written notice to the other Party if the Purchaser Shareholder Approval shall not have been obtained with respect to each Transaction Proposal and any other proposal set forth in Section 7.13(b)(i) that is required by applicable Law, the Purchaser’s Organizational Documents, Nasdaq or the SEC to consummate the Transactions by reason of the failure to obtain the required vote at any Purchaser Shareholders’ Meeting duly convened or at any adjournment or postponement;
(d) by the Purchaser or the Company by written notice to the other Party if any of the conditions to the Closing set forth in Article VIII have not been satisfied or waived on or prior to March 31, 2027, or such other date as may be agreed in writing by Purchaser and the Company (such date, as it may be extended, the “Outside Date”). The right to terminate this Agreement under this Section 9.01(d) shall not be available to a Party if a breach or violation by such Party or its Affiliates of any representation, warranty, covenant or obligation under this Agreement was the primary cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date;
(e) by the Purchaser or the Company by written notice to the other Party if a Governmental Authority of competent jurisdiction shall have issued an Order, Law or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Transactions, and such Order, Law or other action has become final and non-appealable. Notwithstanding the foregoing, the right to terminate this Agreement pursuant to this Section 9.01(e) shall not be available to a Party if the failure by such Party or its Affiliates to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;
(f) by the Company by written notice to the Purchaser if: (i) there has been a breach by the Purchaser or Merger Sub of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of the Purchaser or Merger Sub shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.02(a) or Section 8.02(b) to be satisfied (treating the Closing Date for such purposes as the Signing Date or, if later, the date of such breach); and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of: (A) thirty (30) days after written notice of such breach or inaccuracy is provided to the Purchaser or Merger Sub; or (B) prior to the Outside Date. The Company shall not have the right to terminate this Agreement pursuant to this Section 9.01(f) if at such time the Company is in material breach of this Agreement;
(g) by the Purchaser by written notice to the Company if: (i) there has been a breach by the Company of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of the Company shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.03(a) or Section 8.03(b) to be satisfied (treating the Closing Date for such purposes as the Signing Date or, if later, the date of such breach); and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of: (A) thirty (30) days after written notice of such breach or inaccuracy is provided to the Company; or (B) prior to the Outside Date. The Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.01(g) if at such time the Purchaser or Merger Sub is in material breach of this Agreement;
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(h) by the Purchaser by written notice to the Company if the Written Consent, duly executed by the Requisite Stockholders, has not been delivered to the Purchaser on or before the Written Consent Deadline. Notwithstanding the foregoing, Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.01(h) once such Written Consent has been duly executed by the Requisite Stockholders and received by Purchaser; and
(i) by the Purchaser if there occurs an S-4 Filing Delay.
(j) Any termination of this Agreement by the Purchaser shall require the approval of the Purchaser’s board of directors.
Section 9.02 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 9.01 and pursuant to a written notice delivered by the applicable Party to the other Party, which sets forth the basis for such termination, including the provision of Section 9.01 under which such termination is made. If this Agreement is validly terminated pursuant to Section 9.01, this Agreement shall forthwith become void. In such event, there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Section 7.15, Section 7.16, Article X, and this Section 9.02 shall survive the termination of this Agreement; and (ii) nothing in this Agreement shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant or obligation under this Agreement or Fraud against such Party, in either case, prior to termination of this Agreement (in each case of clauses (i) and (ii) above, subject to Section 10.16 and Section 10.17).
ARTICLE
X
MISCELLANEOUS
Section 10.01 No Survival. Except (x) as otherwise contemplated by Section 9.02 or (y) in the case of Fraud, none of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closing (and there shall be no liability after the Closing in respect of such provisions). Notwithstanding the foregoing, those covenants and agreements contained in this Agreement that by their terms expressly apply in whole or in part after the Closing shall survive only with respect to any breaches occurring after the Closing.
Section 10.02 Notices. All notices, consents, waivers and other communications under this Agreement shall be in writing and shall be deemed to have been duly given: (i) when delivered, if delivered in person; (ii) when sent, if sent by electronic mail or other electronic means (provided that no “bounce back” or similar message is received); (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service; or (iv) three Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, to the applicable Party at the following addresses (or at such other address of a Party as shall be specified by like notice):
If to the Purchaser:
Bluerock Acquisition
Corp.
919 Third Avenue
New York, NY 10022
Attn: Harrison Seideman
Email: [email protected]
with a copy (which will not constitute notice) to:
Ashurst Perkins Coie LLP
1155 Avenue of the Americas 22nd Floor
New York, NY 10036-2711
Attn: Elliott Smith; Gina Eiben
Email: [email protected]; [email protected]
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If to the Company, to:
Bitonic Technology Labs, Inc.
400 Concar Drive
San Mateo, CA 94402
Attn: Raghavendra Kumar Ravinutala
Email: [email protected]; [email protected]; [email protected]
with a copy (which will not constitute notice) to:
Fox Rothschild LLP
101 Park Avenue, Suite 1700
New York, NY 10178
Attn: Loren D. Danzis, Esq., Lauren W. Taylor, Esq.
Email: [email protected]; [email protected]
Section 10.03 Binding Effect; Assignment. This Agreement and all of the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the Parties. Any assignment without such consent shall be null and void. No such assignment shall relieve the assigning Person of its obligations under this Agreement.
Section 10.04 Third Parties. The rights set forth in Section 7.11, Section 7.17, Section 7.18, and Section 10.14 are express rights granted for the benefit of third parties. Subject to the preceding sentence, nothing contained in this Agreement or in any instrument or document executed by any party in connection with the Transactions shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party or a successor or permitted assign of a Party.
Section 10.05 Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the Transactions, shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to contracts entered into and to be performed solely within such state, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction (except that the Cayman Company Act shall apply to the Domestication and any claims related to internal affairs of Purchaser prior to the Domestication).
Section 10.06 Jurisdiction. Any Legal Proceeding based upon, arising out of or related to this Agreement or the Transactions must be brought in the Court of Chancery of the State of Delaware and any State of Delaware appellate court from the Court of Chancery of the State of Delaware. Each of the Parties irrevocably: (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Legal Proceeding; (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum; (iii) agrees that all claims in respect of the proceeding or Legal Proceeding shall be heard and determined only in any such court; and (iv) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or the Transactions in any other court. Nothing in this Agreement shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding brought pursuant to this Section 10.06.
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Section 10.07 WAIVER OF JURY TRIAL. ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES. THEREFORE, EACH PARTY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS.
Section 10.08 Specific Performance. Each Party: (i) acknowledges that the rights of each Party to consummate the Transactions are unique; (ii) recognizes and affirms that if this Agreement is breached by any Party, money damages may be inadequate and the non-breaching Party may have no adequate remedy at law; and (iii) agrees that irreparable damage would occur if any of the provisions of this Agreement were not performed by any Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce specifically the terms and provisions of this Agreement, without the requirement to post any bond or other security or to prove that money damages would be inadequate. The foregoing is in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity.
Section 10.09 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable by any court of competent jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable. The validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired nor shall the validity, legality or enforceability of such provision be affected in any other jurisdiction. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
Section 10.10 Amendment; Waiver. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by the Purchaser, Merger Sub and the Company. At any time prior to the Closing, any Party may, as applicable, by action taken by its board of directors or other officers or Persons thereunto duly authorized: (a) extend the time for the performance of the obligations or acts of another Party; (b) waive any inaccuracies in the representations and warranties (of another Party) that are contained in this Agreement; or (c) waive compliance by another Party with any of the agreements or conditions contained in this Agreement. Notwithstanding the foregoing, such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party granting such extension or waiver. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any Party to assert any of its rights under this Agreement shall not constitute a waiver of such rights. The approval of this Agreement by the shareholders or stockholders of any of the Parties shall not restrict the ability of the board of directors of any of the Parties to terminate this Agreement in accordance with Section 9.01 or to cause such Party to enter into an amendment to this Agreement pursuant to this Section 10.10.
Section 10.11 Entire Agreement. This Agreement and the documents or instruments referred to in this Agreement, including any exhibits and schedules attached, which exhibits and schedules are incorporated by reference, together with the Ancillary Documents and the Company Disclosure Letter and the Purchaser Disclosure Letter referenced in this Agreement, embody the entire agreement and understanding of the Parties in respect of the subject matter contained in this Agreement. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to in this Agreement or the documents or instruments referred to in this Agreement, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained in this Agreement.
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Section 10.12 Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement, unless as otherwise expressly provided in this Agreement: (a) words denoting any gender shall include all genders, and words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and permitted assigns, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) all accounting terms used and not otherwise defined in this Agreement or any Ancillary Document have the meaning given to such terms in accordance with GAAP; (d) the word “including” (and with correlative meaning “include”) means “including, without limitation”; (e) the words “hereof,” “herein,” “hereto,” and “hereby” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when used in this Agreement means “if and only if”; (g) except as the context otherwise provides, the words “either,” “or,” “neither,” “nor” and “any” are not exclusive; (h) any agreement, instrument, insurance policy, Law or Order defined or referred to in this Agreement or in any agreement or instrument that is referred to in this Agreement means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of Laws or Orders) by succession or comparable successor Laws or Orders and references to all attachments to such agreement, instrument, insurance policy, Law or Order and instruments incorporated in such agreement, instrument, insurance policy, Law or Order; (i) references to “days” shall refer to calendar days unless Business Days are specified; (j) all references in this Agreement to the words “Section,” “Article”, “Schedule” and “Exhibit” are to Sections, Articles, Schedules and Exhibits to this Agreement; and (k) the term “Dollars” or character “$” means United States dollars. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body. Any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders or stockholders shall include any applicable owners of the Equity Securities of such Person, in whatever form, including, with respect to the Purchaser, its shareholders under the Cayman Companies Act or DGCL, as then applicable, or its Organizational Documents. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties. No presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. To the extent that any Contract, document, certificate or instrument is represented and warranted to by the Company to be given, delivered, provided or made available by the Company to the Purchaser or its Representatives, such Contract, document, certificate or instrument shall have been posted to the electronic data site maintained on behalf of the Company for the benefit of the Purchaser and its Representatives at least two days prior to the Signing Date.
Section 10.13 Counterparts. This Agreement and each Ancillary Document may be executed and delivered (including by electronic transmission) in one or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.
Section 10.14 Expenses. If the Closing does not occur, the Company shall be responsible for the Company Transaction Costs, and Purchaser shall be responsible for the Purchaser Transaction Costs. If the Closing occurs, in accordance with Section 2.01, the Purchaser shall (x) pay all Purchaser Transaction Costs and (y), on behalf of the Company, pay all Company Transaction Costs, in the case of each of clause (x) and (y), from the Available Purchaser Closing Cash.
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Section 10.15 Legal Representation.
(a) Conflicts and Privilege.
(i) The Purchaser, Merger Sub and the Company, on behalf of their respective successors and assigns, agree that, if a dispute with respect to this Agreement or the Transactions arises after the Closing between or among: (x) the Sponsor, the stockholders, shareholders or holders of other Equity Securities of the Purchaser or the Sponsor or any of their respective directors, members, partners, officers, employees or Affiliates (other than Purchaser or the Surviving Company) (collectively, the “Sponsor Group”), on the one hand; and (y) the Purchaser following the Closing, the Surviving Company or any member of the Company Group, on the other hand, any legal counsel, including Ashurst Perkins Coie, that represented the Purchaser, Merger Sub or the Sponsor prior to the Closing may represent the Sponsor or any other member of the Sponsor Group in such dispute even though: (A) the interests of the Sponsor or any other member of the Sponsor Group in such disputes may be directly adverse to the Purchaser, the Surviving Company or their Affiliates (following the Closing); and (B) such counsel may have represented the Purchaser in a matter substantially related to such dispute or may be handling ongoing matters for the Purchaser, the Surviving Company or the Sponsor. The Purchaser, Merger Sub and the Company, on their own behalf and on behalf of their respective successors and assigns, further agree that, as to all Legally Privileged Communications made or generated prior to the Closing between or among the Purchaser, Merger Sub, the Sponsor or any other member of the Sponsor Group (collectively, “Sponsor-side Persons”), on the one hand, and Ashurst Perkins Coie or such Sponsor-side Persons’ other legal advisors, on the other hand, the attorney/client privilege, or other applicable privilege or immunity constituting Legally Privileged Communications, and the expectation of client confidence shall survive the Transactions and belong to the Sponsor Group from and after the Closing. The attorney/client privilege and the expectation of client confidence with respect to the foregoing shall not pass to or be claimed or controlled by the Purchaser, the Surviving Company or their respective Affiliates (after the Closing) (other than, if applicable, any such Affiliates that are members of the Sponsor Group). Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with the Purchaser, Merger Sub or the Sponsor under a common interest agreement shall remain the privileged communications or information of the Purchaser.
(ii) The Purchaser and the Company, on behalf of their respective successors and assigns, agree that, if a dispute with respect to this Agreement or the Transactions arises after the Closing between or among: (x) the stockholders, shareholders or holders of other Equity Securities of the Company or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Company or Purchaser) (collectively, the “Company Group”), on the one hand; and (y) the Surviving Company, Purchaser or any member of the Sponsor Group, on the other hand, any legal counsel, including Fox, that represented the Company prior to the Closing may represent any member of the Company Group in such dispute even though: (A) the interests of such Persons may be directly adverse to the Purchaser or the Surviving Company; and (B) such counsel may have represented the Purchaser or the Company in a matter substantially related to such dispute or may be handling ongoing matters for the Purchaser or the Surviving Company. The Purchaser, Merger Sub and the Company, on behalf of their respective successors and assigns, further agree that, as to all Legally Privileged Communications made or generated prior to the Closing between or among the Company or any member of the Company Group, on the one hand, and Fox, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Transactions and belong to the Company Group after the Closing. The attorney/client privilege and the expectation of client confidence with respect to the foregoing shall not pass to or be claimed or controlled by the Purchaser or the Surviving Company. Notwithstanding the foregoing, any privileged communications or information shared by the Purchaser prior to the Closing with the Company under a common interest agreement shall remain the privileged communications or information of the Surviving Company.
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(b) Company Privilege; Waiver.
(i) Fox has represented the Company Group and the Company with respect to the Transactions. All Parties recognize the commonality of interest that exists and will continue to exist until the Closing, and that such commonality of interest should continue to be recognized after the Closing. Specifically, the Sponsor Group, Purchaser and the Surviving Company shall not, and shall cause their Affiliates not to, seek to have Fox be disqualified from representing the Company Group in connection with any dispute that may arise after the Closing between the Sponsor Group, on the one hand, and Purchaser or the Surviving Company, on the other hand, in connection with this Agreement, the Ancillary Documents or the Transactions. In connection with any such dispute, the Company Group involved in such dispute (and not the Sponsor Group (including following the Closing)) will have the right to decide whether or not to waive the attorney-client privilege or other applicable privilege or immunity constituting Legally Privileged Communications, that may apply to any communications between the Company Group, the Company (including following the Closing), and their Representatives or Affiliates (collectively, the “Company Parties”) that occurred, or was made or generated prior to the Closing.
(ii) Without limiting the foregoing, the Sponsor Group (on their own behalf and on behalf of their Representatives and Affiliates) also acknowledge and agree that Fox has been and will be providing legal advice to the Company Parties in connection with the Agreement, the Ancillary Documents, and any Transactions. In such capacity, Fox will have had confidential or privileged communications between Fox and the Company Parties, including written and electronic communications between or among Fox or the Company Parties, relating to this Agreement, the Ancillary Documents, and the Transactions (collectively, the “Company Privileged Materials”). The Sponsor Group (on their own behalf and on behalf of their Representatives and Affiliates) further acknowledge and agree that, at and after the Closing, the Company Privileged Materials shall belong solely to the Company Group and any privilege or other right related to the Company Privileged Materials, including the attorney-client privilege and the expectation of client confidences, shall be owned and controlled solely by the Company Group and shall not pass to or be claimed by the Sponsor Group, the Purchaser or the Surviving Company. Notwithstanding the foregoing, the Company Group and its Representatives shall reasonably cooperate with the Sponsor Group, Purchaser or the Surviving Company seeking to assert such privilege in a post-Closing dispute with a Person that is not a member of the Company Group or any of its Affiliates. In furtherance of the foregoing, each of the Parties agree to take the steps reasonably necessary to ensure that all privileges attaching to the Company Privileged Materials shall survive the Closing, remain in effect and be owned and controlled solely by the Company Group. The Sponsor Group (on their own behalf and on behalf of their Representatives and Affiliates), the Purchaser and the Company (on behalf of the Surviving Company) also agree: (A) that they will not, directly or indirectly, obtain or seek to obtain from Fox any such Company Privileged Materials (or assist any other Person); and (B) not to knowingly access, review, use or rely on any Company Privileged Materials in any dispute involving any of the Parties after the Closing.
(c) Purchaser Privilege; Waiver.
(i) Ashurst Perkins Coie has represented the Sponsor Group, the Purchaser and Merger Sub with respect to the Transactions. All Parties recognize the commonality of interest that exists and will continue to exist until the Closing, and that such commonality of interest should continue to be recognized after the Closing. Specifically, the Company Group and, following the Closing, the Purchaser and the Surviving Company, shall not, and shall cause their Affiliates not to, seek to have Ashurst Perkins Coie be disqualified from representing the Sponsor Group in connection with any dispute that may arise between the Company Group and, following the Closing, the Purchaser and the Surviving Company, on the one hand, and the Sponsor Group, on the other hand, in connection with this Agreement, the Ancillary Documents or the Transactions. In connection with any such dispute, the Sponsor Group involved in such dispute (and not the Company Group (including following the Closing)) will have the right to decide whether or not to waive the attorney-client privilege or other applicable privilege or immunity constituting Legally Privileged Communications that may apply to any communications between the Sponsor Group, the Purchaser (including following the Closing), Merger Sub and their Representatives or Affiliates (collectively, the “Purchaser Parties”) that occurred, or was made or generated prior to the Closing.
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(ii) Without limiting the foregoing, the Company Group (on their own behalf and on behalf of their Representatives and Affiliates) also acknowledge and agree that Ashurst Perkins Coie has been and will be providing legal advice to the Purchaser Parties in connection with the Agreement, the Ancillary Documents, and any Transactions. In such capacity, Ashurst Perkins Coie will have had confidential or privileged communications between Ashurst Perkins Coie, on the one hand, and the Purchaser Parties, on the other hand, including written and electronic communications between or among Ashurst Perkins Coie or the Purchaser Parties relating to this Agreement, the Ancillary Documents, and the Transactions (collectively, the “Purchaser Privileged Materials”). The Company Group (on their own behalf and on behalf of their Representatives and Affiliates), the Purchaser and the Company (on behalf of the Surviving Company) further acknowledge and agree that, at and after the Closing, the Purchaser Privileged Materials shall belong solely to the Sponsor Group and any privilege or other right related to the Purchaser Privileged Materials, including the attorney-client privilege and the expectation of client confidences, shall be owned and controlled solely by the Sponsor Group and shall not pass to or be claimed by the Company Group or their Affiliates, the Purchaser or the Surviving Company. Notwithstanding the foregoing, the Sponsor Group and its Representatives shall reasonably cooperate with the Company Group, the Purchaser (following the Closing) or the Surviving Company seeking to assert such privilege in a post-Closing dispute with a Person that is not a member of the Sponsor Group or any of its Affiliates. In furtherance of the foregoing, each of the Parties agree to take the steps reasonably necessary to ensure that all privileges attaching to the Purchaser Privileged Materials shall survive the Closing, remain in effect and be owned and controlled solely by the Sponsor Group. The Company Group (on their own behalf and on behalf of their Representatives and Affiliates), the Purchaser and the Company (on behalf of the Surviving Company) also agree: (A) that they will not, directly or indirectly, obtain or seek to obtain from Ashurst Perkins Coie any such Purchaser Privileged Materials (or assist any other Person in seeking to obtain such materials); and (B) not to knowingly access, review, use or rely on any Purchaser Privileged Materials in any dispute involving any of the Parties after the Closing.
Section 10.16 Waiver of Claims Against Trust. The Company acknowledges that the Purchaser is a blank check company with the powers and privileges to affect a Business Combination. The Company further acknowledges that, as described in the IPO Prospectus available at www.sec.gov, substantially all of the Purchaser’s assets consist of the cash proceeds of the Purchaser’s initial public offering and private placements of its securities. Substantially all of those proceeds have been deposited in the Trust Account for the benefit of the Purchaser, the Purchaser Shareholders and the underwriters of the Purchaser’s initial public offering. The Company acknowledges that it has been advised by the Purchaser that the Purchaser may disburse monies from the Trust Account only in the express circumstances described in the IPO Prospectus. The Company, on behalf of itself and its Affiliates, acknowledge and agree that, notwithstanding anything to the contrary in this Agreement, no such Person: (a) now has or shall at any time after the Signing Date have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions from the Trust Account; or (b) may make any claim against the Trust Account (including any distributions from the Trust Account), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or any proposed or actual business relationship between the Purchaser, Merger Sub or its Representatives, on the one hand, and any such Person or its Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any such claims are collectively referred to as, the “Released Claims”). For and in consideration of the Purchaser and Merger Sub entering into this Agreement, the receipt and sufficiency of which are acknowledged, the Company irrevocably waives on behalf of itself and its Affiliates, the Released Claims and any right, title, interest or claim of any kind they have or may have in the future in or to any monies in the Trust Account. The Company agrees on behalf of itself and its Affiliates, not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with the Purchaser or Merger Sub (including any distributions to the Purchaser Shareholders in respect of Redemptions or deferred underwriting commissions relating to the IPO). Notwithstanding the foregoing, nothing in this Agreement shall serve to limit or prohibit the Company’s right to pursue a claim against the Purchaser or Merger Sub for legal relief against monies or other assets held outside the Trust Account, for specific performance or other equitable relief in connection with the consummation of the Transactions so long as such claim would not adversely affect the Purchaser’s ability to fulfill its obligation to effectuate the Redemption. The Company’s right pursuant to the preceding sentence shall include the right to bring a claim for the Purchaser to specifically perform its obligations under this Agreement upon the occurrence of the Closing with respect to the disbursement of the balance of the cash remaining in the Trust Account (after giving effect to the Redemptions) to the Company in accordance with the terms of this Agreement and the Trust Agreement. Nothing in this Section 10.16 shall serve to limit or prohibit any claims that the Company may have in the future against the Purchaser’s or Merger Sub’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account to the Purchaser and any assets that have been purchased or acquired with any such funds). This section will survive the termination of this Agreement for any reason.
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Section 10.17 Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the Transactions may only be brought against, the entities that are expressly named as Parties and then only with respect to the specific obligations set forth with respect to such Party. Except to the extent a named Party (and then only to the extent of the specific obligations undertaken by such named Party), (a) no past, present or future director, officer, employee, incorporator, member, partner, shareholder, stockholder, agent, attorney, advisor, Representative or Affiliate (nor any investment fund or vehicle managed by an Affiliate or portfolio company of such investment fund and vehicle) of any named Party and (b) no past, present or future director, officer, employee, incorporator, member, partner, shareholder, stockholder, agent, attorney, advisor, Representative or Affiliate (nor any investment fund or vehicle managed by an Affiliate or portfolio company of such investment fund and vehicle) of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company, the Purchaser or Merger Sub under this Agreement or for any claim based on, arising out of, or related to this Agreement or the Transactions.
Section 10.18 Company and Purchaser Disclosure Letters. In accordance with Section 268 of the DGCL, the Company Disclosure Letter and the Purchaser Disclosure Letter referenced in this Agreement are not part of this Agreement for the purposes of Section 251 of the DGCL. Instead, the Company Disclosure Letter and the Purchaser Disclosure Letter operate on the terms of this Agreement as provided in this Agreement. Any disclosure made by a Party in its Disclosure Letter with reference to any section or subsection of this Agreement or section or subsection of the applicable Disclosure Letter shall be deemed to only be a disclosure with respect to: (a) the correspondingly numbered section or subsection of this Agreement; and (b) such other sections or subsections of this Agreement if it is reasonably apparent on the face of such disclosure that such disclosure is responsive to such other section or subsection of this Agreement. Certain information set forth in the Disclosure Letters is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information in a Disclosure Letter shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement. The disclosure of any information in a Disclosure Letter shall not be deemed to establish a standard of materiality.
ARTICLE
XI
DEFINITIONS
Section 11.01 Certain Definitions. The following terms shall have the following meanings in this Agreement:
“Acquisition Proposal” means any written inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any Person or group at any time relating to an Alternative Transaction (other than the Purchaser and the Sponsor or their respective Representatives).
“A&R Registration Rights Agreement” has the meaning specified in the Recitals.
“Additional PIPE Agreements” has the meaning set forth in Section 7.19.
“Additional PIPE Investment” has the meaning set forth in the Recitals.
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“Additional PIPE Investors” has the meaning set forth in Section 7.19.
“Additional Purchaser SEC Reports” has the meaning specified in Section 6.06(a).
“Affiliate” with respect to any specified Person means any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise. Notwithstanding the foregoing, investment funds or vehicles managed by Affiliates of the Purchaser, and portfolio companies of such investment funds and vehicles, are not Affiliates of the Purchaser.
“Aggregate Consideration” means a number of shares of Domesticated Purchaser Common Stock equal to: (a) the Equity Value; divided by (b) $10.00.
“Agreement” has the meaning specified in the Preamble.
“AI Data” means (i) any input and output data of Company AI Products, whether raw, pre-processed or enhanced, and (ii) associated metadata and informational content derived from such data which identify, comment or otherwise derive information from such data.
“AI Technology” means any and all Software or technology (including models) in the deep learning, machine learning, natural language processing, large language model, or other artificial intelligence fields, or that make use of or employ neural networks, statistical learning algorithms (such as linear and logistic regression, support vector machines, random forests, k-means clustering), or reinforcement learning and any related algorithms, weights, parameters, structure and architecture.
“AI Training Data” means (i) training data, inference data, validation data, test data or databases Processed by or for the Company to develop, train or improve any AI Technology, and (ii) associated metadata and information content derived from such data that identify, comment on or otherwise derive information from such data.
“Allocation Schedule” has the meaning specified in Section 1.06(a).
“Alternative Transaction” means: (A) with respect to the Company, a transaction or a series of transactions (other than the Transactions) concerning (x) the sale or divestiture (whether directly or indirectly) of 15% or more of the Equity Securities, business or assets of the Company or its controlled Affiliates; (y) any equity or similar investment in the Company or its controlled Affiliates resulting in any Person beneficially owning 15% or more of any class of equity or voting securities, in any case, whether such transaction takes the form of a sale of shares or other equity interests, assets, merger, consolidation, issuance of debt securities, reorganization, recapitalization, liquidation, dissolution, joint venture or partnership or otherwise (other than the PIPE Investments); or (z) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company; and (B) with respect to the Purchaser and its Affiliates, a transaction (other than the Transactions) concerning a Business Combination involving the Purchaser.
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“Ancillary Documents” means each of the agreements and instruments contemplated by this Agreement or otherwise related to the Transactions, in each case to be executed and delivered on the Signing Date or on or prior to the Closing Date, including this Agreement (together with the Company Disclosure Letter and the Purchaser Disclosure Letter), the Sponsor Support Agreement, the Company Support Agreements, the Lock-Up Agreement, and the Written Consent.
“Annual Company Financials” has the meaning specified in Section 5.06(a).
“Anti-Bribery Law” means: (a) the Foreign Corrupt Practices Act of 1977, as amended, and all other applicable anti-corruption and bribery Laws of any jurisdiction (including the U.K. Bribery Act 2010; (b) any rules or regulations promulgated under the Foreign Corrupt Practices Act of 1977, as amended, and all other applicable anti-corruption and bribery Laws of any jurisdiction (including the U.K. Bribery Act 2010); and (c) other Laws of other countries implementing the OECD Convention on Combating Bribery of Foreign Officials).
“Antitrust Laws” means: (a) the HSR Act, the Federal Trade Commission Act, the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act, including the rules and regulations promulgated under the HSR Act, the Federal Trade Commission Act, the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act; (b) any applicable foreign antitrust Laws; and (c) all other applicable Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.
“Ashurst Perkins Coie” means Ashurst Perkins Coie US LLP.
“Assumed Warrant” has the meaning specified in Section 1.08.
“Available Purchaser Closing Cash” as of immediately prior to the Closing (and prior to the payment of any Purchaser Transaction Costs and Company Transaction Costs) means, an aggregate amount equal to the sum of (without duplication): (a) all amounts in the Trust Account, less amounts required for the Redemptions (to the extent not already paid) (including any excise Taxes expected to be payable in connection with the Redemption as reasonably determined by the Purchaser in good faith in consultation with the Company); plus (b) the aggregate proceeds, if any, actually received by the Purchaser from the PIPE Investments; plus (c) all other cash and cash equivalents of the Purchaser, determined in accordance with GAAP as of 11:59 p.m. New York time on the day immediately preceding the Closing Date.
“Beneficial Owner” has the meaning specified in Section 262(a) of the DGCL. The terms “Beneficial Ownership” and “Beneficially Owned” have correlative meanings.
“Benefit Plans” of any Person means all deferred compensation, executive compensation, incentive compensation, equity purchase or other equity-based compensation, employment or consulting, severance or termination, holiday, vacation, bonus, hospitalization, medical, life welfare, accident, disability, supplemental unemployment benefits, retiree or post-employment health or welfare, profit sharing, pension, retirement, sick pay or paid time off plan, program, policy, agreement, commitment or arrangement, and all other compensation or benefit plans, programs, policies, agreements or arrangements, including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA (whether or not subject to ERISA), whether written or oral, whether covering a single individual or a group of individuals, whether qualified or unqualified, funded or unfunded, or domestic or foreign.
“Business Combination” has the meaning specified in Article 1.1 of the Purchaser’s Organizational Documents as in effect on the Signing Date.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or, for so long as the Purchaser remains domiciled in the Cayman Islands, Governmental Authorities in the Cayman Islands are authorized or required by Law to close.
“Cancelled Shares” has the meaning specified in Section 1.04(a)(ii).
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“Cayman Companies Act” means the Companies Act (As Revised) of the Cayman Islands.
“Cayman Purchaser Units” has the meaning specified in the Recitals.
“Cayman Purchaser Warrant” has the meaning specified in the Recitals.
“Cayman Registrar” means the Cayman Islands Registrar of Companies.
“Certificate of Merger” has the meaning specified in Section 1.02.
“Change of Control” means any transaction or series of transactions the result of which is: (a) the acquisition by any Person or “group” (as defined in the Exchange Act) of Persons (other than Purchaser, the Company or any of their respective successors) of direct or indirect beneficial ownership (within the meaning of Section 13(d) of the Exchange Act) of Equity Securities representing 50% or more of the combined voting power or economic rights or interests in the Purchaser or the Company (or any of their respective successors); (b) a merger, consolidation, reorganization or other business combination, however effected, resulting in: (i) any Person or “group” (as defined in the Exchange Act) acquiring at least 50% of the combined voting power or economic rights or interests in the Purchaser or the Company (or any of their respective successors) or the surviving Person outstanding immediately after such combination; or (ii) members of the board of directors of the Purchaser immediately prior to such merger, consolidation, reorganization or other business combination not constituting at least a majority of the board of directors of the company surviving the combination or, if the surviving company is a Subsidiary, the ultimate parent of such Subsidiary; or (c) a sale of all or substantially all of the assets of the Purchaser or the Company (or any of their respective successors). Notwithstanding the foregoing, no transaction shall be a Change of Control unless such transaction is also a change in the ownership of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5)(v) and (vii).
“Closing” has the meaning specified in Section 3.01.
“Closing Date” has the meaning specified in Section 3.01.
“Closing Filing” has the meaning specified in Section 7.15(b).
“Closing Press Release” has the meaning specified in Section 7.15(b).
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and any successor statute, as amended.
“Collar” means an amount equal to $1,000,000.
“Company” has the meaning specified in the Preamble.
“Company AI Technology” means AI Technology developed, trained or improved by or on behalf of the Company or owned or purported to be owned by the Company.
“Company AI Policies” has the meaning specified in Section 5.14(i).
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“Company Benefit Plan” means any Benefit Plan that is sponsored, maintained, contributed to or required to be contributed to by the Company, any ERISA Affiliate, or any of their respective Subsidiaries or under or with respect to which the Company or any of its Subsidiaries has or could reasonably be expected to have any Liability.
“Company AI Products” means all Company Products that employ or make use of AI Technology.
“Company Book-Entry Share” has the meaning specified in Section 1.10(a).
“Company Certificates” has the meaning specified in Section 1.10(a).
“Company Common Stock” means the Company’s Common Stock, $0.00001 par value per share.
“Company Confidential Information” means Confidential Information, as defined in the Confidentiality Agreement, regarding the Company or any of its Representatives.
“Company Data” means any information or data collected, used, stored or otherwise Processed by or on behalf of the Company (including any Personal Information, or proprietary, regulated, or confidential information of the Company or any Customer Data) and any other information, data or compilation thereof used by, or necessary for the conduct of the business of, the Company.
“Company Director” has the meaning specified in Section 7.17(a).
“Company Disclosure Letter” has the meaning specified in the Preamble to Article V.
“Company Financials” has the meaning specified in Section 5.06(a).
“Company Fully Diluted Stock” means the sum, without duplication, of: (a) the aggregate number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time, determined on an as-converted to Company Common Stock basis (including (i) the number of shares of Company Common Stock issued or issuable upon conversion of the Company Preferred Stock based on the then applicable conversion ratio or conversion price of such Company Preferred Stock, and (ii) the number of shares of Company Common Stock issuable upon conversion of all Company SAFEs outstanding as of immediately prior to the Effective Time, calculated in accordance with each applicable SAFE Amendment) as of immediately prior to the Effective Time; plus (b) the aggregate number of shares of Company Common Stock issuable upon exercise or settlement of all Company Options issued and outstanding as of the Closing (after accounting for the expiration of any Company Options at the Closing); plus (c) the aggregate number of shares of Domesticated Purchaser Common Stock issuable upon exercise of all Assumed Warrants as of immediately following the Effective Time, calculated based on the exercise price and number of shares subject to each Assumed Warrant as adjusted in connection with the Transactions.
“Company Fundamental Representations” means the representations and warranties of the Company made pursuant to Section 5.01 (Organization and Standing), Section 5.02 (Authorization; Binding Agreement), Section 5.03 (Capitalization), Section 5.04 (Subsidiaries and Investments), Section 5.25 (Investment Company Act), Section 5.26 (Finders and Brokers), and Section 5.28 (Information Supplied).
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“Company Group” has the meaning specified in Section 10.15(a)(ii).
“Company Intended Tax Treatments” has the meaning specified in the Recitals.
“Company Material Adverse Effect” means any Event that: (i) has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, assets, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole; or (ii) does or would reasonably be expected to, individually or in the aggregate, prevent the Company from consummating the Transactions. Notwithstanding the foregoing, in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Company Material Adverse Effect” pursuant to clause (i) of the preceding sentence: (a) any change in applicable Laws or GAAP or any interpretation of such following the Signing Date; (b) any change in interest rates or economic, political, business or financial market conditions generally; (c) the taking of any action required by this Agreement; (d) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences) or change in climate; (e) any epidemic, pandemic, other disease outbreak; (f) any acts of terrorism or war, the outbreak or escalation of hostilities or civil disobedience, geopolitical conditions, local, national or international political conditions, and in each of clauses (d), (e), and (f), any actions or omissions that are taken in compliance with applicable Law or any directive or guideline of any Governmental Authority in connection with any of the foregoing in clauses (d), (e) and (f); (g) any failure of the Company or any of its Subsidiaries to meet any projections or forecasts (notwithstanding the foregoing, clause (g) shall not prevent a determination that any Event not otherwise excluded from this definition of Company Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a Company Material Adverse Effect); (h) any Events generally applicable to the industries or markets in which the Company and its Subsidiaries operate (including increases in the cost of products, supplies, materials or other goods purchased from third party suppliers); (i) any Event proximately caused by the announcement, pendency or consummation of this Agreement; or (j) any action taken at the express written request of the Purchaser. Notwithstanding the foregoing, any Event referred to in clauses (a), (b), (d), (e) , (f) or (h) above may be taken into account in determining if a Company Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which the Company and its Subsidiaries conduct their operations.
“Company Material Contract” has the meaning specified in Section 5.13(a).
“Company Option” means a right or privilege of an individual to purchase shares of Company Common Stock for a stated period of time, such individual being under no obligation to purchase, whether or not such right or privilege is granted under the Company Stock Plan.
“Company Parties” has the meaning specified in Section 10.15(b)(i).
“Company Permits” has the meaning specified in Section 5.11.
“Company Preferred Stock” means the Company Series A-1 Preferred Stock, the Company Series A-2 Preferred Stock, the Company Series A-3 Preferred Stock, the Company Series B-1 Preferred Stock, the Company Series B-2 Preferred Stock and the Company Series C Preferred Stock.
“Company Privileged Materials” has the meaning specified in Section 10.15(b)(ii).
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“Company Real Property Leases” has the meaning specified in Section 5.16(b).
“Company Registered IP” has the meaning specified in Section 5.14(a).
“Company SAFE” means an outstanding Simple Agreement for Future Equity entered into between the Company and a Company SAFE Investor.
“Company SAFE Investor” means a counterparty (other than the Company) to a Company SAFE.
“Company Securityholder” means a holder of Company Stock, Company Options, Company Warrants or Company SAFEs, in each case, as of immediately prior to the Merger.
“Company Series A-1 Preferred Stock” means the Company’s Series A-1 Preferred Stock, $0.00001 par value per share.
“Company Series A-2 Preferred Stock” means the Company’s Series A-2 Preferred Stock, $0.00001 par value per share.
“Company Series A-3 Preferred Stock” means the Company’s Series A-3 Preferred Stock, $0.00001 par value per share.
“Company Series B-1 Preferred Stock” means the Company’s Series B-1 Preferred Stock, $0.00001 par value per share.
“Company Series B-2 Preferred Stock” means the Company’s Series B-2 Preferred Stock, $0.00001 par value per share.
“Company Series C Preferred Stock” means the Company’s Series C Preferred Stock, $0.00001 par value per share.
“Company Software” means all Software which the Company owns or purports to own.
“Company Stock” means the Company Common Stock and the Company Preferred Stock.
“Company Stock Plan” means the Bitonic Technology Labs, Inc. 2019 Stock Plan.
“Company Stockholder” means a holder of Company Stock as of immediately prior to the Merger.
“Company Stockholder Meeting” has the meaning specified in Section 7.22(b).
“Company Support Agreement” has the meaning specified in the Recitals.
“Company Support Stockholders” has the meaning specified in the Recitals.
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“Company Transaction Costs” means all fees, costs and expenses of the Company and its Subsidiaries, in each case, incurred prior to and through the Closing Date in connection with the negotiation, preparation and execution of this Agreement, the other Ancillary Documents and the consummation of the Transactions, including: (a) all professional or transaction, deal, brokerage, legal, accounting, financial advisory or any similar fees payable in connection with the consummation of the Transactions; (b) all professional or transaction, deal, brokerage, legal, accounting, financial advisory or any similar fees payable in connection with the consummation of the PIPE Investments; (c) the Transfer Taxes borne by the Company pursuant to Section 7.11; (d) 50% of all costs, fees and expenses relating to the D&O Tail; (e) 50% of the filing fees lawfully payable to or as required by any Governmental Authority in connection with obtaining any required regulatory approvals in connection with this Agreement, the Ancillary Documents and the consummation of the Transactions, including any such fees in connection with the regulatory filings described in Section 7.09; (f) 50% of all costs, fees and expenses incurred in connection with the preparation, printing, filing and mailing of the Registration Statement; and (g) 50% of all costs, fees and expenses incurred in connection with the listing on Nasdaq of the shares of Domesticated Purchaser Common Stock issued in connection with the Transactions.
“Company Warrants” means the warrants of the Company issued and outstanding as of immediately prior to the Closing.
“Confidentiality Agreement” means the Confidentiality Agreement by and between the Company and Purchaser dated as of January 7, 2026, as it may be further amended or supplemented.
“Consent” means any consent, approval, waiver, notice, authorization or permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.
“Continental” means the Continental Stock Transfer & Trust Company.
“Contracts” means all legally binding contracts, agreements, binding arrangements, memorandums of understanding, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses (and all other contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications to the foregoing).
“Conversion Rate” has the meaning set forth in the Company’s Organizational Documents.
“Copyleft Action” has the meaning specified in Section 5.14(e).
“Copyright” has the meaning specified in the definition of “Intellectual Property.”
“Current Conversion Rate” has the meaning specified in Section 5.03(a).
“Customer” means a customer of the Company.
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“Customer Data” means information relating to, received from, or Processed on behalf of, the Company’s Customers.
“D&O Indemnified Party” means any individual who, at or prior to the Closing, was a director (or equivalent) or officer of the Purchaser, Merger Sub or the Company.
“D&O Tail” has the meaning specified in Section 7.18(b).
“Data Privacy and Security Requirements” means, collectively, all of the following to the extent relating to privacy, information security, data protection, data breach notification, AI, automated decision-making, algorithmic bias or discrimination, wiretapping, eavesdropping, recording private communications, direct marketing, confidentiality or the Processing of Personal Information or IT Assets and applicable to the Company: (a) all Laws; (b) the Company’s privacy policies and notices; (c) all industry or self-regulatory standards to which the Company is legally bound or purports to be bound, including, as applicable, the Payment Card Industry Data Security Standard (PCI DSS); and (d) provisions of Contracts to which the Company is a party or is otherwise bound.
“DGCL” has the meaning specified in the Recitals.
“Disclosure Letters” has the meaning specified in the Preamble to Article V.
“Dissenting Shares” has the meaning specified in Section 1.12.
“Dissenting Stockholder” has the meaning specified in Section 1.12.
“Domesticated Purchaser Common Stock” means common stock of the Purchaser following the Domestication, par value $0.00001 per share, which will have a voting right of one vote per share.
“Domesticated Purchaser Unit” has the meaning specified in the Recitals.
“Domesticated Purchaser Warrant” has the meaning specified in the Recitals.
“Domestication” has the meaning specified in the Recitals.
“Effective Time” has the meaning specified in Section 1.02.
“Eligible Option” has the meaning specified in Section 1.07(b).
“Eligible Participant” means an “Employee,” “Consultant,” or “Outside Director” of the Company, as each such term is defined in the Company Stock Plan as of the date of this Agreement.
“Enforceability Exceptions” has the meaning as specified in Section 5.02.
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“Environmental Law” means any Law in any way relating to: (a) public or worker health or safety; (b) pollution or the protection, preservation or restoration of the environment and natural resources; or (c) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Materials.
“Equity Incentive Plan” has the meaning specified in Section 7.14(a).
“Equity PIPE Investment” has the meaning specified in the Recitals.
“Equity PIPE Investors” has the meaning specified in the Recitals.
“Equity PIPE Subscription Agreements” has the meaning specified in the Recitals.
“Equity PIPE Unit” has the meaning specified in the Recitals.
“Equity Securities” with respect to any Person means: (a) any shares of capital or capital stock, partnership, membership, joint venture or similar interest, or other voting securities of, or other ownership interest in, such Person; (b) any securities of such Person convertible into or exchangeable for cash or shares of capital or capital stock or other voting securities of, or other ownership interests in, such Person; (c) any warrants, calls, options, safes or other rights to acquire from such Person, or other obligations of such Person to issue, any shares of capital or capital stock or other voting securities of, or other ownership interests in, or securities convertible into or exchangeable for shares of capital or capital stock or other voting securities of, or other ownership interests in, such Person; (d) any restricted shares, stock appreciation rights, restricted units, performance units, contingent value rights, “phantom” stock or similar securities or rights issued by or with the approval of such Person that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any shares of capital or capital stock or other voting securities of, other ownership interests in, or any business, products or assets of, such Person; and (e) any securities issued or issuable with respect to the securities or interests referred to in clauses (a) through (d) above in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization.
“Equity Value” means an amount equal to: (a) $300,000,000.00; minus (b) the aggregate amount of Indebtedness of the Company and its Subsidiaries as of the Closing Date (as set forth in the Allocation Schedule) other than the TPC Loan Amount; minus (c) if the amount of Net Working Capital as of the Closing Date is less than the Target Working Capital, the amount, if any, equal to the shortfall of Net Working Capital below the Lower Collar Threshold (and, for the avoidance of doubt, no decrease shall be made with respect to amounts within the Collar).
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any Person, trade or business (whether or not incorporated) that, together with the Company, is, or, at any relevant time, was treated as a “single employer” pursuant to Section 414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) or Section 4001(b)(1) of ERISA.
“Event” means any event, state of facts, development, circumstance, condition, change, occurrence or effect.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exchange Agent” has the meaning specified in Section 1.10 (a).
“Exchanged Company Option” has the meaning specified in Section 1.07(b).
“Exchange Fund” has the meaning specified in Section 1.10(a).
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“Fair Market Value” means the fair market value as determined by the board of directors of the Purchaser, in good faith, which determination shall be conclusive and binding on all Persons.
“Federal Securities Laws” has the meaning specified in Section 7.07.
“Financial Advisors” has the meaning specified in Section 7.04(d).
“Fox” means Fox Rothschild LLP.
“Fraud” with respect to a Party means: (a) an intentional misrepresentation or reckless disregard by such Party with respect to the making of the representations and warranties of such Party as expressly set forth in this Agreement with the intent by such Party that the other Parties rely on such misrepresentation to such other party’s material detriment; and (b) such other Party reasonably relies on, and suffers losses as a result of, such misrepresentation.
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
“Government Contract” means any Contract: (a) by or between the Company on one hand and any Governmental Authority on the other; or (b) by or between the Company as a subcontractor at any tier and any other Person in connection with any contract with a Governmental Authority.
“Governmental Authority” means any federal, state, provincial, municipal, local, foreign or other governmental, quasi-governmental, regulatory or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitral body, commission, or other similar dispute-resolving panel or body (public or private).
“Hazardous Material” means (i) any waste, gas, liquid or other substance or material that is defined, listed or designated as a “hazardous substance”, “pollutant”, “contaminant”, “hazardous waste”, “regulated substance”, “hazardous chemical”, or “toxic chemical” (or any similar term) under, or for which Liability or standards of conduct may be imposed pursuant to, any Environmental Law, and (ii) petroleum and its by-products, asbestos and asbestos-containing material, polychlorinated biphenyls, radon, radioactive materials, lead, noise, odor, pesticides, toxic mold, per- and polyfluoroalkyl substances and urea formaldehyde insulation.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“Income Taxes” means any Tax that is, in whole or in part, imposed on, calculated based on or measured by gross or net income (or income as specially defined), earnings, profits or gains, and similar Taxes (to the extent determined by reference to income, earnings, profits or gains) or similar measures.
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“Indebtedness” of any Person means, without duplication: (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest); (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business); (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument; (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP (other than real estate leases and any other leases that are only required to be capitalized upon adoption of ASC 842); (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against; (f) all obligations of such Person in respect of acceptances issued or created; (g) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency; (h) all obligations secured by a Lien on any property of such Person; (i) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person; (j) all Liabilities for underfunded Company Benefit Plans, including, but not limited to, employee deferrals and contributions made but not yet remitted to any such Company Benefit Plan and any; (k) withdrawal Liabilities under multiemployer plans; (l) all Liabilities of the Company in respect of any bonuses, commissions, or discretionary payments, including any pro rata amounts earned, accrued or unpaid for the current fiscal year, and any Taxes payable in connection therewith (including the employer portion of any payroll, FICA, unemployment or similar Tax imposed on such amounts); (m) all Liabilities of the Company in respect of any severance rights, deferred compensation payments, and similar Liabilities triggered by the transactions contemplated by this Agreement and any employer Taxes payable in connection therewith (including the employer portion of any payroll, FICA, unemployment, or similar Tax imposed on such amounts); and (n) all obligations described in clauses (a) through (m) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has otherwise become responsible for or liable or agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
“Information Security Reviews” has the meaning specified in Section 5.14(k).
“Initial PIPE Agreements” has the meaning specified in the Recitals.
“Initial PIPE Investment” has the meaning specified in the Recitals.
“Initial PIPE Investors” has the meaning specified in the Recitals.
“Intellectual Property” means all of the following, anywhere in the world: (i) all United States and foreign patents and patent applications, patent disclosures and other rights in inventions, (whether patentable or unpatentable and whether or not reduced to practice), including any continuations, divisionals, continuations in part, renewals, extensions, reissues or foreign counterparts of any of the foregoing, whether or not patents are issued on any such applications and whether or not any such applications are amended, modified, or refiled (“Patents”); (ii) all United States, international and foreign trade names, trade dress, trademarks, service marks, logos, internet domain name registrations, or other indicia of origin, in each case whether or not registered, together with all related registrations and applications therefor and all goodwill associated with any of the foregoing (“Trademarks”); (iii) all United States, international and foreign copyrights (whether registered or unregistered), original works of authorship (including all rights in Software), rights in copyrightable works, together with all related registrations and applications (“Copyright”); (iv) any registrations and applications for industrial designs throughout the world; (v) Trade Secrets and rights in other confidential business information; (vi) all other intellectual or industrial property rights protectable by applicable law in any jurisdiction; and (vii) all issuances, renewals, registrations and applications of or for any of the foregoing.
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“Intended Tax Treatment(s)” has the meaning specified in the Recitals.
“Interim Company Financials” has the meaning specified in Section 5.06(a).
“Interim Period” has the meaning specified in Section 7.01(a).
“IPO” means the initial public offering of Cayman Purchaser Units pursuant to the IPO Prospectus.
“IPO Prospectus” means the final prospectus of the Purchaser, dated December 10, 2025 (File No. 333-291337).
“IRS” means the U.S. Internal Revenue Service (or any successor Governmental Authority).
“IT Act” has the meaning specified in Section 2.02(b).
“IT Assets” means all technology, devices, computers, hardware, Software (including firmware and middleware), systems, sites, servers, networks, workstations, routers, hubs, circuits, switches, interfaces, websites, platforms, data communications lines, and all other information or operational technology, telecommunications, or data processing assets, facilities, systems services, or equipment, and all associated documentation.
“JOBS Act” has the meaning specified in Section 6.06(e).
“Knowledge” with respect to: (i) the Company, means the knowledge of each of Raghu Ravinutala, Velmurugan Kanniappan, Jaya Kishore Reddy Gollareddy, Rashid Khan, Tushar Hajela and Madhav Chinta; and (ii) the Purchaser or Merger Sub, means the knowledge of each of Ramin Kamfar and Harrison Seideman, in each case, as such individuals would have acquired in the exercise of a reasonable inquiry of direct reports.
“Labor Agreement” has the meaning specified in Section 5.13(a)(ix).
“Law” means any federal, state, local, municipal, foreign or other constitution, law, statute, act, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, ordinance, regulation, Order or Consent, in each case, issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Leased Real Property” has the meaning specified in Section 5.16(b).
“Legal Proceeding” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment, examination, mediation or arbitration, or any request (including any request for information), inquiry, hearing, proceeding (whether at law or in equity) or investigation, by or before any Governmental Authority.
“Legally Privileged Communications” means all legally privileged communications made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Legal Proceeding arising out of or relating to, this Agreement, the Ancillary Documents or the Transactions.
“Letter of Transmittal” has the meaning specified in Section 1.10(b).
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“Liabilities” means all liabilities, Indebtedness, Legal Proceedings or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under GAAP or other applicable accounting standards).
“Lien” means any mortgage, pledge, deed of trust, lease, sublease, license, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind whether consensual, statutory or otherwise (including any conditional sale or other title retention agreement or lease in the nature of any mortgage, pledge, deed of trust, lease, sublease, license, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Lock-Up Agreement” has the meaning specified in the Recitals.
“Lower Collar Threshold” means an amount equal to the Target Working Capital minus the Collar.
“MEP Reserve” has the meaning specified in Section 7.14(b).
“Milestone Equity Plan” means the 2026 Milestone Equity Plan to be adopted by the Purchaser prior to the Closing Date in accordance with Section 7.14, with such terms and conditions as are consistent with the Milestone Equity Plan Term Sheet and as otherwise mutually agreed by the Company and the Purchaser.
“Milestone Equity Plan Term Sheet” means the Milestone Equity Plan Term Sheet attached hereto as Exhibit E.
“Material Current Government Contract” has the meaning specified in Section 5.10(a).
“Merger” has the meaning specified in the Recitals.
“Merger Sub” has the meaning specified in the Preamble.
“Modification in Recommendation” has the meaning specified in Section 7.13(b)(i).
“Nasdaq” means the Nasdaq Global Market.
“Net Working Capital” means, as of any date of determination, the consolidated current assets of the Company and its Subsidiaries as of such date (excluding cash and cash equivalents, and any deferred Tax assets), minus the consolidated current liabilities of the Company and its Subsidiaries as of such date (excluding (i) the current portion of any Indebtedness, (ii) deferred Tax liabilities and (iii) any Company Transaction Costs), in each case calculated in accordance with GAAP, consistently applied, and using the same accounting methods, policies, practices and procedures as used in the preparation of the Annual Company Financials.
“Note PIPE Investment” has the meaning specified in the Recitals.
“Note PIPE Investors” has the meaning specified in the Recitals.
“Note PIPE Purchase Agreements” has the meaning specified in the Recitals.
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“OFAC” means the Office of Foreign Asset Control of the U.S. Department of Treasury.
“Off-the-Shelf Software” means unmodified “shrink wrap,” “click wrap,” and “off the shelf” Software commercially available to the public (whether as distributed software or as a service) on standard terms and conditions, with license, maintenance, support and other fees of less than $100,000 per year.
“Offer Documents” has the meaning specified in Section 7.13(a)(i).
“Open Source Software” means any Software that is distributed as “free software”, “open source software” or pursuant to any license identified as an “open source license” by the Open Source Initiative (www.opensource.org/licenses) or other license that substantially conforms to the Open Source Definition (opensource.org/osd) or any similar licensing model.
“Order” means any order, decree, ruling, judgment, injunction, writ, determination, directive, binding decision, verdict or award that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
“ordinary course of business” means an action taken, or omitted to be taken, by any Person or such Person’s Subsidiaries, in the ordinary course of such Person’s or such Person’s Subsidiaries’ business.
“Organizational Documents” with respect to any Person that is an entity means its certificate of incorporation or formation, bylaws, operating agreement, memorandum and articles of association or similar organizational documents, in each case, as amended.
“Outside Date” has the meaning specified in Section 9.01(d).
“Owned Intellectual Property” means all Intellectual Property owned or purported to be owned by the Company, and includes the Company Software, all Company Registered IP and all other Intellectual Property required to be set forth in Section 5.14(a)(i) of the Company Disclosure Letter.
“Party(ies)” has the meaning specified in the Preamble.
“Patents” has the meaning specified in the definition of “Intellectual Property.”
“PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor).
“Per Share Merger Consideration” means the quotient of: (a) the Aggregate Consideration divided by (b) number of shares of Company Fully Diluted Stock.
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“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or Orders of any Governmental Authority or any other Person.
“Permitted Liens” means: (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are: (i) not yet due and payable; or (ii) being contested in good faith and by appropriate proceedings, for which adequate reserves have been established in accordance with GAAP; (b) other Liens for labor, materials or supplies imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable and which are being contested in good faith and by appropriate proceeding and for which adequate reserves have been established with respect to such Liens for labor, materials or supplies imposed by operation of Law in accordance with GAAP; (c) Liens incurred or deposits made in the ordinary course of business in connection with social security; (d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business; (e) Liens arising under this Agreement or any Ancillary Document; (f) non-exclusive licenses of Owned Intellectual Property granted in the ordinary course of business; (g) easements, encroachments, covenants, rights-of-way, conditions, restrictions and other similar matters of record that do not, individually or in the aggregate, materially impair the value of, or materially interfere with the present use of, the Company Real Property Leases; (h) with respect to any Company Real Property Leases: (i) the interests and rights of the respective lessors with respect thereto, including any Lien on the lessor’s interest therein and statutory landlord liens securing payments not yet due; and (ii) any Liens encumbering the underlying fee title of the real property of which the Company Real Property Leases is a part; (i) Liens arising in connection with the PIPE Investments or the PIPE Agreements; (j) zoning, building, entitlement and other land use regulations promulgated by any Governmental Authority that do not, individually or in the aggregate, materially impair the value of, or materially interfere with the present use of, the Company Real Property Leases; or (k) other than with respect to Intellectual Property, other Liens arising or incurred in the ordinary course of business and not incurred in connection with the borrowing of money that are not, individually or in the aggregate, material to the Company.
“Person” means an individual (including current and former employees), corporation, company, exempted company, partnership (including a general partnership, exempted limited partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision of any government, or an agency or instrumentality of any government.
“Personal Information” means any information that is defined as “personal information,” “personal data,” “personally identifiable information,” “sensitive information” or any similar term under Data Privacy and Security Requirements, including any such information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular individual, household or device.
“Processing” means any operation or set of operations performed on Company Data, whether or not by automatic means, such as receipt, collection, monitoring, maintenance, creation, recording, organization, structuring, storage, adaptation or alteration, retrieval, consultation, use, processing, analysis, transfer, transmission, disclosure, dissemination or otherwise making available, alignment or combination, blocking, erasure, destruction, privacy or security. “Process,” “Processed” and “Processes” shall have correlative meanings.
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“Products” means products (including computer programs and applications) or services and related documentation currently or previously researched, designed, developed, manufactured, performed, licensed, sold, distributed or otherwise made commercially available by the Company and all products and services currently under development by the Company.
“Personal Property” means any machinery, equipment, tool, vehicle, furniture, leasehold improvement, office equipment, plant, part and other tangible personal property.
“PIPE Agreements” has the meaning specified in Section 7.19.
“PIPE Investments” means the financing transactions contemplated by the Note PIPE Investment and the Equity PIPE Investment and any Additional PIPE Agreements, including the issuance, sale or funding of convertible notes and any related shares, warrants, commitment securities or other securities issued or issuable pursuant thereto.
“PIPE Investors” means the Initial PIPE Investors and any Additional PIPE Investors.
“PIPE Materials” means the information package agreed upon in writing by the Purchaser and the Company prior to or at the Signing Date for use in connection with the PIPE Investments, investor presentations and related communications with potential PIPE Investors.
“Post-Closing Purchaser Board” has the meaning specified in Section 7.17.
“Pre-Domestication Purchaser Shareholder” has the meaning specified in Section 7.11(d).
“Premium Cap” has the meaning specified in Section 7.18(b).
“Proxy Statement” has the meaning specified in Section 7.13(a)(i).
“Proxy Statement/Registration Statement” has the meaning specified in Section 7.13(a)(i).
“Public Certifications” has the meaning specified in Section 6.06(a).
“Purchaser” has the meaning specified in the Preamble.
“Purchaser Bylaws upon Domestication” has the meaning specified in the Recitals.
“Purchaser Charter upon Domestication” has the meaning specified in the Recitals.
“Purchaser Class A Ordinary Shares” means prior to the Domestication, Class A ordinary shares of the Purchaser of a par value of US$0.0001 per share.
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“Purchaser Class B Ordinary Shares” means prior to the Domestication, Class B ordinary shares of the Purchaser of a par value of US$0.0001 per share.
“Purchaser Common Warrants” means private placement warrants and public warrants of the Purchaser.
“Purchaser Confidential Information” means Confidential Information, as defined in the Confidentiality Agreement, regarding Purchaser or Merger Sub or their respective Representatives.
“Purchaser Disclosure Letter” has the meaning specified in the Preamble to Article VI.
“Purchaser Fundamental Representations” means the representations and warranties of the Purchaser and Merger Sub made pursuant to Section 6.01 (Organization and Standing), Section 6.02 (Authorization; Binding Agreement), Section 6.05(a), (b), (c) and (e) (Capitalization), and Section 6.17 (Information Supplied).
“Purchaser Intended Tax Treatments” has the meaning specified in the Recitals.
“Purchaser Material Adverse Effect” means any Event that: (i) has had, or would reasonably be expected to have, individually or in the aggregate, a materially adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Purchaser; or (ii) does or would reasonably be expected to, individually or in the aggregate, prevent the Purchaser or Merger Sub from consummating the Transactions. Notwithstanding the foregoing, no change or effect related to any of the following, alone or in combination, shall be taken into account in determining whether a Purchaser Material Adverse Effect has occurred: (a) changes or proposed changes in applicable Law or regulations or interpretations of applicable Law or regulations, or decisions by courts or any Governmental Authority after the Signing Date; (b) changes or proposed changes in GAAP (or any interpretation of GAAP) after the Signing Date; (c) any downturn in general economic conditions, including changes in the credit, debt, securities, financial, capital or reinsurance markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets), in each case, in the United States or anywhere else in the world; (d) the taking of any action required by this Agreement; (e) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences) or change in climate; (f) any epidemic, pandemic, other disease outbreak; (g) any acts of terrorism or war, the outbreak or escalation of hostilities or civil disobedience, geopolitical conditions, local, national or international political conditions, and in the case of each of clauses (e), (f) and (g), any actions or omissions which are taken in compliance with applicable Law or any directive or guideline of any Governmental Authority in connection with any of the foregoing in clauses (e), (f) or (g); (h) any failure of Purchaser to meet any projections or forecasts (notwithstanding the foregoing, this clause (h) shall not prevent a determination that any Event otherwise excluded from this definition of Purchaser Material Adverse Effect underlying such failure to meet projections or forecast has resulted in a Purchaser Material Adverse Effect); (i) any Events generally applicable in the industries or markets in which the Purchaser does business; (j) any Event proximately caused by the announcement, pendency or consummation of this Agreement; (k) any action taken by or at the request of the Company; (l) the number of Purchaser Shareholders electing a Redemption; or (m) any change in the market price or trading volume of the Purchaser Class A Ordinary Shares or the Purchaser Common Warrants (notwithstanding the foregoing, clause (m) shall not prevent a determination that any Event not otherwise excluded from this definition of Purchaser Material Adverse Effect underlying such change in the market price or trading volume of the Purchaser Class A Ordinary Shares or the Purchaser Common Warrants has resulted in a Purchaser Material Adverse Effect). Notwithstanding the foregoing, any Event referred to in clauses (a), (b), (e), (f) or (g) above may be taken into account in determining if a Purchaser Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of the Purchaser relative to similarly situated companies in the industry in which the Purchaser conducts its operations.
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“Purchaser Ordinary Shares” prior to the Domestication, means the Purchaser Class A Ordinary Shares and the Purchaser Class B Ordinary Shares.
“Purchaser Parties” has the meaning specified in Section 10.15(c)(i).
“Purchaser Preference Shares” prior to the Domestication, means preference shares of the Purchaser of a par value of US$0.0001 per share.
“Purchaser Privileged Materials” has the meaning specified in Section 10.15(c)(ii).
“Purchaser Related Person” means any officer, director, manager, employee, trustee or beneficiary of the Purchaser or Merger Sub or any of their respective Affiliates or any immediate family member of any of the foregoing.
“Purchaser SEC Reports” has the meaning specified in Section 6.06(a).
“Purchaser Shareholder Approval” means the approval of: (i) the Transaction Proposal identified in clause (B) of Section 7.13(b)(i) by special resolution under the Organizational Documents of the Purchaser, being the affirmative vote of a majority of at least two-thirds of the holders of the Purchaser Class B Ordinary Shares, as being entitled to do so, vote in person or, where proxies are allowed, by proxy at the Purchaser Shareholders’ Meeting (as determined in accordance with the Purchaser’s Organizational Documents); (ii) the Transaction Proposal identified in clause (C) of Section 7.13(b)(i) by special resolution under the Cayman Companies Act, being the affirmative vote of a majority of at least two-thirds of the holders of the Purchaser Ordinary Shares, as being entitled to do so, vote in person or, where proxies are allowed, by proxy at the Purchaser Shareholders’ Meeting (as determined in accordance with the Purchaser’s Organizational Documents); (iii) those Transaction Proposals identified in clauses (A), (D), (E), (F), (G) and (H) of Section 7.13(b)(i), in each case, by an ordinary resolution under the Organizational Documents of the Purchaser, being the affirmative vote of at least a simple majority of the holders of the Purchaser Ordinary Shares, as being entitled to do so, vote in person or, where proxies are allowed, by proxy at the Purchaser Shareholders’ Meeting (as determined in accordance with the Purchaser’s Organizational Documents); and (iv) with respect to any other proposal proposed to the Purchaser Shareholders, the requisite approval required under the Purchaser’s Organizational Documents, the Cayman Companies Act or any other applicable Law, in each case, at a Purchaser Shareholders’ Meeting.
“Purchaser Shareholders” means the shareholders of the Purchaser as of the applicable time specified in this Agreement.
“Purchaser Shareholders’ Meeting” has the meaning specified in Section 7.13(b)(i).
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“Purchaser Transaction Costs” means: (a) all fees, costs and expenses of the Purchaser incurred prior to and through the Closing Date in connection with the negotiation, preparation and execution of this Agreement, the other Ancillary Documents and the consummation of the Transactions, whether paid or unpaid prior to the Closing, including all professional or transaction related costs, fees and expenses of legal, accounting and financial advisors, consultants, auditors, accountants and brokers, including any deferred underwriting commissions being held in the Trust Account; (b) any Indebtedness of the Purchaser owed to its or Sponsor’s Affiliates or shareholders; (c) 50% of all costs, fees and expenses relating to the D&O Tail; (d) 50% of the filing fees lawfully payable to or as required by any Governmental Authority in connection with obtaining any required regulatory approvals in connection with this Agreement, the Ancillary Documents and the consummation of the Transactions, including any such fees in connection with the regulatory filings described in Section 7.09; (e) 50% of all costs, fees and expenses incurred in connection with the preparation, printing, filing and mailing of the Registration Statement; (f) 50% of all costs, fees and expenses incurred in connection with the listing on Nasdaq of the shares of Domesticated Purchaser Common Stock issued in connection with the Transactions; and (g) the Transfer Taxes borne by the Purchaser pursuant to Section 7.11.
“Redemption” has the meaning specified in Section 7.13(b)(i).
“Redemption Price” means the price at which a Purchaser Class A Ordinary Share may be redeemed in connection with the Redemption, which Redemption Price shall be determined, in accordance with the Organizational Documents of the Purchaser, as of two Business Days prior to the Closing.
“Registration Statement” means the Registration Statement on Form S-4, or other appropriate form, including any pre-effective or post-effective amendments or supplements to such Registration Statement on Form S-4, to be filed with the SEC by the Purchaser under the Securities Act with respect to the Registration Statement Securities.
“Registration Statement Securities” has the meaning specified in Section 7.13(a)(i).
“Related Person” means any officer, director, manager, employee, trustee or beneficiary of the Company or any of its Affiliates and any immediate family member of any of the foregoing.
“Released Claims” has the meaning specified in Section 10.16.
“Representatives” as to any Person means such Person’s Affiliates and their respective managers, directors, officers, employees, independent contractors, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates.
“Requisite Stockholder Approval” means the approval of this Agreement and the Transactions, including the Merger, by the irrevocable affirmative written consent of the Requisite Stockholders (the “Written Consent”) pursuant to the terms and in accordance with and satisfaction of the conditions of the Company’s Organizational Documents and applicable Law.
“Requisite Stockholders” means the holders of at least: (i) a majority of the voting power of the outstanding shares of Company Stock; (ii) a majority of the voting power of the outstanding shares of Company Common Stock; and (iii) a majority of the outstanding shares of Company Preferred Stock, voting together on an as-converted basis.
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“S-4 Filing Delay” shall have occurred if the Registration Statement is not filed with the SEC on or before October 14, 2026.
“SAFE Amendment” means, with respect to each Company SAFE, a written amendment or consent agreement entered into between the Company and the applicable Company SAFE Investor prior to the date hereof that: (i) establishes the conversion price applicable to such Company SAFE for purposes of Section 1.09; and (ii) authorizes conversion of such Company SAFE into Company Common Stock in connection with the Transactions.
“SAFE Consideration” has the meaning set forth in Section 1.09.
“Sanctioned Person” means any Person that is the subject or target of applicable sanctions or restrictions under Sanctions Laws, including: (i) any individual or entity listed on any applicable U.S. or non-U.S. sanctions- or export-related restricted party list, including OFAC’s Specially Designated Nationals and Blocked Persons List, and the European Union Consolidated List; or (ii) any entity that is, in the aggregate, 50 percent or greater owned, directly or indirectly, or otherwise controlled as defined in the applicable regulations by a person or persons described in clause (i).
“Sanctions Laws” means all applicable U.S. and non-U.S. Laws (the latter except to the extent inconsistent with U.S. law), regulations, embargoes or restrictive measures relating to economic or trade sanctions administered or enforced by the United States (including by OFAC, the U.S. Department of State, and the U.S. Department of Commerce), Canada, the United Kingdom, the United Nations Security Council, the European Union, any EU Member State or any other relevant Governmental Authority.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.
“SEC” means the U.S. Securities and Exchange Commission (or any successor Governmental Authority).
“Security Incident” means any unauthorized or unlawful access to or use, disclosure, or other Processing of Company Data, including any ransomware attacks, successful phishing incidents, or other incidents that are “personal data breaches,” “security incidents,” or similar terms as defined by applicable Laws.
“Securities Act” means the Securities Act of 1933, as amended.
“Signing Date” has the meaning specified in the Preamble.
“Signing Filing” has the meaning specified in Section 7.15(b).
“Signing Press Release” has the meaning specified in Section 7.15(b).
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“Software” means all computer software, firmware and computer programs and applications, including all source code, object code, middleware, utilities, computer programs, application programming interfaces, algorithms, plugins, libraries, subroutines, tools, drivers, microcode, scripts, batch files, instruction sets and macros, models, parameters, weights and methodologies, in each case of the foregoing whether in source code, executable or object code form or other form, related documentation (including user manuals, related to any of the foregoing) and all software modules, tools and technical databases.
“Sponsor” means Bluerock Acquisition Holdings, LLC, a Delaware limited liability company.
“Sponsor Director” has the meaning specified in Section 7.17(a).
“Sponsor Group” has the meaning specified in Section 10.15(a)(i).
“Sponsor Share Conversion” has the meaning specified in the Recitals.
“Sponsor-side Persons” has the meaning specified in Section 10.15(a)(i).
“Sponsor Support Agreement” means the Sponsor Support Agreement, dated as of the date of this Agreement (as it may be amended or supplemented from time to time), by and between the Sponsor, the Company and the Purchaser.
“Staleness Deadlines” has the meaning specified in Section 7.04(a).
“Stock Exchange” means the New York Stock Exchange, The Nasdaq Stock Market LLC, or such other securities exchange as mutually agreed by the Company and the Purchaser, acting reasonably.
“Subsidiary” with respect to any Person means any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of such corporation is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination of such Person or one or more of the other Subsidiaries of such Person, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests of such partnership is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination of such Person or one or more of the other Subsidiaries of that Person. A Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Surviving Company” has the meaning specified in Section 1.02.
“Target Working Capital” means $1,500,000, which the parties agree represents a normalized level of working capital for the Company and its Subsidiaries as of the Closing Date.
“Tax Return” means any return, form, declaration, election, disclosure, report, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed with any Governmental Authority in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
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“Taxes” means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, capital gains, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, deduction, collection, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties, surcharge, cess or other taxes, fees, assessments or charges in the nature of a tax, together with (b) any interest, fines and any penalties, additions to tax or additional amounts with respect to such tax imposed by a Governmental Authority responsible for the administration or collection of Taxes described in clause (a) of this definition.
“Top Customers” has the meaning specified in Section 5.23(a).
“Top Suppliers” has the meaning specified in Section 5.23(b).
“TPC Loan Amount” means the aggregate payoff amount required to repay in full all amounts outstanding under the Company’s loan from TriplePoint Venture Growth BDC Corp. and TriplePoint Private Venture Credit Inc. that have been drawn as of the date of this Agreement, including any accrued and unpaid interest, fees, costs, expenses, and other amounts payable in respect of such drawn amounts, and excluding any amounts attributable to any additional borrowings, advances, or draws made after the date of this Agreement.
“Trade Secrets” means all trade secrets and other confidential business information, including ideas, concepts, designs, processes, techniques, specifications, know-how, technical data, technical databases and inventions in each case, from which the Company derives value by virtue of being maintained as confidential.
“Trademarks” has the meaning set forth in the definition of “Intellectual Property.”
“Transaction Litigation” has the meaning specified in Section 7.08.
“Transaction Proposals” has the meaning specified in Section 7.13(b)(i).
“Transactions” means the transactions contemplated by this Agreement and the Ancillary Documents.
“Transfer Taxes” has the meaning specified in Section 7.11(b).
“Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references in this Agreement to sections of the Treasury Regulations shall include any corresponding provisions or provisions of successor or final Treasury Regulations.
“Trust Account” means the trust account maintained by Trustee pursuant to the Trust Agreement.
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“Trust Agreement” means the Investment Management Trust Agreement, dated as of December 10, 2025, between the Purchaser and Trustee.
“Trustee” means Continental Stock Transfer & Trust Company.
“Updated Allocation Schedule” has the meaning specified in Section 4.02.
“VWAP” for any security as of any day or multi-day period means the dollar volume-weighted average price for such security on the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average). If the foregoing does not apply, “VWAP” shall mean the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg. If no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, “VWAP” shall mean the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group Inc. If the VWAP cannot be calculated for such security on such date(s) on any of the foregoing bases, the VWAP of such security on such day or multi-day period (as applicable) shall be the Fair Market Value per share on such day or multi-day period (as applicable) as reasonably determined by the Purchaser.
“WARN Act” has the meaning specified in Section 5.18(b).
“Warrant Agreement” means the Warrant Agreement, dated as of December 10, 2025, by and between the Purchaser and Continental, as warrant agent.
“Written Consent Deadline” means 4:00 pm New York time on the second Business Day following the date on which the Proxy Statement/Registration Statement has been declared effective by the SEC and the prospectus to such Proxy Statement/Registration Statement has been filed and distributed.
“499 Tax Status Report” means (i) in the case of Company Stockholders who are resident in India under the provisions of the IT Act or where Company Stockholders hold a Permanent Account Number (PAN) issued under the IT Act by the Indian authorities, report duly signed by a reputed Indian chartered accountancy firm and on its letterhead containing the screenshots from the website of the Tax Authority, Government of India confirming that there are no tax proceedings, pending or subsisting and / or outstanding tax demand pending against such Company Stockholders along with screenshot of the: (a) income-tax website with respect to the tax returns filed by such Company Stockholders; (b) income tax website with respect to the income tax assessment status and pending tax proceedings, i.e., “e-proceedings” tab; (c) income tax website with respect to the ‘Response to Outstanding demand’ tab; and (d) TDS reconciliation analysis and correction enabling system (TRACES) website with respect to outstanding tax demand status; that may render the transaction as contemplated under the Agreement void under Section 499 of the IT Act and a reliance letter to be issued by a reputed Indian chartered accountancy firm to the Purchaser to permit the Purchaser to rely on such 499 Tax Status Report, each of which are in a form agreeable to such Company Stockholders and the Purchaser; and (ii) in the case of Company Stockholders who are non-resident in India under the provisions of the IT Act and do not have a PAN, an undertaking to the effect that such Company Stockholders are not subject to Tax in India, do not hold a PAN in India and are not required to file their tax returns in India under the provisions of the IT Act, in a form agreeable to such Company Stockholders and the Purchaser.
“2026 MEP” has the meaning specified in Section 7.14(b).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each party has caused this Business Combination Agreement to be signed and delivered as of the date first written above.
| The Purchaser: | ||
| BLUEROCK ACQUISITION CORP. | ||
| By: | /s/ Jordan Ruddy | |
| Name: | Jordan Ruddy | |
| Title: | President | |
| Merger Sub: | ||
| BLRK Merger Sub Inc. | ||
| By: | /s/ Jordan Ruddy | |
| Name: | Jordan Ruddy | |
| Title: | President | |
[Signature Page to Business Combination Agreement]
IN WITNESS WHEREOF, each party has caused this Business Combination Agreement to be signed and delivered as of the date first written above.
| The Company: | ||
| BITONIC TECHNOLOGY LABS INC. | ||
| By: | /s/ Raghavendra Kumar Ravinutala | |
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | Chief Executive Officer | |
SCHEDULE A
[Omitted.]
SCHEDULE 8.03(f)
[Omitted.]
EXHIBIT A
Term Sheet for Purchaser Charter upon Domestication and Purchaser
Bylaws upon Domestication
[Omitted.]
EXHIBIT B
Equity PIPE Subscription Agreements
[Filed Separately.]
EXHIBIT C
A&R Registration Rights Agreement
[Filed Separately.]
EXHIBIT D
Form of United States Real Property Interest Certification and Notice
[Omitted.]
EXHIBIT E
2026 Milestone Equity Plan Term Sheet
This 2026 Milestone Equity Plan Term Sheet (“Term Sheet”) is attached as Exhibit E to, and incorporated by reference to, the Business Combination Agreement (the “Agreement”) made and entered into as of the Signing Date by and between Purchaser, Merger Sub, and the “Company”. This Term Sheet is a summary of the material terms and conditions of the proposed 2026 Milestone Equity Plan (the “2026 MEP”) to be adopted by Purchaser. Any capitalized terms not defined herein have the meaning set forth in the Agreement. This summary is not intended to exhaust all of the terms and conditions of the 2026 MEP, which shall be set forth in the final 2026 MEP document. The terms of the 2026 MEP are subject to the approval of Purchaser’s stockholders in accordance with applicable Law.
1. Objective
The Parties intend that the 2026 MEP will encourage certain key employees and other key service providers of Purchaser selected by the board of directors of Purchaser following the Closing, after taking into account the recommendations of Purchaser’s management following the Closing (such key employees and service providers, the “Eligible MEP Participants”) to continue their service with Purchaser or its subsidiaries and motivate Eligible MEP Participants toward the achievement of the completion of certain business goals, including those below. The 2026 MEP is intended to constitute an “unfunded” plan.
2. Administration.
The 2026 MEP shall be administered by Purchaser’s board of directors and, following the Closing, the Post-Closing Purchaser Board (both, the “Purchaser Board”). The Purchaser Board shall have the sole authority to interpret the Plan and to make any determinations required under the 2026 MEP. No PRSU awards will be granted prior to the Closing Date nor shall any Eligible MEP Participants be selected for awards prior to the Closing Date.
3. Award Mechanism - Performance Restricted Stock Units
Promptly following the Closing Date, but in no case prior to the date that awards can be granted under the 2026 MEP in compliance with applicable laws (including the effectiveness of any registration statement filed with the Securities and Exchange Commission in respect of the 2026 MEP and the awards granted and shares issued thereunder), the Purchaser Board will grant awards of restricted stock units subject to performance-based and service-based vesting (“PRSUs”) to Eligible MEP Participants covering up to the total number of shares subject to the MEP Reserve.
4. Triggering Events
No Eligible MEP Participant will vest in any PRSUs unless and until such Eligible MEP Participant remains in continued service with Purchaser or its subsidiaries until the date the Purchaser Board certifies achievement of one or more of the events set forth below (each, a “Triggering Event” and collectively, the “Triggering Events”), and, in the case of Triggering Event IV, the Eligible MEP Participant must also remain in service through the first anniversary of the Closing Date.
Subject to the Eligible MEP Participant’s continued service with Purchaser or its subsidiaries through the applicable vesting date:
(i) 19.05% of the shares subject to such Eligible MEP Participant’s PRSU award (3,333,750 of the aggregate shares in the MEP Reserve) will vest on the date the Purchaser Board certifies that the Surviving Company has achieved Revenue of at least $45,000,000 (subject to adjustment described below) on a trailing twelve month basis over the three (3) fiscal year period commencing with the first full fiscal year immediately following the Closing Date (“Triggering Event I”).
(ii) 19.05% of the shares subject to such Eligible MEP Participant’s PRSU award (3,333,750 of the aggregate shares in the MEP Reserve) will vest on the date the Purchaser Board certifies that the Surviving Company has achieved Revenue of at least $55,000,000 (subject to adjustment described below) on a trailing twelve month basis over the three (3) fiscal year period commencing with the first full fiscal year immediately following the Closing Date (“Triggering Event II”).
(iii) 19.05% of the shares subject to such Eligible MEP Participant’s PRSU award (3,333,750 of the aggregate shares in the MEP Reserve) will vest on the date the Purchaser Board certifies that the Surviving Company has achieved Revenue of at least $65,000,000 (subject to adjustment described below) on a trailing twelve month basis over the three (3) fiscal year period commencing with the first full fiscal year immediately following the Closing Date (“Triggering Event III”).
(iv) 42.85% of the shares subject to such Eligible MEP Participant’s PRSU award (7,498,750 of the aggregate shares in the MEP Reserve) will vest on the date the Purchaser Board certifies that, at any time during the five (5) year period following the Closing Date, the VWAP of one share of Domesticated Purchaser Common Stock as reported on Nasdaq (or the exchange on which the shares of Domesticated Purchaser Common Stock are then listed) equals or exceeds $12.00 (as adjusted to reflect any stock splits, reverse stock splits, stock dividends, extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change or transaction with respect to Domesticated Purchaser Common Stock, the “Trigger IV Price”) for 20 out of 30 consecutive trading days during the five (5) year period following the Closing Date (“Triggering Event IV”).
Triggering Event I, Triggering Event II and Triggering Event III will be tested at the end of every fiscal quarter commencing with the end of the first full fiscal year following the Closing Date. Triggering Event I, Triggering Event II and Triggering Event III can each be achieved during the same trailing twelve month period.
If Triggering Event I, Triggering Event II or Triggering Event III is not achieved by the end of the third full fiscal year following the Closing Date, and/or if Triggering Event IV is not achieved by the end of the five (5) year period following the Closing Date, in each case as certified by the Purchaser Board promptly following the end of the applicable period for such Triggering Event, then the portion of each then-outstanding PRSU award (and all of the shares subject to such portion) allocated to such Triggering Event under such award will be immediately forfeited.
The term “Revenue” shall mean the consolidated revenue of the Purchaser and its Subsidiaries for the trailing four (4) fiscal quarters, as reported in the Purchaser’s consolidated financial statements filed with the SEC, prepared in accordance with GAAP applied consistently with the Company’s historical accounting policies, and on an audited basis to the extent such filed statements were audited. Revenue shall exclude intercompany revenues. Revenue shall include, without limitation, revenue attributable to any acquisition, joint venture or other business combination consummated during such fiscal quarter (each, a “Post-Closing Business Combination” and such revenue, “Business Combination Revenue”); provided that:
(i) any such Business Combination Revenue shall only be included from the actual closing date of such transaction through the end of the applicable measurement period, and shall not be annualized, extrapolated or otherwise adjusted on a pro forma basis;
(ii) if (x) the Post-Closing Business Combination is consummated prior to the 15th month anniversary of the Closing Date, and (y) any portion of the consideration paid by the Surviving Company in connection with a Post-Closing Business Combination consists of shares of common stock or other equity securities of the Surviving Company, then the Revenue target for the applicable measurement period shall be increased on a dollar-for-dollar basis by the amount of Business Combination Revenue attributable to such Post-Closing Business Combination.
For the avoidance of doubt, if the consideration for a Post-Closing Business Combination does not include shares of common stock or other equity securities of the Surviving Company or such Post-Closing Business Combination is consummated following the 15th month anniversary of the Closing Date, then no adjustment shall be made to the Revenue target with respect to such Post-Closing Business Combination.
5. Acceleration of Vesting on Change of Control
If, prior to the date the Purchaser Board certifies the satisfaction of any Triggering Event, the Surviving Company is subject to a Change of Control, then the following shall apply with respect to any then-outstanding PRSU awards:
(i) to the extent that any portion of a then-outstanding PRSU award remains eligible to vest upon the satisfaction of Triggering Events I, II, and/or III, and subject to the holder of such award continuing in service with Purchaser or its subsidiaries through the closing of such Change of Control, such portion of the then-outstanding PRSU award will become fully vested as of immediately prior to the closing of the Change of Control and treated in accordance with the terms of the definitive agreement governing the Change of Control; and
(ii) to the extent that the portion of a then-outstanding PRSU award remains eligible to vest upon the satisfaction of Triggering Event IV, and subject to the holder of such award continuing in service with Purchaser or its subsidiaries through the closing of such Change of Control, such portion of the then-outstanding PRSU award will become fully vested as of immediately prior to the closing of the Change of Control and treated in accordance with the terms of the definitive agreement governing the Change of Control.
6. Continued Service Requirement
Upon any termination of service of an Eligible MEP Participant, any then-unvested portion of such Eligible MEP Participant’s PRSU award will be immediately forfeited and the shares subject to such award will return to the MEP Reserve. The Purchaser Board shall have the right, but not the obligation, to issue new PRSU awards in respect of such forfeited shares, including to any individual hired to replace the terminated Eligible MEP Participant and any other then current Eligible MEP Participant.
7. Taxes
All amounts payable under the 2026 MEP will be subject to applicable withholdings and deductions. No gross-up payments will be made with respect to payments under the 2026 MEP.
In all cases, PRSUs will be settled not later than the period necessary for compliance with, to the extent applicable, Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(9), 1.409A-3(i)(5)(iv)(A). Each payment under the 2026 MEP is a separate payment for purposes of Treasury Regulations Section 1.409A-2(b)(2)(iii).
8. Recoupment
All awards under the 2026 MEP are subject to recoupment in accordance with any clawback policy that Purchaser is required or permitted to adopt pursuant to the listing standards of any national securities exchange or association on which Purchaser’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable Law. The implementation of any clawback policy will not be deemed a triggering event for purposes of any definition of “good reason” for resignation or “constructive termination.”
9. Other Provisions.
No individual will have any claim to be granted any award under the 2026 MEP. Nothing in the Plan or any Award will be deemed to constitute an employment contract or confer or be deemed to confer on any individual any right to continue in the employ of, or to continue any other service relationship with, Purchaser or any of its subsidiaries or limit in any way the right of Purchaser or any of its subsidiaries to terminate an individual’s service relationship at any time, with or without cause.
The granting of awards and the issuance of shares under the 2026 MEP are subject to all applicable Laws. Purchaser will have no obligation to issue or deliver any shares under the 2026 MEP or make any other distribution of benefits under the 2026 MEP unless, in the opinion of Purchaser’s counsel, such issuance, delivery or distribution would comply with all applicable Laws.
10. Choice of Law and Venue.
The 2026 MEP, all awards granted thereunder, and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, will be governed by the laws of the state of Delaware without giving effect to principles of conflicts of law. Participants irrevocably consent to the sole and exclusive jurisdiction and venue of the state and federal courts located in the state of Delaware.
Exhibit 10.1
SPONSOR SUPPORT AGREEMENT
This SPONSOR SUPPORT AGREEMENT (this “Agreement”) is dated as of July 31, 2026 (the “Effective Date”), by and among Bluerock Acquisition Corp., a Cayman Islands exempted company (which shall domesticate as a Delaware corporation prior to the Closing) (the “Purchaser”), Bluerock Acquisition Holdings, LLC, a Delaware limited liability company (the “Purchaser Support Party”), and Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (the “Company”). Capitalized terms used but not defined in this Agreement shall have the meanings given to those same terms in the Business Combination Agreement.
WHEREAS, as of the Effective Date, the Purchaser Support Party is the holder of record and the “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of such number of Purchaser Class B Ordinary Shares and Cayman Purchaser Warrants as are indicated opposite its name on Schedule I attached to this Agreement (collectively, the “Subject Securities”);
WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Purchaser, BLRK Merger Sub Inc., a Delaware corporation and direct wholly-owned subsidiary of the Purchaser (“Merger Sub”) and the Company have entered into the Business Combination Agreement (as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”), dated as of the Effective Date. Pursuant to the Business Combination Agreement, among other transactions, the Purchaser, Merger Sub and the Company intend to consummate a business combination; and
WHEREAS, as an inducement to the Purchaser and the Company to enter into the Business Combination Agreement and to consummate the Transactions, the parties to this Agreement desire to agree to certain matters.
NOW, THEREFORE, the parties to this Agreement agree as follows:
ARTICLE I
SUPPORT AGREEMENT; COVENANTS
Section 1.1 Binding Effect of Business Combination Agreement. The Purchaser Support Party acknowledges that it has read the Business Combination Agreement and this Agreement and has had the opportunity to consult with its tax and legal advisors. The Purchaser Support Party shall be bound by, be subject to and comply with Section 7.06 (No Solicitation), Section 7.15 (Public Announcements) and Section 7.16 (Confidential Information) of the Business Combination Agreement (and any relevant definitions contained in any such Sections) as if the Purchaser Support Party was an original signatory to the Business Combination Agreement with respect to such provisions.
Section 1.2 No Transfer.
(a) Unless otherwise deemed a Permitted Transfer, during the period commencing on the Effective Date and ending on the earliest of: (i) the Closing, (ii) such date and time as the Business Combination Agreement shall be terminated in accordance with Section 9.01 (Termination) of the Business Combination Agreement (the earlier of (i) and (ii), “BCA Termination”); and (iii) the liquidation of the Purchaser, without the prior written consent of the Company, the Purchaser Support Party shall not: (A) sell, offer to sell, contract or agree to sell, hypothecate or pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Subject Securities owned by the Purchaser Support Party; (B) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of any Subject Securities owned by the Purchaser Support Party, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise; (C) take any action in furtherance of any of the matters described in the foregoing clause (A) or (B); or (D) publicly announce any intention to effect any transaction specified in the foregoing clause (A) or (B) (each, a “Transfer”).
(b) “Permitted Transfer” means any Transfer of the Subject Securities: (i) to the Purchaser’s officers or directors, any Affiliate or family member of any of the Purchaser’s officers or directors, any members or partners of the Sponsor or their Affiliates and funds and accounts advised or managed by such members or partners, any Affiliates of the Sponsor, or any employees of such Affiliates; (ii) in the case of an individual, by gift to a member of one of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s family or an Affiliate of such person, (iii) to a charitable organization; (iv) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (v) in the case of an individual, pursuant to a qualified domestic relations order; (vi) in the case of an entity that is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust; (vii) by virtue of the Sponsor’s organizational documents upon liquidation or dissolution of the Sponsor; or (viii) to a nominee or custodian of a Person to whom a Transfer would be permitted under clauses (i) through (vii); (ix) to the Purchaser for no value for cancellation in connection with the completion of the Transactions; (x) for bona fide estate planning purposes; or (xi) by private sales or transfers made in connection with any non-redemption agreement, forward purchase agreement, PIPE Investment or any other financing transaction or similar arrangement, or in connection with the consummation of an initial Business Combination. Notwithstanding the foregoing, in the case of clauses (i) through (vi), clause (viii) or clause (ix), a Transfer shall only be deemed a “Permitted Transfer” if (A) the transferor has provided prior written notice to the Company and Purchaser of such Transfer, and (B) such transferee enters into a written agreement with the Company and the Purchaser assuming all of the obligations under this Agreement with respect to such Subject Securities and subjecting itself to the restrictions set forth in this Agreement. Any Transfer that does not comply with the provisions of this Section 1.2 shall be null and void. No Transfer permitted under this Section 1.2 shall relieve the Purchaser Support Party of its obligations under this Agreement.
Section 1.3 New Shares. If: (a) any Purchaser Ordinary Shares, Cayman Purchaser Warrants or other equity securities of the Purchaser are issued to the Purchaser Support Party after the Effective Date pursuant to any share dividend, share split, recapitalization, reclassification, combination or exchange of or similar transaction with respect to, on or affecting the Purchaser Ordinary Shares or the Cayman Purchaser Warrants owned by the Purchaser Support Party or otherwise; (b) the Purchaser Support Party purchases or otherwise acquires beneficial ownership of any Purchaser Ordinary Shares, Cayman Purchaser Warrants or other equity securities of the Purchaser after the Effective Date; or (c) the Purchaser Support Party acquires the right to vote or share in the voting of any Purchaser Ordinary Shares or other equity securities of the Purchaser after the Effective Date (such Purchaser Ordinary Shares, Cayman Purchaser Warrants or other equity securities of the Purchaser, collectively, the “New Securities”), then such New Securities acquired or purchased by the Purchaser Support Party shall be subject to the terms of this Agreement to the same extent as if they constituted the Subject Securities owned by the Purchaser Support Party as of the Effective Date.
Section 1.4 Closing Date Deliverables. On the Closing Date, the Purchaser Support Party shall deliver to the Purchaser and the Company a duly executed copy of the Registration Rights Agreement.
Section 1.5 Agreements.
(a) In all circumstances in which the vote, consent or other approval of the Purchaser Shareholders is sought, the Purchaser Support Party shall: (i) appear at each such meeting, in person or by proxy, or otherwise cause all of the Purchaser Support Party’s Subject Securities that are entitled to vote to be counted as present at such meeting for purposes of calculating a quorum; and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of the Purchaser Support Party’s Subject Securities that are entitled to vote:
(A) in favor of each Transaction Proposal;
(B) against any Alternative Transaction or any proposal relating to an Alternative Transaction (in each case, other than the Transaction Proposals);
(C) against any merger agreement or merger (other than the Business Combination Agreement and the Transactions), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Purchaser; and
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(D) against any proposal, action or agreement that would: (I) impede, interfere, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement or the Transactions; (II) result in a breach in any material respect of any covenant, representation, warranty or any other obligation or agreement of the Purchaser under the Business Combination Agreement; (III) result in any of the conditions set forth in Article VIII (Closing Conditions) of the Business Combination Agreement not being fulfilled; (IV) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Purchaser Support Party contained in this Agreement; or (V) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, the Purchaser. The Purchaser Support Party shall not commit or agree to take any action inconsistent with the foregoing in its capacity as a shareholder of the Purchaser.
(b) Notwithstanding anything to the contrary in this Agreement, if at any time following the Effective Date and prior to the termination of the Business Combination Agreement, the board of directors of the Purchaser effects a Modification in Recommendation, then the obligations of the Purchaser Support Party to vote or consent in accordance with Section 1.5(a), Section 1.5(c) and Section 1.9 shall automatically be deemed to be modified such that, from and after the occurrence of such Modification in Recommendation, the Purchaser Support Party shall vote or provide consent in respect of its Subject Securities in the same proportion to the votes cast or consent provided, as applicable, by the holders of the Purchaser Class A Ordinary Shares.
(c) Prior to the Closing, the Purchaser Support Party shall comply with, and fully perform all of its obligations, covenants and agreements set forth in, the letter agreement, dated as of December 10, 2025, by and among the Purchaser, the Purchaser Support Party and certain of the Purchaser’s other current and former officers and directors (the “Insider Letter”). Without limiting the generality of the foregoing, such compliance shall include the obligations of the Purchaser Support Party pursuant to the Insider Letter to not redeem any Purchaser Ordinary Shares owned by the Purchaser Support Party in connection with the Transactions. The Purchaser Support Party confirms and acknowledges, and shall cause each Insider (as defined in the Insider Letter) to confirm and acknowledge, that the voting obligations set forth in paragraph 1 of the Insider Letter extend to each Transaction Proposal as defined in the Business Combination Agreement, including without limitation the approval of the Equity Incentive Plan, the 2026 Milestone Equity Plan, the election of members of the Post-Closing Purchaser Board, and all other proposals contemplated by Section 7.13(b)(i) of the Business Combination Agreement.
Section 1.6 No Challenges. The Purchaser Support Party agrees not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against the Purchaser, the Company or any of their respective successors or directors: (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement; or (b) alleging a breach of any fiduciary duty of any person in connection with the evaluation, negotiation or entry into this Agreement, the Business Combination Agreement or the Transactions. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall limit or restrict the ability of the Purchaser Support Party to enforce its rights under this Agreement or any other Ancillary Document to which it is a party or seek any other remedies with respect to any breach of this Agreement or such other Ancillary Document by any other party to this Agreement or such other Ancillary Document, including by commencing any action in connection with this Agreement or any other Ancillary Document.
Section 1.7 Further Assurances. The Purchaser Support Party shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws to consummate the transactions contemplated by this Agreement on the terms and subject to the conditions set forth in this Agreement and the Transactions on the terms and subject to the conditions set forth in the Business Combination Agreement.
Section 1.8 No Inconsistent Agreement. The Purchaser Support Party represents and covenants that it has not, in such Person’s capacity as a shareholder of the Purchaser, entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of the Purchaser Support Party’s obligations under this Agreement.
Section 1.9 Insider Letter. Neither the Purchaser Support Party nor the Purchaser shall amend, terminate or otherwise modify the Insider Letter without the Company’s prior written consent other than to remove the lock-up obligations under paragraphs 7(a) and 7(b) with effect from the Closing (and make other necessary adjustments as a result of the removal of such obligations); provided however, that any such removal shall not be effective with respect to any particular Insider (as defined in the Insider Letter) unless and until such Insider agrees in writing to be bound by the terms of the Lock-up Agreement with respect to such Insider. The Purchaser Support Party acknowledges that in connection with the Transactions, the Purchaser will adopt the Purchaser Bylaws upon Domestication, and the Purchaser Support Party agrees to be bound by the lock-up provisions applicable to it as set forth in such Purchaser Bylaws upon Domestication.
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Section 1.10 Waiver of Anti-Dilution Provision. Subject to the consummation of the Transactions, the Purchaser Support Party waives (for itself and for its successors, heirs and assigns), to the fullest extent permitted by law and the amended and restated memorandum and articles of association of the Purchaser (as may be amended from time to time, the “Articles”), all anti-dilution rights that would otherwise result in Purchaser Class B Ordinary Shares held by the Purchaser Support Party converting into Purchaser Class A Ordinary Shares on a greater than one-for-one basis in connection with the Transactions. The waiver specified in this Section 1.10 shall be applicable only in connection with the Transactions and the transactions contemplated by this Agreement and any Purchaser Class A Ordinary Shares, shares of Domesticated Purchaser Common Stock or equity-linked securities issued in connection with the Transactions and the transactions contemplated by this Agreement. If the Business Combination Agreement shall be terminated for any reason, the foregoing waiver shall be void and of no force and effect.
Section 1.11 Purchaser Support Party Indemnity. For a period of six years after the Closing Date, the Company will indemnify, exonerate and hold harmless the Purchaser Support Party and such Person’s respective members, partners, managers and officers from and against all third-party actions, causes of action, suits, claims, liabilities, losses, damages and costs and out-of-pocket expenses in connection with such third-party actions, causes of actions, suits, claims, liabilities, losses, damages and costs (including reasonable attorneys’ fees and expenses) (“Indemnified Liabilities”) incurred by the Purchaser Support Party on or after the date of this Agreement, arising out of any third-party action, cause of action, suit, litigation, investigation, inquiry, arbitration or claim arising from or relating to this Agreement, the entry by the Purchaser Support Party into this Agreement, and the compliance with the Purchaser Support Party’s obligations in this Agreement, in any such case, that names the Purchaser Support Party as a defendant (or co-defendant). The preceding sentence shall not apply to: (a) any Indemnified Liabilities to the extent arising out of any breach by the Purchaser Support Party or such Person’s members, managers and officers of this Agreement or any other agreement between the Purchaser Support Party or such Person’s members, managers and officers, on the one hand, and the Company or any of its subsidiaries, on the other hand; or (b) the willful misconduct, gross negligence or fraud of the Purchaser Support Party or such Person’s members, managers and officers.
Section 1.12 Founder Share Forfeiture. At or immediately prior to the Closing, the Purchaser Support Party shall irrevocably forfeit, surrender and deliver to the Purchaser for cancellation, for no consideration, 750,000 Purchaser Class B Ordinary Shares, together with all Company Ordinary Shares issued upon conversion thereof, including any securities paid as dividends or distributions with respect to or into which such shares are exchanged or converted (or, following the Sponsor Share Conversion and the Domestication, the equivalent number of shares of Domesticated Purchaser Common Stock). Upon such forfeiture, such shares shall be automatically cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor. Purchaser is authorized to deliver any notices required to be delivered to its transfer agent and take such further actions in order to terminate and cancel any shares that have been forfeited as provided in this Section 1.12. For applicable tax purposes, it is intended that the forfeiture contemplated by this Section 1.12 be treated in the nature of a capital contribution under Section 118 of the Internal Revenue Code of 1986, as amended (the “Code”), and the principles of Commissioner v. Fink, 483 U.S. 89 (1987). The forfeiture contemplated by this Section 1.12 shall be effective immediately prior to the Effective Time.
Section 1.13 Commitment Shares.
(a) In connection with the PIPE Investment, the Purchaser Support Party shall, at the Closing, transfer to the Purchaser for re-allocation to each PIPE Investor, 0.5 Purchaser Class B Ordinary Shares (or, following the Sponsor Share Conversion and the Domestication, shares of Domesticated Purchaser Common Stock) (the “Commitment Shares”) for each share of Domesticated Purchaser Common Stock purchased by such PIPE Investor as part of a Unit or held by such PIPE Investor as a Non-Redemption Share (each as defined in the applicable PIPE Agreement) through the Merger Closing. The aggregate number of Commitment Shares deliverable by the Purchaser Support Party pursuant to this Section 1.13 shall not exceed 1,000,000 shares.
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(b) The delivery of Commitment Shares pursuant to this Section 1.13 is in connection with and as additional consideration for the PIPE Investors’ commitments under the PIPE Agreements, the debt-for-equity exchange transactions contemplated by the PIPE Agreements, and the Purchaser Support Party’s interest in consummating the Transactions. The parties acknowledge and agree that the Commitment Shares do not constitute a placement fee, commission, or similar payment.
Section 1.14 Warrant Cancellation.
(a) In connection with and as additional consideration for the Company's consent to exchange certain convertible notes into equity securities of the Company and to facilitate the consummation of the Transactions, the Purchaser Support Party shall, at or immediately prior to the Closing, surrender and deliver to the Purchaser for cancellation, for no additional consideration, 2,000,000 Cayman Purchaser Warrants held by Purchaser Support Party (or, following the Domestication, the equivalent number of Domesticated Purchaser Warrants) (the “Cancelled Warrants”). Upon such surrender and delivery, the Cancelled Warrants shall be automatically cancelled and shall cease to exist.
(b) The parties acknowledge and agree that the cancellation of the Cancelled Warrants pursuant to this Section 1.14 constitutes additional consideration flowing to the Company in connection with the debt-for-equity exchange transactions contemplated by the PIPE Agreements. The cancellation of the Cancelled Warrants is not a commitment fee, placement fee, or similar payment, but rather reflects the reduction of warrant overhang as consideration for the Company’s consent and cooperation.
(c) The obligations of the Purchaser Support Party under this Section 1.14 are conditioned upon and shall only become effective upon the substantially concurrent consummation of the debt-for-equity exchange transactions contemplated by the applicable PIPE Agreements. If such debt-for-equity exchange transactions are not consummated substantially concurrently with the Closing, the Purchaser Support Party shall have no obligation to cancel the Cancelled Warrants.
(d) For applicable tax purposes, it is intended that the warrant cancellation contemplated by this Section 1.14 be treated in the nature of a capital contribution under Section 118 of the Code and the principles of Commissioner v. Fink, 483 U.S. 89 (1987).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Purchaser Support Party. The Purchaser Support Party represents and warrants as of the Effective Date to the Purchaser and the Company as follows:
(a) Organization; Due Authorization. The Purchaser Support Party is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which such Person is incorporated, formed, organized or constituted. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement are within the Purchaser Support Party’s corporate, limited liability company, partnership or similar organizational powers and have been duly authorized by all necessary corporate, limited liability company, partnership or similar organizational actions on the part of the Purchaser Support Party. This Agreement has been duly executed and delivered by the Purchaser Support Party. Assuming the due authorization, execution and delivery by the other parties to this Agreement, this Agreement constitutes a legally valid and binding obligation of the Purchaser Support Party. Except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies, this Agreement is enforceable against the Purchaser Support Party in accordance with its terms. If this Agreement is being executed in a representative or fiduciary capacity, the Person signing this Agreement has full power and authority to enter into this Agreement on behalf of the Purchaser Support Party.
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(b) Ownership. The Purchaser Support Party is the record and beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of, and has good title to, all of the Subject Securities. There exist no Liens or any other limitation or restriction affecting any such Subject Securities, other than Liens pursuant to: (i) this Agreement; (ii) the Purchaser’s Organizational Documents; (iii) the Business Combination Agreement; (iv) the Insider Letter; (v) the Sponsor’s Organizational Documents; (vi) agreements between the Purchaser Support Party and the Purchaser Support Party’s members or Affiliates, as applicable; (vii) the Sponsor Lock-Up Agreement; or (viii) any applicable securities Laws. The Purchaser Support Party’s Subject Securities are the only equity securities of the Purchaser owned of record or beneficially by the Purchaser Support Party on the Effective Date. Except as provided under this Agreement and the Insider Letter, none of such Subject Securities are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Securities. Other than the Cayman Purchaser Warrants held by the Purchaser Support Party, the Purchaser Support Party does not hold or own any rights to acquire (directly or indirectly) any equity securities of the Purchaser or any equity securities convertible into, or which can be exchanged for, equity securities of the Purchaser.
(c) No Conflicts. The execution and delivery of this Agreement by the Purchaser Support Party does not, and the performance by the Purchaser Support Party of its obligations under this Agreement will not (i) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any Contract binding upon the Purchaser Support Party), (ii) contravene or conflict with or result in a violation of any provision of any Law or Order of any Governmental Authority binding upon or applicable to the Purchaser Support Party or any of its properties or assets, (iii) result in a violation or breach of, or constitute a default or give rise to any right of termination, consent, cancellation, amendment, modification, suspension, revocation or acceleration under, any of the terms, conditions or provisions of any Contract to which the Purchaser Support Party is a party, or (iv) other than the restrictions contemplated by this Agreement, result in the creation of any Lien upon the Subject Securities, except in the case of each of clauses (i) through (iv), that would not prevent, enjoin or materially delay the performance by the Purchaser Support Party of its obligations under this Agreement.
(d) Litigation. There are no Legal Proceedings pending against the Purchaser Support Party, or, to the knowledge of the Purchaser Support Party, threatened against the Purchaser Support Party, before (or, in the case of threatened Legal Proceedings, that would be before) any arbitrator or any Governmental Authority, that in any manner challenge or seek to prevent, enjoin or materially delay the performance by the Purchaser Support Party of its obligations under this Agreement.
(e) Brokerage Fees. Except as set forth on the Purchaser Disclosure Letter, no broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the Transactions based upon arrangements made by the Purchaser Support Party, for which the Purchaser or any of such Person’s Affiliates may become liable.
(f) Acknowledgement. The Purchaser Support Party understands and acknowledges that each of the Purchaser and the Company is entering into the Business Combination Agreement in reliance upon the Purchaser Support Party’s execution and delivery of this Agreement.
ARTICLE III
MISCELLANEOUS
Section 3.1 Termination. This Agreement and all of its provisions shall terminate and be of no further force or effect upon the earliest of: (a) the BCA Termination; (b) the Effective Time; (c) the liquidation of the Purchaser; and (d) the written agreement of the Purchaser Support Party and the Purchaser (with respect to provisions in which the Company is not a party) or the Purchaser Support Party, the Purchaser and the Company. Upon such termination of this Agreement: (i) all obligations of the parties under this Agreement will terminate, without any liability or other obligation on the part of any party to this Agreement to any Person with respect to this Agreement or the transactions contemplated by this Agreement; and (ii) no party to this Agreement shall have any claim against another (and no Person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter of this Agreement. Notwithstanding the foregoing, the termination of this Agreement shall not relieve any party to this Agreement from liability arising in respect of any breach of this Agreement prior to such termination. Notwithstanding the foregoing, if the Closing occurs, Section 1.11 shall survive in accordance with its terms. This Article III shall survive the termination of this Agreement.
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Section 3.2 No Recourse. Except for claims based on or for fraud, each Party agrees that this Agreement may only be enforced against, and any action for breach of this Agreement may only be made against, the parties to this Agreement. No claims of any nature whatsoever (whether in tort, contract or otherwise) arising under or relating to this Agreement, the negotiation of this Agreement or its subject matter, or the transactions contemplated by this Agreement shall be asserted against any Non-Party Affiliate. Except to the extent liable in such Person’s capacity as a party to this Agreement, no Non-Party Affiliates shall have any liability arising out of or relating to this Agreement, the negotiation of this Agreement or its subject matter, or the transactions contemplated by this Agreement, including: (a) with respect to any claim (whether in tort, contract or otherwise) for breach of this Agreement; (b) in respect of any written or oral representations made or alleged to be made in connection with this Agreement; (c) as expressly provided in this Agreement; or (d) for any actual or alleged inaccuracies, misstatements or omissions with respect to any information or materials of any kind furnished in connection with this Agreement, the negotiation of this Agreement or the transactions contemplated by this Agreement. “Non-Party Affiliate” means: (i) any officer, director, employee, partner, member, manager, direct or indirect equityholder or Affiliate of each of the Company, the Purchaser, the Sponsor or the Purchaser Support Party (and for clarity with respect to the Purchaser Support Party, the Purchaser); and (ii) each of the former, current or future Affiliates, Representatives, successors or permitted assigns of any of the Persons referred to in the immediately preceding clause (i) (other than the parties to this Agreement).
Section 3.3 Fiduciary Duties. Notwithstanding anything in this Agreement to the contrary: (a) the Purchaser Support Party does not make any agreement or understanding in this Agreement in any capacity other than in its capacity as a record holder and beneficial owner of such Person’s respective Subject Securities; and (b) nothing in this Agreement will be construed to limit or affect any action or inaction expressly permitted under the Business Combination Agreement by the Purchaser Support Party or any representative of the Purchaser Support Party in its capacity as a member of the board of directors (or other similar governing body) of the Purchaser or as an officer, employee or fiduciary of the Purchaser or an Affiliate of the Purchaser.
Section 3.4 Assignment. This Agreement and all of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned (including by operation of law) without the prior written consent of the parties to this Agreement. Any assignment without such consent shall be null and void.
Section 3.5 Specific Performance. The parties to this Agreement acknowledge and agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. In addition to any other remedy to which such party is entitled at law or in equity, the parties to this Agreement shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. In the event that any action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party waives the defense, that there is an adequate remedy at law. Each party agrees to waive any requirement for the securing or posting of any bond in connection with such action.
Section 3.6 Jurisdiction. Any Legal Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated by this Agreement must be brought in the Court of Chancery of the State of Delaware and any State of Delaware appellate court therefrom (or, but only to the extent the Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the parties irrevocably: (i) submits to the exclusive jurisdiction of each such court in any such Legal Proceeding; (ii) waives any objection such party may now or after this Agreement have to personal jurisdiction, venue or to convenience of forum; (iii) agrees that all claims in respect of the Legal Proceeding shall be heard and determined only in any such court; and (iv) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement in any other court. Nothing in this Agreement shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding brought pursuant to this Section 3.6.
Section 3.7 Amendment. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the Parties to this Agreement.
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Section 3.8 No Ownership Interest. Nothing contained in this Agreement will be deemed to vest in the Company any direct or indirect ownership or incidents of ownership of or with respect to the Subject Securities. All rights, ownership and economic benefits of and relating to the Subject Securities shall remain vested in and belong to the Purchaser Support Party, and the Company shall have no authority to manage, direct, superintend, restrict, regulate, govern or administer any of the policies or operations of Purchaser or exercise any power or authority to direct the Purchaser Support Party in the voting of any of the Subject Securities, except as otherwise expressly provided herein with respect to the Subject Securities. Except as otherwise expressly provided in Section 1.5, the Purchaser Support Party shall not be restricted from voting in favor of, against or abstaining with respect to or giving (or withholding) its written consent to any other matters presented to the shareholders of Purchaser.
Section 3.9 Miscellaneous. Sections 10.02 (Notices), 10.05 (Governing Law), 10.07 (Waiver of Jury Trial), 10.09 (Severability), 10.11 (Entire Agreement), 10.12 (Interpretation), 10.13 (Counterparts) and 10.16 (Waiver of Claims Against Trust) of the Business Combination Agreement are each incorporated into this Agreement (including any relevant definitions contained in any such Sections), mutatis mutandis.
Section 3.10 Disclosure. The Purchaser Support Party authorizes the Purchaser and the Company to publish and disclose in any announcement or disclosure relating to the Transactions, including any such announcement or disclosure required or requested by the SEC (or as otherwise required or requested pursuant to any applicable Laws or any other Governmental Authorities), the Purchaser Support Party’s identity and ownership of the Subject Securities, the nature of the Purchaser Support Party’s obligations under this Agreement and a copy of this Agreement, if reasonably deemed appropriate by the Purchaser and the Company. The Purchaser Support Party will promptly provide any information reasonably requested in writing by the Purchaser or the Company for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including filings with the SEC).
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on such Person’s behalf as of the date first written above.
| PURCHASER: | ||
| BLUEROCK ACQUISITION CORP. | ||
| By: | /s/ R. Ramin Kamfar | |
| Name: | R. Ramin Kamfar | |
| Title: | Chief Executive Officer | |
| PURCHASER SUPPORT PARTY: | ||
| BLUEROCK ACQUISITION HOLDINGS, LLC | ||
| By: BEH SPAC Holdings, LLC, its Managing Member | ||
| By: | /s/ R. Ramin Kamfar | |
| Name: | R. Ramin Kamfar | |
| Title: | Managing Member | |
| COMPANY: | ||
| BITONIC TECHNOLOGY LABS INC. d/b/a YELLOW.AI | ||
| By: | /s/ Raghavendra Kumar Ravinutala | |
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | CEO | |
SCHEDULE I
Purchaser Support Party
| Insider; Address | Founder Shares | Private Placement Warrants | ||||||
| Bluerock Acquisition Holdings, LLC | 5,655,000 | 3,000,000 | ||||||
| Total: | 5,655,000 | 3,000,000 | ||||||
[Exhibit A to Sponsor Support Agreement]
Exhibit 10.2
COMPANY SUPPORT AGREEMENT
This COMPANY SUPPORT AGREEMENT (this “Agreement”) is effective as of the signing date of the Business Combination Agreement, by and among Bluerock Acquisition Corp., a Cayman Islands exempted company (which shall transfer by way of continuation and domesticate as a Delaware corporation prior to the Closing) (the “Purchaser”), Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (the “Company”), and those Persons set forth on Schedule A hereto who have executed this Agreement or a counterpart hereof (each a “Stockholder”). Each of Purchaser, the Company and the Stockholder are sometimes referred to herein individually as a “Party” and collectively as the “Parties”. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Business Combination Agreement (as defined below).
RECITALS
WHEREAS, Purchaser and the Company have entered into that certain Business Combination Agreement, dated as of the date hereof (as it may be amended or modified from time to time in accordance with its terms, the “Business Combination Agreement”), pursuant to which, among other things, (i) Purchaser shall domesticate as a Delaware corporation (the “Domestication”), with the continuing entity following the Domestication to be renamed (“PubCo”), and (ii) following the Domestication, a wholly-owned subsidiary of Purchaser shall merge with and into the Company (the “Merger”), with the Company surviving as a wholly-owned subsidiary of PubCo, and each share of Company Common Stock (including the Subject Company Securities (as defined below)) will be converted into the right to receive shares of Domesticated Purchaser Common Stock, in each case on the terms and subject to the conditions set forth in the Business Combination Agreement;
WHEREAS, the Stockholder is the record and beneficial owner of the number and class or series (as applicable) of issued and outstanding shares of Company Common Stock, Company Preferred Stock and/or other Equity Securities of the Company set forth opposite the Stockholder’s name on Schedule A hereto (the “Owned Securities”, and together with any other shares of Company Stock or other Equity Securities of the Company that the Stockholder acquires record or beneficial ownership of after the date hereof, collectively, the “Subject Company Securities”); and
WHEREAS, in consideration for the benefits to be received by the Stockholder under the terms of the Business Combination Agreement and as a material inducement to Purchaser agreeing to enter into and consummate the transactions contemplated by the Business Combination Agreement, the Stockholder desires to enter into this Agreement and to be bound by the agreements, covenants and obligations contained in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, each intending to be legally bound, hereby agree as follows:
1. Company Stockholder Consent and Related Matters.
(a) As promptly as reasonably practicable (and in any event within two (2) Business Days following the date on which the Proxy Statement/Registration Statement has been declared effective by the SEC and the prospectus to such Proxy Statement/Registration Statement has been filed and distributed), the Stockholder, in its, his or her capacity as a stockholder of the Company, shall duly execute and deliver to the Company and Purchaser the stockholder written consent pursuant to which the Stockholder shall irrevocably and unconditionally consent with respect to all Subject Company Securities entitled to vote thereon to the adoption and approval of the Business Combination Agreement, the Transactions, the Merger, and each other matter set forth in the Written Consent or otherwise necessary or reasonably requested by the Company or Purchaser for consummation of the Merger or the other Transactions. Without limiting the generality of the foregoing, prior to the Closing, the Stockholder shall vote (or cause to be voted) the Subject Company Securities in favor of and/or consent to any such other matters, actions or proposals necessary or reasonably requested by the Company or Purchaser for consummation of the Merger or the other Transactions. Without limiting the generality of the foregoing, prior to the Closing, the Stockholder shall vote (or cause to be voted) the Subject Company Securities against and withhold consent with respect to (i) any Acquisition Proposal with respect to the Company or any proposal or offer that constitutes or could reasonably be expected to lead to an Acquisition Proposal with respect to the Company or (ii) any other matter, action or proposal that would reasonably be expected to result in a breach of any of the Company’s covenants, agreements or obligations under the Business Combination Agreement or otherwise reasonably be expected to prevent, impede, interfere with, delay, postpone or adversely affect the consummation of the Merger or any of the other Transactions.
(b) Without limiting any other rights or remedies of Purchaser, the Stockholder hereby irrevocably appoints Purchaser or any officer of Purchaser designated by Purchaser as the Stockholder’s agent, attorney-in-fact and proxy (with full power of substitution and resubstitution), for and in the name, place and stead of the Stockholder, (i) to attend on behalf of the Stockholder any meeting of the Company Stockholders with respect to the matters described in Section 1(a), (ii) to include the Subject Company Securities in any computation for purposes of establishing a quorum at any such meeting of the Company Stockholders and (iii) to vote (or cause to be voted), or deliver a written consent (or withhold consent) with respect to, the Subject Company Securities on the matters specified in, and in accordance and consistent with, Section 1(a) in connection with any meeting of the Company Stockholders or any action by written consent by the Company Stockholders (including the Written Consent), in each case, in the event that the Stockholder fails to perform or otherwise comply with the covenants, agreements or obligations set forth in Section 1(a).
(c) The proxy granted by the Stockholder pursuant to Section 1(b) is coupled with an interest sufficient in law to support an irrevocable proxy and is granted in consideration for Purchaser entering into the Business Combination Agreement and agreeing to consummate the transactions contemplated thereby. The proxy granted by the Stockholder pursuant to Section 1(b) is also a durable proxy and shall survive the bankruptcy, dissolution, death, incapacity or other inability to act by the Stockholder and shall revoke any and all prior proxies granted by the Stockholder with respect to the Subject Company Securities. The vote or consent of the proxyholder in accordance with Section 1(b) and with respect to the matters described in Section 1(a) shall control in the event of any conflict between such vote or consent by the proxyholder of the Subject Company Securities and a vote or consent by the Stockholder of the Subject Company Securities (or any other Person with the power to vote or provide consent with respect to the Subject Company Securities) with respect to the matters described in Section 1(a). The proxyholder may not exercise the proxy granted pursuant to Section 1(b) on any matter except for those matters described in Section 1(a).
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2. Other Covenants and Agreements.
(a) The Stockholder hereby irrevocably consents to the conversion of all Subject Company Securities that are Company Preferred Stock into shares of Company Common Stock in accordance with Section 4 of Part B of Article IV of the Company’s certificate of incorporation, with such conversion to be contingent upon, and effective as of immediately prior to, the Closing.
(b) The Stockholder agrees that the Stockholder shall (i) be bound by and subject to (A) Section 7.06 (No Solicitation), Section 7.15 (Public Announcements), Section 7.16 (Confidential Information) and Section 10.16 (Trust Account Waiver) of the Business Combination Agreement to the same extent as such provisions apply to the parties to the Business Combination Agreement, as if the Stockholder is directly party thereto, and (ii) not, directly or indirectly, take any action that the Company is prohibited from taking pursuant to Section 7.06(a) of the Business Combination Agreement.
(c) The Stockholder acknowledges and agrees that Purchaser is entering into the Business Combination Agreement in reliance upon the Stockholder entering into this Agreement and agreeing to be bound by, and perform, or otherwise comply with, as applicable, the agreements, covenants and obligations contained in this Agreement and but for the Stockholder entering into this Agreement and agreeing to be bound by, and perform, or otherwise comply with, as applicable, the agreements, covenants and obligations contained in this Agreement, Purchaser would not have entered into or agreed to consummate the transactions contemplated by the Business Combination Agreement or the Ancillary Documents.
3. Stockholder Representations and Warranties. The Stockholder represents and warrants to Purchaser and the Company on and as of the date hereof, as follows:
(a) If the Stockholder is an entity, the Stockholder is a corporation, limited liability company or other applicable business entity duly organized or formed, as applicable, validly existing and in good standing (or the equivalent thereof, if applicable, in each case, with respect to the jurisdictions that recognize the concept of good standing or any equivalent thereof) under the Laws of its jurisdiction of formation or organization (as applicable).
(b) The Stockholder has, if the Stockholder is an entity, the requisite corporate, limited liability company or other similar power and authority, and if the Stockholder is a person, the capacity, right and authority, to execute and deliver this Agreement, to perform the Stockholder’s covenants, agreements and obligations hereunder (including, for the avoidance of doubt, those covenants, agreements and obligations hereunder that relate to the provisions of the Business Combination Agreement), and to consummate the transactions contemplated hereby. If the Stockholder is an entity, the execution and delivery of this Agreement has been duly authorized by all necessary corporate (or other similar) action on the part of the Stockholder. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid, legal and binding agreement of the Stockholder (assuming that this Agreement is duly authorized, executed and delivered by Purchaser and the Company), enforceable against the Stockholder in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).
(c) No consent, approval or authorization of, or designation, declaration or filing with, any Governmental Entity is required on the part of the Stockholder with respect to the Stockholder’s execution, delivery or performance of his, her or its covenants, agreements or obligations under this Agreement (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement) or the consummation of the transactions contemplated hereby, except for any consents, approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not adversely affect the ability of the Stockholder to perform, or otherwise comply with, any of the Stockholder’s covenants, agreements or obligations hereunder in any material respect.
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(d) None of the execution or delivery of this Agreement by the Stockholder, the performance by the Stockholder of any of the Stockholder’s covenants, agreements or obligations under this Agreement (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement) or the consummation of the transactions contemplated hereby will, directly or indirectly (with or without due notice or lapse of time or both) (i) to the extent Stockholder is an entity, result in any breach of any provision of the Stockholder’s governing documents, (ii) result in a violation or breach of, or constitute a default or give rise to any right of termination, Consent, cancellation, amendment, modification, suspension, revocation or acceleration under, any of the terms, conditions or provisions of any Contract to which the Stockholder is a party, (iii) violate, or constitute a breach under, any Order or applicable Law to which the Stockholder or any of the Stockholder’s properties or assets are bound or (iv) result in the creation of any Lien upon the Subject Company Securities, except, in the case of any of clauses (ii) and (iii) above, as would not adversely affect the ability of the Stockholder to perform, or otherwise comply with, any of the Stockholder’s covenants, agreements or obligations hereunder in any material respect.
(e) The Stockholder is the record and beneficial owner of the Owned Securities and has valid, good and marketable title to the Owned Securities, free and clear of all Liens (other than transfer restrictions under applicable Securities Law or under the Company Organizational Documents or any stockholders’ agreement to which the Stockholder is a party). Except for the Equity Securities of the Company set forth on Schedule A hereto, together with any other Equity Securities of the Company that the Stockholder acquires record or beneficial ownership after the date hereof in accordance with the Business Combination Agreement, the Stockholder does not own, beneficially or of record, any Equity Securities of the Company or have the right to acquire any Equity Securities of the Company. The Stockholder has the sole right to vote (and provide consent in respect of, as applicable) the Owned Securities and, except for this Agreement and the Business Combination Agreement, the Stockholder is not party to or bound by (i) any option, warrant, purchase right, or other Contract that could (either alone or in connection with one or more events, developments or events (including the satisfaction or waiver of any conditions precedent)) require the Stockholder to Transfer any of the Subject Company Securities or (ii) any voting trust, proxy or other Contract with respect to the voting or Transfer of any of the Subject Company Securities that would adversely affect the ability of the Stockholder to perform, or otherwise comply with, any of the Stockholder’s covenants, agreements or obligations hereunder in any material respect.
(f) There is no Proceeding pending or, to the Stockholder’s knowledge, threatened in writing against or involving the Stockholder or any of the Stockholder’s Affiliates that, if adversely decided or resolved, would reasonably be expected to adversely affect the ability of the Stockholder to perform, or otherwise comply with, any of its covenants, agreements or obligations under this Agreement in any material respect.
(g) The Stockholder, on the Stockholder’s own behalf and on behalf of the Stockholder’s Representatives, acknowledges, represents, warrants and agrees that (i) the Stockholder has conducted the Stockholder’s own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of Purchaser and the transactions contemplated by this Agreement, the Business Combination Agreement and the other Ancillary Documents to which the Stockholder is or will be a party and (ii) the Stockholder has been furnished with or given access to such documents and information about Purchaser and its business and operations as the Stockholder and the Stockholder’s Representatives have deemed necessary to enable the Stockholder to make an informed decision with respect to the execution, delivery and performance of this Agreement or the other Ancillary Documents to which the Stockholder is or will be a party and the transactions contemplated hereby and thereby.
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(h) In entering into this Agreement and the other Ancillary Documents to which the Stockholder is or will be a party, the Stockholder has relied solely on the Stockholder’s own investigation and analysis and the representations and warranties expressly set forth in the Ancillary Documents to which the Stockholder is or will be a party and no other representations or warranties of Purchaser, the Company or any other Person, either express or implied, and the Stockholder, on the Stockholder’s own behalf and on behalf of the Stockholder’s Representatives, acknowledges, represents, warrants and agrees that, except for the representations and warranties expressly set forth in this Agreement or in the other Ancillary Documents to which the Stockholder is or will be a party, none of the Purchaser Related Persons, the Company nor any other Person makes or has made any representation or warranty, either express or implied, in connection with or related to this Agreement, the Business Combination Agreement or the other Ancillary Documents or the transactions contemplated hereby or thereby.
4. Transfer of Subject Company Securities. Except as expressly contemplated by the Business Combination Agreement or with the prior written consent of Purchaser (such consent to be given or withheld in its sole discretion), from and after the date hereof, until the termination of this Agreement pursuant to Section 5, the Stockholder agrees not to (a) Transfer any of the Subject Company Securities, (b) enter into (i) any option, warrant, purchase right, or other Contract that could (either alone or in connection with one or more events, developments or events (including the satisfaction or waiver of any conditions precedent)) require the Stockholder to Transfer the Subject Company Securities or (ii) any voting trust, proxy or other Contract with respect to the voting or Transfer of the Subject Company Securities, or (c) enter into any Contract to take, or cause to be taken, any of the actions set forth in clauses (a) or (b); provided, however, that the foregoing shall not apply to any Transfer (A) to any Affiliates of the Stockholder; (B) in the case of an individual, by gift to a member of one of the individual’s immediate family, to a trust, the beneficiary of which is a member of the individual’s immediate family or an Affiliate of such person; (C) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (D) by virtue of the Stockholder’s organizational documents upon liquidation or dissolution of the Stockholder; or (E) prior to the date on which the Registration Statement has been declared effective by the SEC of up to ten percent (10%) of the Company Preferred Stock owned, in the aggregate, by such Stockholder and its Affiliates, calculated as of the date of this Agreement; provided, that (x) the Stockholder shall, and shall cause any transferee of any Transfer of the type set forth in clauses (A) through (E), to enter into a written agreement in form and substance reasonably satisfactory to Purchaser, agreeing to be bound by this Agreement and the Lock-Up Agreement prior and as a condition to the occurrence of such Transfer, and (y) nothing in this Agreement shall relieve, limit or supersede any obligation, transfer restriction, right of first refusal or right of co-sale to which a Stockholder is subject. For purposes of this Agreement, “Transfer” means any, direct or indirect, sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of a security interest or encumbrance in or disposition of an interest (whether with or without consideration, whether voluntarily or involuntarily or by operation of law or otherwise).
5. Termination. This Agreement and all of its provisions shall terminate and be of no further force or effect upon the earlier of (a) the Effective Time and (b) the termination of the Business Combination Agreement prior to the Closing in accordance with its terms. Upon such termination of this Agreement, all obligations of the parties under this Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Agreement shall not relieve the Stockholder from liability for any breach of this Agreement prior to such termination. Section 2(a), this Section 5 and Sections 7 through 13 of this Agreement shall survive the termination of this Agreement.
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6. Fiduciary Duties. Notwithstanding anything in this Agreement to the contrary, (a) the Stockholder makes no agreement or understanding herein in any capacity other than in such Stockholder’s capacity as a record holder and beneficial owner of the Owned Securities, and not in such Stockholder’s capacity as a director, officer or employee of the Company, and (b) nothing herein will be construed to limit or affect any action or inaction by such Stockholder or any representative of such Stockholder serving as a member of the board of directors of the Company or as an officer, employee or fiduciary of the Company, in each case, acting in such person’s capacity as a director, officer, employee or fiduciary of the Company.
7. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) by delivery in person, by e-mail (having obtained electronic delivery confirmation thereof (i.e., an electronic record of the sender that the email was sent to the intended recipient thereof without an “error” or similar message that such email was not received by such intended recipient)), or by registered or certified mail (postage prepaid, return receipt requested) (upon receipt thereof) to the other Parties, as applicable, as follows:
If to Purchaser, to:
Bluerock Acquisition Corp.
919 Third Avenue
New York, NY 10022
Attn: Jason Emala, Harrison Seideman
E-mail: [email protected]; [email protected]
with a copy (which shall not constitute notice) to:
Ashurst Perkins Coie US LLP
1155 Avenue of the Americas, 22nd Floor
New York, New York 10036
Attn: Elliott Smith; Gina Eiben
E-mail: [email protected]; [email protected]
If to the Company, to:
Bitonic Technology Labs, Inc.
400 Concar Drive
San Mateo, CA 94402
Attn: Raghavendra Kumar Ravinutala
E-mail: [email protected]; [email protected]; [email protected]
with a copy (which shall not constitute notice) to:
Fox Rothschild LLP
101 Park Avenue, Suite 1700
New York, NY 10178
Attn: Loren D. Danzis, Esq., Lauren W. Taylor, Esq.
E-mail: [email protected]; [email protected]
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If to the Stockholder, to the address on file with the Company, or in each case to such other address as the Party to whom notice is given may have furnished following the date of this Agreement and prior to such notice to the others in writing in the manner set forth above.
8. Entire Agreement. This Agreement, the Business Combination Agreement and documents referred to herein and therein constitute the entire agreement of the Parties with respect to the subject matter of this Agreement, and supersede all prior agreements and undertakings, both written and oral, among the Parties with respect to the subject matter of this Agreement, except as otherwise expressly provided in this Agreement.
9. Amendments and Waivers; Assignment. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by (i) Purchaser, (ii) the Company, and (iii) Stockholders holding a majority of the Subject Company Securities that are then subject to this Agreement; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that materially and adversely affects a Stockholder, solely in its capacity as a holder of Subject Company Securities, in a manner disproportionate to other Stockholders, shall require the consent of the Stockholder so affected.
10. Specific Performance. The parties to this Agreement acknowledge and agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. In addition to any other remedy to which such party is entitled at law or in equity, the parties to this Agreement shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. In the event that any action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party waives the defense, that there is an adequate remedy at law. Each party agrees to waive any requirement for the securing or posting of any bond in connection with such action.
11. Third Party Beneficiaries. This Agreement shall be for the sole benefit of the Parties and their respective successors and permitted assigns and is not intended, nor shall be construed, to give any Person, other than the Parties and their respective successors and assigns, any legal or equitable right, benefit or remedy of any nature whatsoever by reason of this Agreement. Nothing in this Agreement, expressed or implied, is intended to or shall constitute the Parties as partners or participants in a joint venture.
12. Disclosure. The Stockholder authorizes each of Purchaser and the Company to publish and disclose in any announcement or disclosure relating to the Transactions, including any such announcement or disclosure required or requested by the SEC (or as otherwise required or requested pursuant to any applicable Laws or any other Governmental Entities), such Stockholder’s identity and ownership of the Subject Company Securities, the nature of such Stockholder’s obligations under this Agreement and a copy of this Agreement, if reasonably deemed appropriate by Purchaser or the Company, as applicable. The Stockholder will promptly provide any information reasonably requested in writing by Purchaser for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including, for the avoidance of doubt, any filings by Purchaser with the SEC).
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13. Acknowledgements. The Parties each acknowledge that (a) Perkins Coie LLP, counsel for Purchaser, is representing Purchaser in connection with this Agreement, the Business Combination Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, (b) Fox Rothschild LLP, counsel for the Company, is representing the Company in connection with this Agreement, the Business Combination Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, (c) none of the foregoing firms is representing the Stockholder in connection with this Agreement, the Merger, the Business Combination Agreement, the Ancillary Documents or the transactions contemplated hereby, thereby or otherwise and (d) the Stockholder acknowledges that such Stockholder has had the opportunity to consult with such Stockholder’s own counsel.
14. Counterparts. The undersigned hereby consents to receipt of this Agreement in electronic form and understands and agrees that this Agreement may be signed electronically. In the event that any signature is delivered by facsimile transmission, electronic mail or otherwise by electronic transmission evidencing an intent to sign this Agreement, such facsimile transmission, electronic mail or other electronic transmission shall create a valid and binding obligation of the undersigned with the same force and effect as if such signature were an original. Execution and delivery of this Agreement by facsimile transmission, electronic mail or other electronic transmission is legal, valid and binding for all purposes.
15. Partial Execution. The failure of any Person set forth on Schedule A hereto to execute this Agreement shall not affect the validity or enforceability of this Agreement as to those Persons who have executed this Agreement. This Agreement shall be binding upon and enforceable against each Person who executes this Agreement regardless of whether any other Person listed on Schedule A hereto executes this Agreement. No Holder’s obligations under this Agreement are conditioned upon execution by all or any other Persons set forth on Schedule A.
16. Miscellaneous. Sections 10.05 (Governing Law), 10.06 (Jurisdiction), 10.07 (Waiver of Jury Trial), 10.09 (Severability), 10.11 (Entire Agreement), and 10.12 (Interpretation) of the Business Combination Agreement shall apply to this Agreement, mutatis mutandis.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties have executed and delivered this Company Support Agreement as of the date first above written.
| PURCHASER: | ||
| BLUEROCK ACQUISITION CORP. | ||
| By: | /s/ Jordan Ruddy | |
| Jordan Ruddy | ||
| President | ||
[Signature Page to Company Support Agreement]
IN WITNESS WHEREOF, the Parties have executed and delivered this Company Support Agreement as of the date first indicated written.
| COMPANY: | ||
| BITONIC TECHNOLOGY LABS INC. d/b/a YELLOW.AI | ||
| By: | /s/ Raghavendra Kumar Ravinutala | |
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | CEO | |
IN WITNESS WHEREOF, the Parties have executed and delivered this Company Support Agreement as of the date first indicated written.
| Stockholder: | ||
| By: | ||
| (signature) | ||
| Name: | ||
| Title: | ||
SCHEDULE A
[Omitted.]
Exhibit 10.3
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”) is effective as of the signing date of the Business Combination Agreement (as defined below), by and among Bluerock Acquisition Corp., a Cayman Islands exempted company (which shall domesticate as a Delaware corporation prior to the Closing) (the “Company”), Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (“Target”), and each of Bluerock Acquisition Holdings, LLC, a Delaware limited liability company (the “Sponsor”), those Persons set forth on Schedule 1 hereto who have executed this Agreement or a counterpart hereof (the “SPAC Holders”) and those Persons set forth on Schedule 2 hereto who have executed this Agreement or a counterpart hereof (the “Target Holders”). The Sponsor, the Target Holders, the SPAC Holders and any Person who hereafter becomes a party to this Agreement pursuant to Section 2 are referred to herein, individually, as a “Holder” and, collectively, as the “Holders.”
WHEREAS, capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in that certain Business Combination Agreement, dated as of the date hereof (as it may be amended or supplemented from time to time, the “Business Combination Agreement” and the transactions contemplated by the Business Combination Agreement, the “Business Combination”), by and among the Company, BLRK Merger Sub Inc., a Delaware corporation (“Merger Sub”), and Target, pursuant to which, among other things, (i) the Company will transfer by way of continuation to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Companies Act (As Revised) of the Cayman Islands (the “Domestication”), and (ii) Merger Sub will merge with and into Target, with Target surviving (the “Merger”);
WHEREAS, in connection with the transactions contemplated by the Business Combination Agreement, and in view of the valuable consideration to be received by the parties thereunder, the Company and each of the Holders desire to enter into this Agreement, pursuant to which the Holders’ Lock-Up Securities shall become subject to limitations on Transfer as set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to be legally bound hereby, the Company hereby agrees with each of the Holders as follows:
1. Definitions. The terms defined in this Section 1 shall, for all purposes of this Agreement, have the respective meanings set forth below:
(a) “Commitment Shares” shall have the meaning ascribed to such term in the Equity PIPE Subscription Agreements.
(b) “Common Stock” shall mean the shares of common stock, par value $0.0001 per share, of the Company following the Domestication.
(c) “Lock-Up Period” shall mean, with respect to the Holders and their respective Permitted Transferees, the period beginning on the Closing Date and ending on the earliest of (w) (i) with respect to 50% of the shares of Common Stock held by a Holder, two hundred ten (210) days after the Closing Date and (ii) with respect to the remaining 50% of the shares of Common Stock held by a Holder, one (1) year after the Closing Date, (x) the date on which the Trading Price of the shares of Common Stock equals or exceeds $12.00 per share, (y) the date on which the Common Stock ceases to be listed on any national securities exchange or automated quotation system (including, without limitation, OTCQB, OTCQX, OTCID, the Pink Limited Market or any other similar exchange) (collectively, the “Applicable Exchanges”) and is not re-listed on any of the Applicable Exchanges within five (5) Business Days thereafter and (z) the date on which the Company completes a liquidation, merger, amalgamation, capital stock exchange, reorganization or other similar transaction, that results in all of the Company’s public stockholders having the right to exchange their shares of Common Stock for cash, securities or other property. Notwithstanding the foregoing, the Lock-Up Period with respect to any Commitment Shares held by the Holders or their respective Permitted Transferees shall mean the period beginning on the Closing Date and ending on the earliest of (w) one hundred eighty (180) days after the Closing Date, (x) the date on which the Trading Price of the shares of Common Stock equals or exceeds $12.00 per share, (y) the date on which the Common Stock ceases to be listed on any of the Applicable Exchanges and is not re-listed on any of the Applicable Exchanges within five (5) Business Days thereafter and (z) the date on which the Company completes a liquidation, merger, amalgamation, capital stock exchange, reorganization or other similar transaction, that results in all of the Company’s public stockholders having the right to exchange their shares of Common Stock for cash, securities or other property.
(d) “Lock-Up Securities” shall mean the shares of Common Stock held by the Holders immediately following the Closing; provided, however, that such term shall not include any shares of Common Stock issued to the Holders upon separation of the Equity PIPE Units or in respect of any Non-Redeemed Shares or any securities issued as part of the Note PIPE Investment.
(e) “Non-Redeemed Shares” shall have the meaning ascribed to such term in the Equity PIPE Subscription Agreements.
(f) “Permitted Transferee” shall mean any Person to whom a Holder is permitted to Transfer Lock-Up Securities prior to the expiration of the Lock-Up Period pursuant to Section 2(b).
(g) “Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.
(h) “Trading Price” shall mean the daily closing price of the shares of Common Stock (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any twenty (20) trading days within a period of thirty (30) consecutive trading days after the Closing.
(i) “Transfer” shall mean the (i) sale or assignment of, offer to sell, contract or agreement to sell, hypothecation, pledge, grant of any option to purchase or other disposal of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (ii) entry into any swap or other arrangement that transfers to another Person, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or engagement in any Short Sales, or (iii) public announcement of any intention to effect any transaction specified in clause (i) or (ii).
2. Lock-Up Provisions.
(a) Subject to Section 2(b), each Holder agrees that it shall not and will cause all affiliates (as defined in Rule 144 promulgated under the Securities Act of 1933, as amended) of such Holder or any affiliate of such Holder not to, Transfer any Lock-Up Securities until the end of the Lock-Up Period, other than affiliates that such Holder does not control.
(b) Notwithstanding the provisions set forth in Section 2(a), each Holder or its respective Permitted Transferees may Transfer the Lock-Up Securities during the Lock-Up Period (i) to any direct or indirect partners, members or equity holders of a Holder, any affiliates of a Holder or any related investment funds or vehicles controlled or managed by such Persons or their respective affiliates, (ii) by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is such individual or a member of such individual’s immediate family or an affiliate of such Person, (iii) to a charitable organization; (iv) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (v) in the case of an individual, pursuant to a qualified domestic relations order, divorce settlement, divorce decree or separation agreement; (vi) to a nominee or custodian of a Person to whom a Transfer would be permitted under clauses (i) through (v) above, (vii) by virtue of the Sponsor’s limited liability company agreement upon dissolution of the Sponsor; (viii) to the Company; (ix) in connection with a liquidation, merger, share exchange, reorganization, tender offer approved by the board of directors of the Company (the “Company Board”) or a duly authorized committee thereof or other similar transaction which results in all of the Company’s shareholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the Closing Date; or in connection with any legal, regulatory or other order; provided, however, that in the case of clauses (i) through (vi), such Permitted Transferees must enter into a duly executed joinder to this Agreement in the form of Exhibit A hereto; provided, further, that no filing by any Holder under the Exchange Act or other public announcement shall be made (including voluntarily) in connection with such Transfer except as otherwise compelled or required to comply with applicable law or legal process or any request by a Governmental Authority or the rules of any securities exchange, foreign securities exchange, futures exchange, commodities exchange or contract market; provided, further, that any Transfer pursuant to this Section 2(b) shall not involve a disposition for value.
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(c) In order to enforce this Section 2, the Company may impose stop-transfer instructions with respect to the Lock-Up Securities until the end of the Lock-Up Period; provided that such instructions permit the transfers contemplated by clause (b) above.
(d) For the avoidance of doubt, each Holder shall retain all of its rights as a securityholder of the Company with respect to the Lock-Up Securities during the Lock-Up Period, including the right to vote any Lock-Up Security that such Holder is entitled to vote, as applicable.
(e) Notwithstanding anything in this Agreement to the contrary, the Company Board shall be entitled to release any Holder from any or all of its obligations hereunder on behalf of the Company; provided, however, that if one Holder is released, the other Holders shall also be similarly released to the same relative extent as the released Holder.
(f) The lock-up provisions in this Section 2 shall, with respect to any Holder, supersede the lock-up provisions contained in Sections 7(a) of that certain letter agreement, dated as of December 10, 2025, by and among the Company, the Sponsor and the Company’s officers and directors (the “Prior Agreement”) with respect to such Holder and such provision of the Prior Agreement shall be of no further force or effect with respect to such Holder.
3. Validity of Transfers. If any Transfer is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be null and void ab initio, and the Company shall refuse to recognize any such purported transferee of the applicable Lock-Up Securities as one of its equity holders for any purpose.
4. Effectiveness; Termination. This Agreement shall be effective upon consummation of the transactions contemplated by the Business Combination Agreement and shall terminate on the date on which Holder no longer holds Lock-Up Securities.
5. Miscellaneous.
(a) Governing Law. This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement) will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to agreements executed and performed entirely within such State.
(b) Consent to Jurisdiction and Service of Process. ANY PROCEEDING OR ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE BROUGHT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, ONLY TO THE EXTENT SUCH COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE OR, IF IT HAS OR CAN ACQUIRE JURISDICTION, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE), AND EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY (I) CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN ANY SUCH PROCEEDING OR ACTION, (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO PERSONAL JURISDICTION, VENUE OR TO CONVENIENCE OF FORUM, (III) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH PROCEEDING OR ACTION SHALL BE HEARD AND DETERMINED ONLY IN ANY SUCH COURT AND (IV) AGREES NOT TO BRING ANY PROCEEDING OR ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT. SERVICE OF PROCESS WITH RESPECT THERETO MAY BE MADE UPON ANY PARTY TO THIS AGREEMENT BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS AS PROVIDED IN SECTION 3(h), WITHOUT LIMITING THE RIGHT OF A PARTY TO SERVE PROCESS IN ANY OTHER MATTER PERMITTED BY APPLICABLE LAWS.
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(c) Waiver of Jury Trial. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3(c).
(d) Assignment; Third Parties. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. This Agreement and all obligations of a Holder are personal to such Holder and may not be transferred or delegated at any time. Nothing contained in this Agreement shall be construed to confer upon any person who is not a signatory hereto any rights or benefits, as a third party beneficiary or otherwise.
(e) Specific Performance. Each Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the event of a breach of this Agreement by such Holder, money damages will be inadequate and the Company will have no adequate remedy at law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by such Holder in accordance with their specific terms or were otherwise breached. Accordingly, the Company shall be entitled to an injunction or restraining order to prevent breaches of this Agreement by a Holder and to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.
(f) Amendment; Waiver. This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed by (i) the Company, (ii) Holders holding a majority of the shares of Common Stock that are then subject to this Agreement, and, solely to the extent such amendment occurs prior to the Closing, (iii) Target; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that materially and adversely affects a Holder, solely in its capacity as a holder of Lock-Up Securities, shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
(g) Interpretation. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular section or other subdivision of this Agreement; and (iv) the term “or” means “and/or”. The parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
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(h) Notices. All notices and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid or (iii) when delivered by FedEx or other nationally recognized overnight delivery service, addressed, if to the Company, to: Bluerock Acquisition Corp., 919 Third Avenue, New York, New York 10022, Attn: Jason Emala, with a copy, which shall not constitute notice, to Perkins Coie LLP, 1155 Avenue of the Americas, New York, New York 10036, Attn: Elliott Smith, email: [email protected]; if to the Target, to: Bitonic Technology Labs, Inc., 400 Concar Drive, San Mateo, CA 94402, Attn: Raghu Ravinutala, Email: [email protected]; [email protected]; [email protected], with a copy, which shall not constitute notice, to Fox Rothschild LLP, 101 Park Avenue, Suite 1700, New York, NY 10178, Attn: Loren Danzis, Lauren Taylor, email: [email protected]; [email protected] and if to any Holder, at such Holder’s address or email address as set forth in the Company’s books and records.
(i) Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
(j) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Notwithstanding the foregoing, nothing in this Agreement (other than Section 2(f)) shall limit any of the rights, remedies or obligations of the Company or any of the Holders under any other agreement between any of the Holders and the Company, and nothing in any other agreement, certificate or instrument shall limit any of the rights, remedies or obligations of any of the Holders or the Company under this Agreement.
(k) Several Liability. The liability of any Holder hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Holder be liable for any other Holder’s breach of such other Holder’s obligations under this Agreement.
(l) Counterparts. The undersigned hereby consents to receipt of this Agreement in electronic form and understands and agrees that this Agreement may be signed electronically. In the event that any signature is delivered by facsimile transmission, electronic mail or otherwise by electronic transmission evidencing an intent to sign this Agreement, such facsimile transmission, electronic mail or other electronic transmission shall create a valid and binding obligation of the undersigned with the same force and effect as if such signature were an original. Execution and delivery of this Agreement by facsimile transmission, electronic mail or other electronic transmission is legal, valid and binding for all purposes.
(m) Partial Execution. The failure of any Person set forth on Schedule 1 or Schedule 2 hereto to execute this Agreement shall not affect the validity or enforceability of this Agreement as to those Persons who have executed this Agreement. This Agreement shall be binding upon and enforceable against each Person who executes this Agreement regardless of whether any other Person listed on Schedule 1 or Schedule 2 hereto executes this Agreement. No Holder’s obligations under this Agreement are conditioned upon execution by all or any other Persons set forth on Schedule 1 or Schedule 2.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
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IN WITNESS WHEREOF, the parties have executed this Lock-Up Agreement effective as of the date first indicated above.
| COMPANY: | ||
| BLUEROCK ACQUISITION CORP. | ||
| By: | /s/ Jordan Ruddy | |
| Name: | Jordan Ruddy | |
| Title: | President | |
| TARGET: | ||
| BITONIC TECHNOLOGY LABS INC. D/B/A YELLOW.AI | ||
| By: | /s/ Raghavendra Kumar Ravinutala | |
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | CEO | |
[Signature Page to Lock-Up Agreement]
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IN WITNESS WHEREOF, the parties have executed this Lock-Up Agreement effective as of the date first indicated above.
| [HOLDER] | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Lock-Up Agreement]
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EXHIBIT A
FORM OF JOINDER TO LOCKUP AGREEMENT
Reference is made to the Lockup Agreement, dated as of [●], 2026, by and among [●] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation (the “Company”), Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (“Yellow.ai”), Bluerock Acquisition Holdings, LLC, the Target Holders (as defined therein) and the SPAC Holders (as defined therein) who from time to time become a party thereto (as amended from time to time, the “Lockup Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Lockup Agreement.
Each of the Company and each undersigned holder of shares of common stock of the Company (each, a “New Shareholder Party”) agrees that this Joinder to the Lockup Agreement (this “Joinder”) is being executed and delivered for good and valuable consideration.
Each undersigned New Shareholder Party hereby agrees to and does become party to the Lockup Agreement as a Shareholder Party. This Joinder shall serve as a counterpart signature page to the Lockup Agreement and by executing below each undersigned New Shareholder Party is deemed to have executed the Lockup Agreement with the same force and effect as if originally named a party thereto.
This Joinder may be executed in multiple counterparts, including by means of facsimile or electronic signature, each of which shall be deemed an original, but all of which together shall constitute the same instrument.
[Remainder of Page Intentionally Left Blank.]
A-1
IN WITNESS WHEREOF, the undersigned have duly executed this Joinder as of the date first set forth above.
| [NEW SHAREHOLDER PARTY] | |||
| By: | |||
| Name: | |||
| Title: | |||
| [COMPANY] | |||
| By: | |||
| Name: | |||
| Title: | |||
A-2
Exhibit 10.4
SUBSCRIPTION AGREEMENT
Bluerock Acquisition Corp.
919 Third Avenue, 40th Floor
New York, NY 10022
Bitonic Technology Labs, Inc. (d/b/a Yellow.ai)
400 Concar Drive
San Mateo, CA 94402
Ladies and Gentlemen:
This Subscription Agreement (this “Subscription Agreement”) is entered into as of the latest date set forth on the signature page hereto by and among Bitonic Technology Labs, Inc. (d/b/a Yellow.ai), a Delaware corporation (the “Company”), Bluerock Acquisition Corp., a Cayman Islands exempted company that will transfer by way of continuation to and domesticate as a Delaware corporation prior to the Merger Closing (the “Issuer”), and the undersigned (the “Subscriber” or “you”). Capitalized terms used but not defined herein shall have the same meaning as set forth in the Transaction Agreement (as defined below).
The Issuer has entered into a Business Combination Agreement, dated as of the date hereof (the “Transaction Agreement” and the transactions contemplated thereby, the “Transactions”), among the Issuer, BLRK Merger Sub Inc., a Delaware corporation and direct, wholly-owned subsidiary of the Issuer, the Company, and the other parties named therein, pursuant to which, among other things, prior to the Merger Closing the Issuer will domesticate as a Delaware corporation (the “Domestication”) and, at the Merger Closing, the Company will become a wholly-owned subsidiary of the Issuer. In connection with the Transaction Agreement, the Issuer is seeking commitments to purchase units of the Issuer (each, a “Unit”), with each Unit consisting of (i) one share of common stock of the domesticated Issuer, par value $0.0001 per share (each, a “Share”), and (ii) one warrant to purchase one share of common stock of the domesticated Issuer (each, a “Warrant” and the share of common stock issuable upon exercise thereof, a “Warrant Share”), in a private placement to be conducted by the Issuer (the “PIPE”).
On the date set forth on the signature page of this Subscription Agreement, the Issuer is entering into subscription agreements substantially similar to this Subscription Agreement (the “Other Subscription Agreements” and together with this Subscription Agreement, the “Subscription Agreements”) with certain other subscribers (the “Other Subscribers”), pursuant to which the Other Subscribers, severally and not jointly, have agreed to purchase Units in the PIPE.
In connection therewith, the Subscriber, the Issuer, and the Company agree as follows:
1. Definitions.
(a) “Accredited Investor” means an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act.
(b) “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
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(c) “Commitment Shares” has the meaning set forth in Section 2(b).
(d) “Company MAE” means a material adverse effect on the business, properties, assets, liabilities, operations, condition (including financial condition), stockholders’ equity or results of operations of the Company or the combined company after giving effect to the Transactions, or on the legal authority or ability of the Company to perform in all material respects its obligations under this Subscription Agreement.
(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(f) “Institutional Account” has the meaning set forth in FINRA Rule 4512(c).
(g) “IPO Prospectus” means the final prospectus of the Issuer, dated December 10, 2025 and filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on December 12, 2025, relating to the Issuer’s Registration Statement on Form S-1, originally filed with the SEC on November 6, 2025 and declared effective on December 10, 2025 (File No. 333-291337).
(h) “Issuer Common Stock” means, prior to the Domestication, the Issuer’s Class A ordinary shares and Class B ordinary shares, taken together, and, following the Domestication, the common stock of the domesticated Issuer.
(i) “Issuer MAE” means a material adverse effect on the business, properties, assets, liabilities, operations, condition (including financial condition), stockholders’ equity or results of operations of the Issuer, or on the validity of the Securities or the legal authority or ability of the Issuer to perform in all material respects its obligations under this Subscription Agreement.
(j) “Merger Closing” means the consummation of the Merger pursuant to the Transaction Agreement.
(k) “Merger Closing Date” means the date on which the Merger Closing occurs.
(l) “Non-Redeemed Shares” has the meaning set forth in Section 2(f).
(m) “Per-Share Redemption Price” means the per-share amount payable from the Issuer’s trust account to holders of Issuer Common Stock who validly elect to redeem their shares in connection with the Merger Closing.
(n) “PIPE Warrant Certificate” means the form of PIPE Warrant Certificate attached hereto as Exhibit C.
(o) “Proxy Statement” means the proxy statement to be filed by the Issuer with the SEC for the purpose of soliciting proxies from stockholders of the Issuer to approve the Transactions and the other proposals related to the Transactions.
(p) “QIB” means a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act.
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(q) “Redemption Right” means the right to redeem or convert shares of Issuer Common Stock in connection with the redemption conducted by the Issuer in accordance with the Issuer’s organizational documents and the IPO Prospectus in conjunction with the Merger Closing.
(r) “Registration Statement” means the registration statement on Form S-4 (as amended or supplemented from time to time) to be filed by the Issuer with the SEC pursuant to the Transaction Agreement, including the Proxy Statement.
(s) “SEC” means the U.S. Securities and Exchange Commission.
(t) “Securities” means the Subscriber Units, the Shares, the Warrants, the Warrant Shares, the Commitment Shares and, to the extent applicable, the Non-Redeemed Shares.
(u) “Securities Act” means the Securities Act of 1933, as amended.
(v) “Sponsor” means Bluerock Acquisition Holdings, LLC, a Delaware limited liability company.
(w) “Trading Day” means any day on which Nasdaq or, if applicable, the New York Stock Exchange, is open for trading.
(x) “Trading Market” means the national securities exchange on which the Shares are listed for trading, which shall be either Nasdaq or the New York Stock Exchange.
(y) “Transfer” means (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to any relevant securities, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any relevant securities, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).
2. Subscription; Units.
(a) The Subscriber hereby subscribes for and agrees to purchase from the Issuer, and the Issuer agrees to issue and sell to the Subscriber, such number of Units as is set forth on the signature page of this Subscription Agreement (the “Subscriber Committed Units”, as may be decreased by any Non-Redeemed Shares pursuant to Section 2(f), collectively, the “Subscriber Units”). Each Subscriber Unit consists of one Share and one Warrant.
(b) Each Warrant shall be exercisable for one Warrant Share at an exercise price of $11.50 per share, for a period of five (5) years from the Merger Closing. The terms of the Warrants shall be set forth in the PIPE Warrant Certificate. The PIPE Warrant Certificate incorporates by reference that certain Warrant Agreement, dated as of December 10, 2025, by and between the Issuer and Continental Stock Transfer & Trust Company, as warrant agent, solely to the extent provided therein. At the Merger Closing, the Issuer shall issue the Warrants to the Subscriber and shall deliver, or cause to be delivered, promptly following the Merger Closing, the PIPE Warrant Certificate evidencing such Warrants in the name of the Subscriber or its nominee, subject to the Subscriber’s execution and delivery of such PIPE Warrant Certificate.
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(c) In consideration for the Subscriber Units, the Subscriber shall pay the Issuer an aggregate purchase price equal to the product of (x) $10.00, and (y) the total number of Subscriber Committed Units purchased by the Subscriber (such amount, the “Purchase Price”), all on the terms and conditions provided for herein.
(d) In addition to the Subscriber Units, for every Share purchased by Subscriber as part of (i) a Subscriber Unit or (ii) held as a Non-Redeemed Share, the Subscriber shall be entitled to receive 0.5 shares of Issuer Common Stock (the “Commitment Shares”) from the Sponsor at the Merger Closing; provided, however, that the aggregate number of Commitment Shares issuable pursuant to all Subscription Agreements shall not exceed 1,000,000 shares, and if the aggregate number of Commitment Shares otherwise issuable pursuant to all Subscription Agreements would exceed such amount, the number of Commitment Shares issuable to the Subscriber hereunder shall be reduced to the Subscriber’s pro rata share of such 1,000,000 Commitment Shares, based on the Subscriber’s Purchase Price hereunder relative to the aggregate Purchase Price of all subscribers under the Subscription Agreements. Notwithstanding anything to the contrary herein, the number of Commitment Shares issuable to the Subscriber hereunder shall not exceed the number set forth on the signature page hereto. The Commitment Shares will be subject to the same 180-day lock-up period as the other shares of Issuer Common Stock held by the Sponsor.
(e) Prior to the Merger Closing, the Units shall not entitle the Subscriber (i) to receive dividends or (ii) to vote on matters submitted to the Issuer’s shareholders.
(f) Notwithstanding anything to the contrary contained in this Subscription Agreement, if (i) as of the fifth (5th) calendar day after the effectiveness of the Registration Statement, the Subscriber holds any shares of Issuer Common Stock (including shares of Issuer Common Stock acquired in the open market at a price not exceeding the estimated Per-Share Redemption Price), along with any related Redemption Rights (such shares of Issuer Common Stock, the “Eligible Shares”); and (ii) the Subscriber (1) does not exercise any Redemption Rights with respect to such Eligible Shares (including revoking any prior redemption or conversion elections made with respect to such Eligible Shares), (2) does not Transfer such Eligible Shares prior to the Closing Date, and (3) does not vote such Eligible Shares in favor of approving the Transactions at the extraordinary general meeting of the Issuer’s shareholders or in favor of any proposal contained in the Proxy Statement related thereto, then Subscriber may elect to treat such Eligible Shares as “Non-Redeemed Shares”, and if Subscriber makes such election, then the number of Subscriber Committed Units the Subscriber is obligated to purchase under this Subscription Agreement shall be reduced on a one-for-one basis by the number of Non-Redeemed Shares. For each Non-Redeemed Share held by the Subscriber through the Merger Closing, the Subscriber will be entitled to receive one Warrant and 0.5 Commitment Shares, subject to adjustment as described in Section 2(d) above. In order to decrease the Subscriber Committed Units, the Subscriber must, at least five (5) Business Days prior to the date of the Issuer’s extraordinary general meeting to be held pursuant to the Proxy Statement, deliver to the Issuer a certificate in the form attached hereto as Exhibit B (the “Certificate”), and shall further, upon the Issuer’s request, promptly provide such additional documents reasonably requested by the Issuer relating to the Eligible Shares. In addition, no later than three (3) Business Days prior to the anticipated Closing Date as set forth in the Closing Notice, Subscriber shall reaffirm to the Issuer in writing that the certifications included in the Certificate are true and correct. In no event will the number of Non-Redeemed Shares exceed the number of Subscriber Units listed on the signature page hereto.
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3. Closing; Delivery of Securities.
(a) The issuance of the Subscriber Committed Units contemplated hereby (the “Closing”, and the date on which the Closing actually occurs, the “Closing Date”) is contingent upon the substantially concurrent consummation of the Merger. The Closing shall occur on the date of, but immediately prior to, the Merger Closing.
(b) At least seven (7) Business Days before the anticipated Closing Date, the Issuer shall deliver written notice to the Subscriber (the “Closing Notice”) specifying (i) the anticipated Closing Date, (ii) the wire instructions for delivery of the Purchase Price to an escrow account specified by the Issuer, and (iii) the estimated Per-Share Redemption Price. No later than two (2) Business Days after receiving the Closing Notice, the Subscriber shall deliver to the Issuer such information as is reasonably requested in the Closing Notice in order for the Issuer to issue the Subscriber Units and other Securities (as applicable) to the Subscriber. At least five (5) Business Days prior to the anticipated Closing Date specified in the Closing Notice, the Subscriber shall deliver the Purchase Price by wire transfer of United States dollars in immediately available funds to the escrow account specified by the Issuer in the Closing Notice, such funds to be held in escrow and released to the Issuer at the Closing, concurrently with the issuance of the Units to the Subscriber.
(c) The Issuer shall deliver to the Subscriber (i) at the Closing, the Subscriber Units (including the underlying Shares and Warrants) in book-entry form or by certificated evidence, as applicable, free and clear of any liens or other restrictions (other than those arising under state or federal securities laws), in the name of the Subscriber (or its nominee in accordance with its delivery instructions) or to a custodian designated by the Subscriber, as applicable, and (ii) promptly after the Merger Closing, evidence from the Issuer’s transfer agent of the issuance to the Subscriber of the Subscriber Units and delivery of the PIPE Warrant Certificate evidencing the Warrants on and as of the Closing Date, which securities will have been issued upon the separation of the Subscriber Units in connection with the Merger Closing. If the Closing does not occur on the anticipated Closing Date specified in the Closing Notice for any reason other than termination of this Subscription Agreement, the Issuer shall promptly return the Purchase Price to the Subscriber, and such return shall not terminate this Subscription Agreement or relieve the Subscriber of its obligation to fund following delivery of a subsequent Closing Notice.
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4. Closing Conditions. In addition to the conditions set forth in Section 3:
(a) General Conditions. The Closing is subject to the satisfaction or valid waiver in writing by each party of the conditions that, on the Closing Date:
(i) no suspension of the qualification of the applicable Securities for offering or sale or trading in any jurisdiction, or initiation or threatening of any proceedings for any such purposes, shall have occurred;
(ii) no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated by this Subscription Agreement illegal or otherwise preventing or prohibiting consummation of the transactions contemplated by this Subscription Agreement; and
(iii) all conditions precedent to each party’s obligation to effect the Transactions set forth in the Transaction Agreement, including all necessary approvals of the Issuer’s stockholders and regulatory approvals, if any, shall have been satisfied or, subject to the Subscriber’s consent where required pursuant to this Subscription Agreement, waived (as determined by the parties to the Transaction Agreement and other than those conditions that, by their nature, may only be satisfied at the Merger Closing, but subject to the satisfaction or waiver of such conditions as of the Merger Closing), and the Merger Closing shall be scheduled to occur immediately following the Closing.
(b) Issuer Conditions. The obligations of the Issuer to consummate the Closing are subject to the satisfaction or valid waiver by the Issuer of the additional conditions that, on the Closing Date:
(i) all representations and warranties of the Subscriber contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) as of such date), and consummation of the Closing shall constitute a reaffirmation by the Subscriber of each of the representations, warranties and agreements of the Subscriber contained in this Subscription Agreement as of the Closing Date or as of such specific date, as applicable; and
(ii) the Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing.
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(c) Subscriber Conditions. The obligations of the Subscriber to deliver the Purchase Price, and to perform any of its other obligations hereunder, are also subject to the satisfaction or valid waiver by the Subscriber of the additional conditions that, on the Closing Date:
(i) all representations and warranties of the Issuer and the Company contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or an Issuer MAE or Company MAE, as applicable, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date (except for representations and warranties made as of a specific date, which shall be true and correct in all material respects, or in all respects if already qualified by materiality, as of such date), and consummation of the Closing shall constitute a reaffirmation by the Issuer and the Company of each of their respective representations, warranties and agreements contained in this Subscription Agreement as of the Closing Date or as of such specific date, as applicable;
(ii) each of the Issuer and the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing;
(iii) no amendment, modification, or waiver of the terms of the Transaction Agreement shall have occurred that would reasonably be expected to materially and adversely affect the economic benefits that the Subscriber would reasonably expect to receive under this Subscription Agreement;
(iv) the Issuer and the Company shall have obtained all consents or approvals (including any approval of stockholders) necessary to permit them to perform their obligations under this Subscription Agreement and consummate the Transactions; and
(v) the Shares shall have been approved for listing on Nasdaq or the NYSE, as applicable, subject to official notice of issuance.
5. Issuer Representations and Warranties. The Issuer represents and warrants to the Subscriber that:
(a) Organization and Qualification. As of the date hereof, the Issuer is duly organized, validly existing and in good standing under the laws of the Cayman Islands and, following the Domestication, the Issuer will be a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Issuer has the corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement.
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(b) Authorization; Enforcement. This Subscription Agreement has been duly authorized, executed and delivered by the Issuer and is enforceable against the Issuer in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.
(c) No Conflicts. The execution, delivery and performance of this Subscription Agreement, including the issuance and sale of the Securities by the Issuer and the consummation of the transactions contemplated hereby, will not conflict with or result in a material breach or material violation of any agreement or instrument to which the Issuer or any of its subsidiaries is a party or by which any of their respective properties or assets are bound, except as would not reasonably be expected to have an Issuer MAE; will not result in any violation of the organizational documents of the Issuer; and will not result in any violation of any applicable statute, rule, regulation, judgment or order applicable to the Issuer, except as would not reasonably be expected to have an Issuer MAE.
(d) Filings, Consents and Approvals. Assuming the accuracy of the representations and warranties of the Subscriber, the Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance by the Issuer of this Subscription Agreement, other than (i) those required to consummate the Transactions as provided under the Transaction Agreement, (ii) the filings required in accordance with Section 8(c), (iii) any filings or notices required by Nasdaq or the NYSE, as applicable, (iv) the filing of notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if applicable (“HSR”), and (v) any consent, waiver, authorization or order of, notice to, or filing or registration, the failure of which to obtain would not be reasonably expected to have, individually or in the aggregate, an Issuer MAE.
(e) Capitalization. The authorized and outstanding capital stock of the Issuer is as set forth in the Issuer’s SEC Reports. All issued and outstanding shares of Issuer Common Stock have been duly authorized and validly issued, are fully paid and non-assessable, and are not subject to preemptive rights. The outstanding warrants of the Issuer have been duly authorized and validly issued and are not subject to preemptive rights. Except as set forth in the Issuer’s SEC Reports, the Transaction Agreement, the Other Subscription Agreements and the convertible promissory notes issued or issuable by the Issuer or the domesticated Issuer to [●] and/or one or more of its affiliates or managed funds in connection with the Transactions (as such notes may be amended, restated, supplemented or otherwise modified from time to time) (the “[●] Notes”), there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the Issuer shares of Issuer Common Stock or other equity interests in the Issuer, or securities convertible into or exchangeable or exercisable for such equity interests, other than as would not reasonably be expected to have an Issuer MAE.
(f) Authorization and Issuance of Subscribed Units. The Subscribed Units, including the underlying Shares, Warrants and Warrant Shares, have been, or prior to the Closing will be, duly authorized and, when issued and delivered against payment therefor in accordance with this Subscription Agreement, will be validly issued, fully paid and non-assessable, free and clear of any liens or other restrictions (other than those arising under this Agreement or applicable state or federal securities laws), and will not have been issued in violation of or subject to any preemptive or similar rights.
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(g) Registration of Issuer Equity Securities. As of the date of this Agreement, the issued and outstanding Class A ordinary shares of the Issuer are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “BLRK.” There is no suit, action, proceeding or investigation pending or, to the knowledge of the Issuer, threatened against the Issuer by Nasdaq or the SEC with respect to any intention by such entity to deregister the Issuer Common Stock or prohibit or terminate the listing of the Issuer Common Stock on Nasdaq.
(h) Regulatory Actions. Except for such matters as have not had and would not reasonably be expected to have, individually or in the aggregate, an Issuer MAE, there is no (i) action, suit, claim or other proceeding, in each case by or before any governmental authority pending, or, to the knowledge of the Issuer, threatened against the Issuer, or (ii) judgment, decree, injunction, ruling or order of any governmental entity outstanding against the Issuer.
(i) Compliance. The Issuer is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have an Issuer MAE. The Issuer has not received any written communication from a governmental entity that alleges that the Issuer is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not, individually or in the aggregate, be reasonably expected to have an Issuer MAE. The Issuer is not in default or violation of any term, condition or provision of (i) the organizational documents of the Issuer, (ii) any agreement to which the Issuer is now a party or by which the Issuer’s properties or assets are bound, or (iii) any statute, judgment, order, rule or regulation applicable to the Issuer, except, in the case of clauses (ii) and (iii), for defaults or violations that would not reasonably be expected to have an Issuer MAE.
(j) Broker Fees. The Issuer has not entered into any agreement or arrangement entitling any agent, broker, investment banker, financial advisor or other person to any broker’s or finder’s fee or any other commission or similar fee in connection with the transactions contemplated by this Subscription Agreement for which the Subscriber could become liable. The Issuer is not aware of any person that has been or will be paid (directly or indirectly) remuneration for solicitation of the Subscriber in connection with the sale of any Securities in the PIPE.
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(k) SEC Reports; Financial Statements. As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to supersede such original filing, all forms, reports, statements, schedules, proxies, registration statements and other documents filed by the Issuer with the SEC prior to the date of this Subscription Agreement (the “SEC Reports”) complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the rules and regulations of the SEC promulgated thereunder as in effect at the time of filing, and none of the SEC Reports, when filed, or, if amended, as of the date of such amendment, which shall be deemed to supersede such original filing, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Issuer included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing or, if amended, as of the date of such amendment, which shall be deemed to supersede such original filing, and fairly present in all material respects the financial position of the Issuer as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. The Issuer has timely filed each report, statement, schedule, prospectus, and registration statement that the Issuer was required to file with the SEC since its initial registration of the Issuer Common Stock with the SEC. A copy of each SEC Report is available to the Subscriber via the SEC’s EDGAR system. There are no outstanding or unresolved comments in comment letters received by the Issuer from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Reports.
(l) No Side Letters. Other than the Other Subscription Agreements, the Transaction Agreement, the [●] Notes and any other agreement expressly contemplated by the Transaction Agreement, the Issuer has not entered into any subscription agreement, side letter or similar agreement with any Other Subscriber in connection with such Other Subscriber’s investment in the Issuer through the PIPE, except for side letters required to comply with an Other Subscriber’s policies and procedures or rules and regulations applicable to the Other Subscriber. No Other Subscription Agreement includes material terms and conditions that are more advantageous to any such Other Subscriber than the Subscriber hereunder, other than terms particular to the regulatory requirements of such subscriber or its affiliates or related funds, and such Other Subscription Agreements have not been amended or modified in any material respect following the date of this Subscription Agreement to include such terms and conditions.
(m) No Bankruptcy. The Issuer has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation, administration or winding up or failed to pay its debts when due, nor does the Issuer have any knowledge or reason to believe that any of its creditors intend to initiate involuntary bankruptcy proceedings or seek to commence an administration.
(n) Private Placement. Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 7, in connection with the offer, sale and delivery of the Subscribed Units in the manner contemplated by this Subscription Agreement, it is not necessary to register the Subscribed Units under the Securities Act. The Subscribed Units (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws.
(o) The Issuer understands that the foregoing representations and warranties shall be deemed material to and have been relied upon by the Subscriber.
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6. Company Representations and Warranties. The Company represents and warrants to the Subscriber that:
(a) Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company has the corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement.
(b) Authorization; Enforcement. This Subscription Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting creditors’ rights generally, and by general principles of equity.
(c) No Conflicts. The execution, delivery and performance by the Company of this Subscription Agreement and the consummation by the Company of the transactions contemplated hereby will not conflict with or result in a material breach or violation of the Company’s organizational documents, any material agreement to which the Company is a party or bound, or any law or order applicable to the Company, except, in each case, as would not reasonably be expected to have a Company MAE or materially impair the Company’s ability to perform its obligations under this Subscription Agreement.
(d) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing with, any governmental authority or other person in connection with its execution, delivery and performance of this Subscription Agreement, other than those required under the Transaction Agreement or the failure of which to obtain or make would not reasonably be expected to have a Company MAE or materially impair the Company’s ability to perform its obligations under this Subscription Agreement.
(e) No Bankruptcy. The Company has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation, administration or winding up, and the Company has no knowledge or reason to believe that any of its creditors intend to initiate involuntary bankruptcy proceedings against the Company.
(f) The Company understands that the foregoing representations and warranties shall be deemed material to and have been relied upon by the Subscriber.
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7. Subscriber Representations, Warranties and Covenants. The Subscriber represents and warrants to each of the Issuer and the Company that:
(a) Subscriber Status. At the time the Subscriber was offered the Securities, it was, and as of the date hereof, the Subscriber is (i) an Accredited Investor or a QIB, as indicated in the questionnaire attached as Exhibit A hereto (the “Investor Questionnaire”), (ii) an Institutional Account, and (iii) acquiring the Securities only for its own account and not for the account of others, and not on behalf of any other account or person or with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act. If the Subscriber is not an individual, the Subscriber is not an entity formed for the specific purpose of acquiring the Securities except as permitted under applicable securities laws and in all events only if the Subscriber otherwise qualifies as an accredited investor.
(b) Nature of Investment. The Subscriber understands that the Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Securities delivered at the Closing have not been registered under the Securities Act. The Subscriber understands that the Securities may not be resold, transferred, pledged or otherwise disposed of absent an effective registration statement under the Securities Act except (i) to the Issuer or one of its subsidiaries, or (ii) pursuant to an applicable exemption from the registration requirements of the Securities Act, and in each case in accordance with any applicable securities laws. The Subscriber acknowledges that any certificates or book-entry positions representing the Securities will contain a legend or restrictive notation to such effect and that, as a consequence, the Subscriber may not be able to readily resell the Securities and be required to bear the financial risk of an investment in the Securities for an indefinite period of time. Subscriber acknowledges and agrees that the Securities will not be eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”) until at least one year following the filing of certain required information with the SEC after the Closing Date. Subscriber acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Securities.
(c) Authorization and Enforcement. The execution, delivery and performance by the Subscriber of this Subscription Agreement are within the powers of the Subscriber, have been duly authorized and will not constitute or result in a breach or default under or conflict with any federal or state statute, rule or regulation applicable to the Subscriber, any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Subscriber is a party or by which the Subscriber is bound which would reasonably be expected to have a material adverse effect on the legal authority of the Subscriber to enter into and perform its obligations under this Subscription Agreement, and, if the Subscriber is not an individual, will not violate any provisions of the Subscriber’s charter documents, including its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature on this Subscription Agreement is genuine, and the signatory, if the Subscriber is an individual, has legal competence and capacity to execute the same or, if the Subscriber is not an individual, the signatory has been duly authorized to execute the same, and this Subscription Agreement constitutes a legal, valid and binding obligation of the Subscriber, enforceable against the Subscriber in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity. If the Subscriber is not an individual, the Subscriber has been duly formed or incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation or formation.
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(d) Other Representations. The Subscriber understands and agrees that the Subscriber is purchasing the Securities directly from the Issuer. The Subscriber further acknowledges that there have been no representations, warranties, covenants and agreements made to the Subscriber by the Issuer or the Company, or any of their respective officers or directors, expressly (other than those representations, warranties, covenants and agreements included in this Subscription Agreement) or by implication, other than the representations, warranties, covenants and agreements herein.
(e) Tax Treatment. The Subscriber’s acquisition and holding of the Securities will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law.
(f) Receipt of Disclosure. The Subscriber acknowledges and agrees that it has received such information as it deems necessary in order to make an investment decision with respect to the Securities. Without limiting the generality of the foregoing, the Subscriber acknowledges that it has received (or, in the case of documents filed with the SEC, had access to) the following items (collectively, the “Disclosure Documents”): (i) the IPO Prospectus, (ii) each filing made by the Issuer with the SEC following the filing of the IPO Prospectus through the date of this Subscription Agreement, (iii) the Transaction Agreement, a copy of which will be filed by the Issuer with the SEC, and (iv) the investor presentation by the Issuer and the Company, a copy of which will be furnished by the Issuer to the SEC. The Subscriber represents and agrees that the Subscriber and the Subscriber’s professional advisors, if any, have had the opportunity to ask management of the Issuer and the Company questions, receive such answers and obtain such information as the Subscriber and such advisors have deemed necessary to make an investment decision with respect to the Securities.
(g) No General Solicitation. The Subscriber became aware of the offering of the Securities solely by means of direct contact between the Subscriber and the Issuer, the Company, or a representative of any of the foregoing, and the Securities were offered to the Subscriber solely by direct contact between the Subscriber and the Issuer, the Company or a representative of any of the foregoing. The Subscriber acknowledges that the Issuer represents and warrants that the Securities (i) were not offered to the Subscriber by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws.
(h) Investment Risks. The Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities, including risks similar to those set forth in the Disclosure Documents and in the Issuer’s filings with the SEC. The Subscriber is a sophisticated institutional investor and is able to fend for itself in the transactions contemplated herein and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and the Subscriber has sought such accounting, legal and tax advice as the Subscriber has considered necessary to make an informed investment decision. Alone, or together with any professional advisor(s), the Subscriber has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the Securities are a suitable investment for the Subscriber and that the Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Subscriber’s investment in the Issuer. The Subscriber acknowledges specifically that a possibility of total loss exists.
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(i) Compliance. The Subscriber understands and agrees that no federal or state agency has passed upon or endorsed the merits of this offering of the Securities or made any findings or determination as to the fairness of this investment or the accuracy or adequacy of the Issuer’s reports, schedules, forms, statements and other documents required to be filed by the Issuer under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof.
(j) Diligence Disclaimer. Neither the due diligence investigation conducted by the Subscriber in connection with making its decision to acquire the Securities nor any representations and warranties made by the Subscriber herein shall modify, amend or affect the Subscriber’s right to rely on the truth, accuracy and completeness of the Issuer’s and the Company’s representations and warranties contained herein.
(k) OFAC/Patriot Act. The Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The Subscriber agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Subscriber is permitted to do so under applicable law. If the Subscriber is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.), as amended by the USA PATRIOT Act of 2001, and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Subscriber, directly or indirectly through a third-party administrator, maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, it, directly or indirectly through a third-party administrator, maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required, it, directly or indirectly through a third-party administrator, maintains policies and procedures reasonably designed to ensure that the funds held by the Subscriber and used to purchase the Securities were legally derived.
(l) The Subscriber understands that the foregoing representations and warranties shall be deemed material to and have been relied upon by the Issuer and the Company.
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8. Additional Covenants.
(a) Transfer Restrictions.
(i) The Securities may only be resold, transferred, pledged or otherwise disposed of in compliance with state and federal securities laws, and pursuant to an effective registration statement, or an applicable exemption from the registration requirements of the Securities Act, or transferred to the Issuer or to one or more affiliates of the Subscriber or to a lender to the Subscriber pursuant to a pledge and, thereafter, to a transferee thereof pursuant to a foreclosure. As a condition of transfer, other than pursuant to an effective registration statement or such permitted affiliate/lender transfer, the Issuer may require the transferor to provide to the Issuer an opinion of counsel selected by the transferor to the effect that such transfer does not require registration under the Securities Act, and any such transferee shall agree in writing to be bound by the terms of this Subscription Agreement.
(ii) The Issuer and the Company acknowledge and agree that, notwithstanding anything herein to the contrary, the Subscriber may from time to time after the Closing pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities issued and sold to the Subscriber to a financial institution that is an accredited investor as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, the Subscriber may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer shall not be subject to approval of the Issuer and no legal opinion of counsel of the pledgee, secured party or pledgor shall be required in connection therewith; provided that the Subscriber and its pledgee comply with the other provisions of this Section 8 in order to effect any sale, transfer or assignment of such Securities.
(iii) The Subscriber agrees to the imprinting, so long as required by this Section 8(a), of a restrictive legend on any certificated Securities in substantially the form set forth below:
THIS SECURITY HAS NOT 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 FEDERAL, STATE AND FOREIGN SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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(iv) Subject to applicable requirements of the Securities Act and the interpretations of the SEC thereunder and any requirements of the Issuer’s transfer agent, the Issuer shall ensure that instruments, whether certificated or uncertificated, evidencing the Securities shall not contain any legend following any sale of such Securities pursuant to Rule 144 under the Securities Act or if such Securities are otherwise eligible for sale under Rule 144 and without volume or manner-of-sale restrictions.
(v) The Subscriber agrees with the Issuer that any Securities sold pursuant to an effective registration statement will be sold in compliance with the applicable plan of distribution set forth therein, and acknowledges that the removal of any restrictive legend from instruments representing the Securities as set forth in this Section 8 is predicated upon the Issuer’s reliance upon this understanding.
(b) Furnishing of Information; Public Information. Until the earliest of (i) the first date on which the Subscriber can sell all of its Shares, Warrant Shares and Commitment Shares under Rule 144 without limitation as to the manner of sale or the amount of such securities that may be sold and (ii) two (2) years from the Closing Date, the Issuer covenants to maintain the registration of the Shares under Section 12(b) or 12(g) of the Exchange Act and to timely file, or obtain extensions in respect thereof and file within the applicable grace period, all reports required to be filed by the Issuer after the effective date of registration of such securities pursuant to the Exchange Act.
(c) Public Disclosure. The Issuer shall (a) by 9:30 a.m. ET on the first Business Day following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby (“Disclosure Time”), and (b) file a Current Report on Form 8-K, including the Transaction Agreement and the investor presentation provided to the Subscriber, or the material non-public information contained therein, as exhibits thereto, with the SEC within the time required by the Exchange Act. From and after the issuance of such press release, each of the Issuer and the Company represent to the Subscriber that it shall have publicly disclosed all material, non-public information delivered to the Subscriber by or on behalf of the Issuer, the Company or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by this Subscription Agreement, and the Subscriber shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral, with the Issuer, the Company or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by this Subscription Agreement. The Subscriber shall not issue any press release or make any other similar public statement with respect to the transactions contemplated hereby without the prior written consent of the Issuer (such consent not to be unreasonably withheld or delayed). Notwithstanding the foregoing, none of the Issuer, the Company or the Subscriber shall publicly disclose the name of any other party to this Agreement, or include the name of any other party in any filing with the SEC, any regulatory agency or Nasdaq or the NYSE, as applicable, without the prior written consent of the party being disclosed, except to the extent such disclosure is required by applicable law, SEC, Nasdaq or NYSE rules, or at the request of any governmental or regulatory agency or as required by legal process, in which case, to the extent legally permissible, written notice of such disclosure permitted under this clause shall be made to the other party prior to or as soon as reasonably practicable following such disclosure.
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(d) Non-Public Information. Following the Disclosure Time or otherwise as required by applicable law, each of the Issuer and the Company covenants and agrees that neither it, nor any other person acting on its behalf, will provide the Subscriber with any information that constitutes, or the Issuer or the Company, as applicable, reasonably believes constitutes, material non-public information, unless prior thereto the Subscriber shall have consented in writing to the receipt of such information and agreed with the Issuer or the Company, as applicable, to keep such information confidential. The Issuer and the Company each understand and confirm that the Subscriber shall be relying on the foregoing covenant in effecting transactions in securities of the Issuer; provided that each Subscriber shall be solely responsible for its compliance with federal, state and foreign securities laws.
(e) Listing of Securities. The Issuer hereby agrees to cause the Shares and Warrant Shares to be listed on Nasdaq or the NYSE, as applicable, and to ensure and maintain the eligibility of such securities for electronic transfer through The Depository Trust Company or another established clearing corporation, including by timely payment of fees to such clearing corporation in connection with such electronic transfer.
(f) Certain Transactions and Confidentiality. The Subscriber covenants that neither it, nor any affiliate acting on its behalf or pursuant to any understanding with it, has executed or will execute any purchases or sales of any of the Issuer’s securities during the period that commenced at the time that the Subscriber first learned of the transactions contemplated hereunder and ending at such time that the transactions contemplated by this Subscription Agreement are first publicly announced pursuant to the initial press release as described in Section 8(c). The Subscriber covenants that until such time as the transactions contemplated by this Subscription Agreement are publicly disclosed by the Issuer pursuant to the initial press release as described in Section 8(c), the Subscriber will maintain the confidentiality of the existence and terms of the Transactions and the transactions contemplated hereby, provided that Subscriber is permitted to disclose such items to its and its affiliates’ representatives, employees, advisers, and counsel on a need to know basis and who are obligated to keep such information confidential and agree not to trade on any such confidential information, or otherwise where required pursuant to applicable law.
Notwithstanding the foregoing, the Issuer and the Company expressly acknowledge and agree that (i) the Subscriber makes no representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Issuer after the time that the transactions contemplated by this Subscription Agreement are first publicly announced pursuant to the initial press release as described in Section 8(c), and (ii) the Subscriber shall not be restricted or prohibited from effecting any transactions in any securities of the Issuer in accordance with applicable securities laws from and after such public announcement. Notwithstanding the foregoing, (i) in the case that the Subscriber is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Subscriber’s assets, this Section 8(g) shall only apply with respect to the portfolio manager that made the investment decision to purchase the Securities covered by this Subscription Agreement and any other portfolio manager that has direct knowledge of this investment and (ii) the representations set forth in this Section 8(g) shall not apply to any other entity, affiliate or client under common management with the Subscriber that has no knowledge of this Subscription Agreement or of the Subscriber’s participation in the Transactions.
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(g) Subscriber Undertaking. The Issuer may request from the Subscriber such additional information as the Issuer may deem reasonably necessary to evaluate the eligibility of the Subscriber to acquire the Securities, and the Subscriber shall promptly provide such information to the Issuer upon such request, to the extent readily available and consistent with its internal policies and procedures and within the Subscriber’s possession and control or otherwise readily available to the Subscriber, and provided that the Issuer agrees to keep confidential any such information provided by the Subscriber.
(h) No Short Sales. The Subscriber hereby agrees that, from the date of this Agreement until the Merger Closing, neither Subscriber nor any person or entity acting on behalf of Subscriber or pursuant to any understanding with Subscriber will engage in any Short Sales with respect to securities of the Issuer. For purposes of this Section 8(i), “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers. Notwithstanding the foregoing, (A) nothing herein shall prohibit other entities under common management with Subscriber that have no knowledge of this Subscription Agreement or of Subscriber’s participation in the Transactions (including Subscriber’s controlled affiliates and/or affiliates) from entering into any Short Sales and (B) in the case of a Subscriber that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Subscriber’s assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other portions of such Subscriber’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Units.
(i) Most Favored Nation. In the event at or prior to the Closing the Issuer or the Sponsor enters into any Other Subscription Agreement, or amends, modifies or waives any term of any Other Subscription Agreement, in each case on terms (whether relating to purchase price, discount, warrant coverage, commitment or bonus shares, registration rights, lock-up, transfer restrictions, governance or otherwise) that are more favorable in any material respect to the applicable subscriber than the terms of this Subscription Agreement are to the Subscriber, then (x) the Issuer shall promptly notify the Subscriber in writing and furnish a copy of the relevant agreement, amendment or waiver, and (y) such more favorable terms shall automatically be deemed incorporated into this Subscription Agreement for the benefit of the Subscriber, unless the Subscriber notifies the Issuer in writing that it elects not to receive the benefit of such terms; provided, however, that the foregoing shall not apply to the [●] Notes or other agreements between the Issuer or the Sponsor with [●] and/or one or more of its affiliates or managed funds in connection with the Transactions. The Issuer shall deliver to the Subscriber at or prior to the Closing a certificate of an executive officer of the Issuer certifying that no Other Subscription Agreement contains terms more favorable to any subscriber than the terms of this Subscription Agreement, or otherwise identifying any such more favorable terms.
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9. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier to occur of: (a) the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement; (b) such date and time as the Transaction Agreement is terminated in accordance with its terms; or (c) if the Merger Closing has not occurred on or prior to March 31, 2027, at the election of the Subscriber; provided that (i) nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and (ii) each party will be entitled to any remedies at law or in equity to recover reasonable and documented losses, liabilities or damages arising from such breach. The Issuer shall notify the Subscriber of the termination of the Transaction Agreement promptly after the termination of such agreement and the provisions of this Section 9 and Sections 11 and 12 will survive any termination of this Subscription Agreement and continue indefinitely.
10. Registration Rights.
(a) The Issuer agrees that, within thirty (30) calendar days after the Closing Date (the “Filing Date”), the Issuer will file with the SEC (at the Issuer’s sole cost and expense) a registration statement registering the resale of the Subscriber Shares (as defined below) (the initial registration statement and any other registration statement that may be filed by the Issuer under this Section 10, the “Resale Registration Statement”). The Issuer shall use its reasonable best efforts to have the Resale Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day (or 90th calendar day if the SEC notifies the Issuer that it will “review” the Resale Registration Statement) following the Merger Closing Date and (ii) the second (2nd) Business Day after the date the Issuer is notified (orally or in writing, whichever is earlier) by the SEC that the Resale Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, as may be delayed pursuant to this Section 10, the “Effectiveness Date”). The Issuer agrees that the Issuer will cause such Resale Registration Statement or another registration statement (which may be a “shelf” registration statement) to remain effective until the earlier of (i) two (2) years from the date of effectiveness of the initial Resale Registration Statement, (ii) the date on which the Subscriber ceases to hold the Subscriber Shares covered by such Resale Registration Statement, or (iii) the first date on which the Subscriber can sell all of its Subscriber Shares under Rule 144 of the Securities Act without restriction, including without limitation, any volume or manner of sale restrictions and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable). The Issuer’s obligations to include the Subscriber Shares in the Resale Registration Statement are contingent upon the Subscriber furnishing in writing to the Issuer such information regarding the Subscriber, the securities of the Issuer held by the Subscriber and the intended method of disposition of the Subscriber Shares as shall be reasonably requested by the Issuer to effect the registration of the Subscriber Shares (including disclosure of its beneficial ownership of the Subscriber Shares, as determined in accordance with Rule 13d-3 of the Exchange Act), and the Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling shareholder in similar situations; provided that the Subscriber shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Subscriber Shares. Any failure by the Issuer to file the Resale Registration Statement by the Filing Date or for the Resale Registration Statement to be declared effective by the Effectiveness Date shall not otherwise relieve the Issuer of its obligations to file or effect the Resale Registration Statement as set forth in this Section 10. In no event shall the Subscriber be identified as a statutory underwriter in the Resale Registration Statement unless requested by the SEC; provided that if the SEC requests that the Subscriber be identified as a statutory underwriter in the Resale Registration Statement, the Subscriber will have the option, in its sole and absolute discretion, to either (i) have an opportunity to withdraw from the Resale Registration Statement, in which case the Issuer’s obligation to register the Subscriber Shares will be deemed satisfied, or (ii) be included as such in the Resale Registration Statement. Notwithstanding the foregoing, if the SEC prevents the Issuer from including any or all of the Issuer Shares proposed to be registered under the Resale Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of Issuer Shares by the applicable shareholders or otherwise, such Resale Registration Statement shall register for resale such number of Issuer Shares as is equal to the maximum number of Issuer Shares permitted by the SEC. In such event, the number of Issuer Shares to be registered for each selling shareholder named in the Resale Registration Statement (including the number of Subscriber Shares to be registered for the Subscriber) shall be reduced pro rata among all such selling shareholders and, as promptly as practicable after being permitted to register additional Issuer Shares under Rule 415 under the Securities Act, the Issuer shall amend the Resale Registration Statement or file a new Resale Registration Statement to register such additional Issuer Shares (including the applicable Subscriber Shares) and cause such amendment or new Resale Registration Statement to become effective as promptly as practicable thereafter. For purposes of this Section 10, “Issuer Shares” means the Issuer’s equity securities, and “Subscriber Shares” means the Shares, Warrant Shares, Commitment Shares and, to the extent applicable, Non-Redeemed Shares, in each case held by the Subscriber and registrable for resale pursuant to this Section 10, together with any other equity security of the Issuer issued or issuable with respect to such securities by way of share split, dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise.
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(b) In the case of the registration, qualification, exemption or compliance effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform the Subscriber as to the status of such registration, qualification, exemption and compliance. At its expense, the Issuer shall:
(i) except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Resale Registration Statement, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Issuer determines to obtain, continuously effective with respect to Subscriber, and to keep the applicable Resale Registration Statement or any subsequent shelf registration statement free of any material misstatements or omissions;
(ii) advise Subscriber within three (3) Business Days:
(A) when a Resale Registration Statement or any amendment thereto has been filed with the SEC and when such Resale Registration Statement or any post-effective amendment thereto has become effective;
(B) of any request by the SEC for amendments or supplements to the Resale Registration Statement or the prospectus included therein or for additional information;
(C) of the issuance by the SEC of any stop order suspending the effectiveness of any Resale Registration Statement or the initiation of any proceedings for such purpose;
(D) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Subscriber Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(E) subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in any Resale Registration Statement or prospectus included therein so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.
Notwithstanding anything to the contrary set forth herein, the Issuer shall not, when so advising Subscriber of such events listed above, provide Subscriber with any material, nonpublic information regarding the Issuer other than to the extent that providing notice to Subscriber of the occurrence of the events listed in (A) through (C) above constitutes material, nonpublic information regarding the Issuer;
(iii) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Resale Registration Statement as soon as reasonably practicable;
(iv) upon the occurrence of any event contemplated above, except for such times as the Issuer is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Resale Registration Statement, the Issuer shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Resale Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Subscriber Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
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(v) use its commercially reasonable efforts to cause all Subscriber Shares to be listed on each securities exchange or market, if any, on which Issuer Shares have been listed; and
(vi) use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Subscriber Shares contemplated hereby.
(c) The Issuer may delay filing or suspend the use of any such registration statement (x) if it determines, upon advice of external legal counsel, that in order for the registration statement to not contain a material misstatement or omission, an amendment thereto would be needed, (y) as may be necessary in connection with the preparation and filing of a post-effective amendment to the Resale Registration Statement following the filing of the Issuer’s Annual Report on Form 10-K for its first completed fiscal year, or (z) if the Issuer’s Board of Directors, upon advice of external legal counsel, reasonably believes that such filing or use would materially affect a bona fide business or financing transaction of the Issuer or any of its subsidiaries, or would require premature disclosure of information that could materially adversely affect the Issuer (each such circumstance, a “Suspension Event”); provided, however, that the Issuer may not delay filing or suspend use of any registration statement on more than two occasions or for more than forty-five (45) consecutive calendar days or more than ninety (90) total calendar days, in each case in any 12-month period. Upon receipt of any written notice from the Issuer of the happening of any Suspension Event (which notice shall not contain any material non-public information) during the period that the Resale Registration Statement is effective or if as a result of a Suspension Event the Resale Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, the Subscriber agrees that it will (i) immediately discontinue offers and sales of the Subscriber Shares under the Resale Registration Statement until the Subscriber receives (A) (x) copies of a supplemental or amended prospectus that corrects the misstatement(s) or omission(s) referred to above and (y) notice that any post-effective amendment has become effective or (B) notice from the Issuer that it may resume such offers and sales, and (ii) maintain the confidentiality of any information included in such written notice delivered by the Issuer unless otherwise required by applicable law. If so directed by the Issuer, the Subscriber will deliver to the Issuer or, in Subscriber’s sole discretion, destroy all copies of the prospectus covering the Subscriber Shares in the Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Subscriber Shares shall not apply to (i) the extent the Subscriber is required to retain a copy of such prospectus (A) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (B) in accordance with a bona fide pre-existing document retention policy or (ii) copies stored electronically on archival servers as a result of automatic data back-up. In addition to the removal of restrictive legends at the Subscriber’s request contemplated by Section 8(a)(iv), during any periods that a Resale Registration Statement registering the resale of the Subscriber Shares is effective or when the Subscriber Shares may be sold pursuant to Rule 144 under the Securities Act or may be sold without restriction under Rule 144, the Issuer shall, at its expense, cause the Issuer’s transfer agent to remove any restrictive legends on any Subscriber Shares sold by the Subscriber within two (2) Business Days of the date that such Subscriber Shares are sold and the Subscriber notifies the Issuer of such sale (and prior to removal the Subscriber provides the Issuer with any customary representations in connection therewith). In connection therewith, if required by the Issuer’s transfer agent, the Issuer will promptly cause an opinion of counsel to be delivered to and maintained with its transfer agent, together with any other authorizations, certificates and directions required by the transfer agent that authorize and direct the transfer agent to issue such Subscriber Shares without any such legend.
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(d) From and after the Closing, the Issuer shall indemnify, defend and hold harmless the Subscriber (to the extent a seller under the Resale Registration Statement), and the officers, employees, affiliates, directors, partners, members, managers, investment advisors, attorneys and agents of the Subscriber, and each person, if any, who controls the Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (the Subscriber and each of the foregoing, a “Subscriber Indemnified Party”), from and against any losses, judgments, claims, damages, liabilities or reasonable costs or expenses (including reasonable external attorneys’ fees) (collectively, “Losses”), that arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in the Resale Registration Statement, any prospectus included in the Resale Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (ii) any violation or alleged violation by the Issuer of the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder, in connection with the performance of its obligations under this Section 10, except to the extent that such untrue or alleged untrue statements or omissions or alleged omissions are based solely upon information furnished in writing to the Issuer by a Subscriber Indemnified Party expressly for use therein. Notwithstanding the foregoing, the Issuer’s indemnification obligations shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior written consent of the Issuer (which consent shall not be unreasonably withheld, delayed or conditioned).
(e) From and after the Closing, the Subscriber shall, severally and not jointly with any Other Subscriber, indemnify, defend and hold harmless the Issuer, and the officers, employees, affiliates, directors, partners, members, managers, attorneys and agents of the Issuer, and each person, if any, who controls the Issuer (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), from and against any Losses, that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Resale Registration Statement, any prospectus included in the Resale Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, to the extent that such untrue or alleged untrue statements or omissions or alleged omissions are based solely upon information regarding Subscriber furnished in writing to the Issuer by a Subscriber Indemnified Party expressly for use therein. In no event shall the liability of the Subscriber be greater in amount than the dollar amount of the net proceeds received by the Subscriber upon the sale of the Subscriber Shares giving rise to such indemnification obligation. Notwithstanding the foregoing, the Subscriber’s indemnification obligations shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior written consent of the Subscriber (which consent shall not be unreasonably withheld, delayed or conditioned).
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(f) If the indemnification provided under this Section 10 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any Losses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses or other liabilities referred to above shall be subject to the limitations set forth in this Section 10 and deemed to include any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 10(f) from any person who was not guilty of such fraudulent misrepresentation. Each indemnifying party’s obligation to make a contribution pursuant to this Section 10(f) shall be individual, not joint, and in no event shall the liability of the Subscriber under this Section 10(f) be greater in amount than the dollar amount of the net proceeds received by the Subscriber upon the sale of the Subscriber Shares giving rise to such indemnification obligation.
(g) Any person entitled to indemnification herein shall (1) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (2) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
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(h) The indemnification provided for under this Subscription Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, employee, agent, affiliate or controlling person of such indemnified party and shall survive the transfer of the Subscriber Shares purchased pursuant to this Subscription Agreement.
11. Trust Account Waiver.
(a) The Subscriber hereby represents and warrants that it has had the opportunity to read the IPO Prospectus and understands that the Issuer has established a trust account (the “Trust Account”) containing the proceeds of its initial public offering (the “IPO”), the overallotment shares acquired by its underwriters and certain private placements occurring simultaneously with the IPO, including interest accrued from time to time thereon, for the benefit of the Issuer’s public stockholders, including overallotment shares acquired by the Issuer’s underwriters (the “Public Stockholders”). The Subscriber further understands that, except as otherwise described in the IPO Prospectus, the Issuer may disburse monies from the Trust Account only: (a) to the Public Stockholders who elect to redeem their Issuer shares in connection with the consummation of the Issuer’s initial business combination, as such term is used in the IPO Prospectus, or in connection with an extension of the Issuer’s deadline to consummate an initial business combination; (b) to the Public Stockholders if the Issuer fails to consummate an initial business combination within 24 months after the closing of the IPO, subject to any further extension approved by amendment to the Issuer’s organizational documents; (c) with respect to any interest earned on the amounts held in the Trust Account, to pay taxes and up to $100,000 of dissolution expenses; or (d) to the Issuer after or concurrently with the consummation of an initial business combination.
(b) For and in consideration of the Issuer entering into this Subscription Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subscriber hereby agrees that, notwithstanding anything to the contrary contained in this Subscription Agreement, the Subscriber does not now and shall not at any time hereafter have, and waives any and all right, title and interest, or any claims of any kind it has or may have in the future as a result of, or arising out of, this Subscription Agreement, the transactions contemplated hereby or the Securities, in or to any monies held in the Trust Account or any distributions therefrom directly or indirectly to Public Stockholders (“Public Distributions”).
(c) The Subscriber further agrees not to seek recourse or make or bring any action, suit, claim or other proceeding against the Trust Account or Public Distributions as a result of, or arising out of, this Subscription Agreement, the transactions contemplated hereby or the Securities, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability. To the extent the Subscriber commences any action or proceeding based upon, in connection with, as a result of or arising out of, this Subscription Agreement, the transactions contemplated hereby or the Securities, which proceeding seeks, in whole or in part, monetary relief against the Issuer or its Representatives, the Subscriber hereby acknowledges and agrees that the Subscriber’s sole remedy shall be against funds held outside of the Trust Account, other than Public Distributions, and that such claim shall not permit the Subscriber, or any person claiming on its behalf or in lieu of any of it, to have any claim against the Trust Account, including any distributions therefrom, or any amounts contained therein.
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(d) Notwithstanding anything else in this Section 11 to the contrary, nothing herein shall: (x) serve to limit or prohibit the Subscriber’s right to pursue a claim against the Issuer for legal relief against assets held outside the Trust Account, for specific performance or other equitable relief; (y) serve to limit or prohibit any claims that the Subscriber may have in the future against the Issuer’s assets or funds that are not held in the Trust Account, including any funds that have been released from the Trust Account to the Issuer, excluding, for the avoidance of doubt, funds released to redeeming shareholders of the Issuer, and any assets that have been purchased or acquired with any such funds; or (z) be deemed to limit the Subscriber’s right, title, interest or claim to the Trust Account by virtue of the Subscriber’s record or beneficial ownership of Issuer Common Stock other than pursuant to this Subscription Agreement, including any redemption right with respect to any such securities of the Issuer.
(e) For purposes of this Subscription Agreement, “Representatives” with respect to any person shall mean such person’s affiliates and its and its affiliates’ respective directors, officers, employees, consultants, advisors, agents and other representatives.
12. Miscellaneous.
(a) Transferability. Neither this Subscription Agreement nor any rights that may accrue to the Subscriber hereunder (other than the Subscriber Shares acquired hereunder, if any, subject to applicable securities laws and Subscriber’s rights under Section 10 hereof) may be transferred or assigned by the Subscriber without the prior written consent of the Issuer and the Company, and any purported transfer or assignment without such consent shall be null and void ab initio. Notwithstanding the foregoing, prior to the Closing the Subscriber may assign all of its rights and obligations under this Subscription Agreement to an affiliate of the Subscriber, or to any fund or account managed by the same investment manager as Subscriber, that is an Accredited Investor or a QIB and is also an Institutional Account, so long as the Subscriber provides the Issuer and the Company with at least three (3) Business Days’ prior written notice of such assignment and a completed Investor Questionnaire duly executed by such assignee; provided, further that (i) such assignee will be deemed to have made to the Issuer and the Company each of the representations, warranties and covenants of the Subscriber set forth in Section 7 as of the date of such assignment and as of the Closing Date, and (ii) no such assignment by the Subscriber will relieve the Subscriber of its obligations under this Subscription Agreement, and the Subscriber will remain secondarily liable under this Subscription Agreement for the obligations of the assignee hereunder unless the Issuer and the Company have consented to such relief. The Issuer may not transfer or assign all or a portion of its rights under this Subscription Agreement without the prior consent of the Subscriber.
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(b) Reliance. The Subscriber acknowledges that the Issuer and the Company will rely on the acknowledgments, understandings, agreements, representations and warranties of the Subscriber contained in this Subscription Agreement; provided, however, that the Subscriber’s obligations hereunder may only be enforced against the Subscriber by the Issuer or, pursuant to Section 12(o), the Company. Prior to the Closing, the Subscriber agrees to promptly notify the Issuer and the Company if any of the acknowledgments, understandings, agreements, representations and warranties made by the Subscriber set forth herein are no longer accurate in any material respect and such inaccuracy would cause any of the conditions to the Closing in Sections 4(a) or 4(b) not to be satisfied. Each of the Issuer and the Company is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Each of the Issuer and the Company acknowledges that the Subscriber will rely on the acknowledgments, understandings, agreements, representations and warranties of the Issuer and the Company contained in this Subscription Agreement. Prior to the Closing, each of the Issuer and the Company agrees to promptly notify the Subscriber if any of the acknowledgments, understandings, agreements, representations and warranties made by it set forth herein are no longer accurate in any material respect and such inaccuracy would cause any of the conditions to the Closing in Sections 4(a) or 4(c) not to be satisfied. The Subscriber is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
(c) Survival. All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing until the expiration of any applicable statute of limitations.
(d) Amendments and Waivers. This Subscription Agreement may not be amended, modified or waived except by an instrument in writing, signed by the party against whom enforcement of such amendment, modification or waiver is sought.
(e) Entire Agreement. This Subscription Agreement (including the exhibits and, to the extent applicable, the Lock-Up Addendum attached hereto), constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof (other than any confidentiality agreement entered into by the Issuer and/or the Company, on the one hand, and the Subscriber, on the other hand, in connection with the Offering).
(f) Successors and Assigns. This Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.
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(g) Severability. If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(h) Counterparts. This Subscription Agreement may be executed and delivered in one or more counterparts (including by facsimile, electronic mail or in .pdf (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com)) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
(i) Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to equitable relief, including an injunction or injunctions, to prevent breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. Each party hereto further agrees that none of the parties hereto or the Company shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 12(i), and each party hereto irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.
(j) GOVERNING LAW AND JURY TRIAL. THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER STATE. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS SUBSCRIPTION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
(k) Venue. Each party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction, any federal court within the State of Delaware) (the “Chosen Court”) for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby (and each party agrees not to commence any action, suit or proceeding relating thereto except in such courts). Each party hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby, in the Chosen Court, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
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(l) Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered by facsimile or email, with affirmative confirmation of receipt, (iii) one (1) Business Day after being sent, if sent by reputable, internationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, prepaid and return receipt requested, in each case to the applicable party at the addresses set forth on the applicable signature pages hereto.
(m) Headings and Certain Defined Terms. The headings set forth in this Subscription Agreement are for convenience of reference only and shall not be used in interpreting this Subscription Agreement. In this Subscription Agreement, unless the context otherwise requires: (i) whenever required by the context, any pronoun used in this Subscription Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; and (iii) the words “herein”, “hereto” and “hereby” and other words of similar import in this Subscription Agreement shall be deemed in each case to refer to this Subscription Agreement as a whole and not to any particular portion of this Subscription Agreement, and references to any Section or Subsection shall refer to the numbered and lettered Sections and Subsections of this Agreement. As used in this Subscription Agreement, the term: (x) “person” shall refer to any individual, corporation, partnership, trust, limited liability company or other entity or association, including any governmental or regulatory body, whether acting in an individual, fiduciary or any other capacity, and (y) “affiliate” shall mean, with respect to any specified person, any other person or group of persons acting together that, directly or indirectly, through one or more intermediaries controls, is controlled by or is under common control with such specified person (where the term “control” (and any correlative terms) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by contract or otherwise). For the avoidance of doubt, any reference in this Subscription Agreement to an affiliate of the Issuer will include the Sponsor.
(n) Further Assurances. At the Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties may reasonably deem necessary in order to consummate the Offering as contemplated by this Subscription Agreement.
(o) Third Party Beneficiaries. The parties hereto agree that the Company is an express third-party beneficiary of this Agreement. Except for the foregoing, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and assigns.
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13. Non-Reliance and Exculpation. The Subscriber acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person other than the statements, representations and warranties contained in this Subscription Agreement in making its investment or decision to invest in the Issuer. The Subscriber agrees that no Other Subscriber pursuant to the Other Subscription Agreements (including the controlling persons, members, officers, directors, partners, agents, or employees of any such Other Subscriber) shall be liable to the Subscriber pursuant to this Subscription Agreement for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Subscriber Shares.
14. Several Not Joint. The obligations of the Subscriber under this Subscription Agreement are several and not joint with the obligations of any Other Subscriber or any other investor under the Other Subscription Agreements, and the Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscriber under any Other Subscription Agreement or any other investor under the Other Subscription Agreements. Nothing contained herein or in any Other Subscription Agreement, and no action taken by the Subscriber or any Other Subscriber or other investor pursuant hereto or thereto, shall be deemed to constitute the Subscriber and any Other Subscribers or other investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Subscriber and any Other Subscribers or other investors are in any way acting in concert or as a “group” (within the meaning of Section 13(d) of the Exchange Act) with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. The Subscriber acknowledges that no Other Subscriber has acted as agent for the Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of the Subscriber in connection with monitoring its investment in the Subscriber Shares or enforcing its rights under this Subscription Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement as of the last date written below.
| COMPANY: |
BITONIC TECHNOLOGY LABS, INC. (d/b/a Yellow.ai) | |
| By: | ||
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | CEO | |
| Date: | ||
| ISSUER: |
BLUEROCK ACQUISITION CORP. | |
| By: | ||
| Name: | Jordan Ruddy | |
| Title: | President | |
| Date: | ||
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement as of the last date written below.
| SUBSCRIBER: | ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
| Subscriber Committed Units: | ||
| Purchase Price: | $ | |
| Maximum Commitment Shares to be issued hereunder: | ||
| Mailing Address for Notices: | ||
| City, State, Zip: | ||
| Email for Notices: | ||
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EXHIBIT A
INVESTOR QUESTIONNAIRE
This Investor Questionnaire is being delivered in connection with that certain Subscription Agreement by and among Bitonic Technology Labs, Inc. (d/b/a Yellow.ai), Bluerock Acquisition Corp. and the undersigned Subscriber named therein. Capitalized terms used but not defined herein have the meanings given to such terms in the Subscription Agreement.
The undersigned Subscriber understands that the Issuer and the Company will rely on the information contained herein to determine whether the Subscriber is eligible to purchase the Securities pursuant to the Subscription Agreement. The Subscriber represents and warrants that the information provided below is true, complete and correct as of the date hereof and will be true, complete and correct as of the Closing Date.
1. Subscriber Information.
| Legal Name of Subscriber: | ||
| Jurisdiction of Organization, if applicable: | ||
| Type of Subscriber: |
☐ Individual ☐ Corporation ☐ Limited liability company ☐ Partnership ☐ Trust ☐ Employee benefit plan ☐ Investment fund ☐ Registered investment company ☐ Registered investment adviser ☐ Bank, savings and loan association or similar institution ☐ Insurance company ☐ Other: | |
| Principal Place of Business / Residence Address: | ||
| City, State, Zip Code: | ||
| Taxpayer Identification Number / EIN: | ||
| Contact Person: | ||
| Email: | ||
| Telephone: |
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2. Accredited Investor Status.
The Subscriber represents that it is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act. The Subscriber should check each applicable category below.
☐ Bank, savings and loan association or similar institution, whether acting in its individual or fiduciary capacity.
☐ Broker or dealer registered pursuant to Section 15 of the Exchange Act.
☐ Insurance company, registered investment company, business development company, small business investment company or rural business investment company.
☐ Employee benefit plan within the meaning of ERISA, if the investment decision is made by a qualifying plan fiduciary, the plan has total assets in excess of $5,000,000, or the plan is self-directed and investment decisions are made solely by accredited investors.
☐ Organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership or limited liability company, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000.
☐ Natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000, excluding the value of such person’s primary residence.
☐ Natural person who had individual income in excess of $200,000 in each of the two most recent years, or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year.
☐ Trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a person with such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment.
☐ Family office with assets under management in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose prospective investment is directed by a person with such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment, or a family client of such family office.
☐ Entity, of a type not listed above, not formed for the specific purpose of acquiring the Securities, owning investments in excess of $5,000,000.
☐ Entity in which all equity owners are accredited investors.
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☐ Other accredited investor category: ________________________________.
3. Qualified Institutional Buyer Status.
The Subscriber represents that it ☐ is ☐ is not a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act.
If the Subscriber is a QIB, the Subscriber further represents that it satisfies the applicable Rule 144A securities ownership threshold for its investor category, including, if applicable, ownership and discretionary investment of at least $100,000,000 in securities of unaffiliated issuers, or, for a registered broker-dealer, at least $10,000,000 in securities of unaffiliated issuers.
Applicable QIB category: ☐ Institutional investor ☐ Registered broker-dealer ☐ Bank, savings and loan association or similar institution ☐ Entity all of the equity owners of which are QIBs ☐ Other: ________________________________.
4. Institutional Account Status.
The Subscriber represents that it ☐ is ☐ is not an “Institutional Account” as defined in FINRA Rule 4512(c).
If applicable, the Subscriber qualifies as an Institutional Account because it is: ☐ a bank, savings and loan association, insurance company or registered investment company; ☐ an investment adviser registered with the SEC or a state securities commission; ☐ another entity, whether natural person, corporation, partnership, trust or otherwise, with total assets of at least $50,000,000; or ☐ other: ________________________________.
5. Reliance; Updates.
The Subscriber acknowledges that the Issuer, the Company and their respective representatives are relying on the information contained in this Investor Questionnaire. The Subscriber agrees to promptly notify the Issuer and the Company in writing if any information contained herein becomes inaccurate or incomplete before the Closing.
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IN WITNESS WHEREOF, the undersigned has executed this Investor Questionnaire as of the date set forth below.
| SUBSCRIBER: | ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
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EXHIBIT B
FORM OF NON-REDEEMED SHARES CERTIFICATE
Reference is made to that certain Subscription Agreement by and among Bitonic Technology Labs, Inc. (d/b/a Yellow.ai), Bluerock Acquisition Corp. and the undersigned Subscriber. Capitalized terms used but not defined herein have the meanings given to such terms in the Subscription Agreement.
The undersigned Subscriber hereby certifies to the Issuer and the Company that, as of the date hereof:
1. The Subscriber beneficially owns the number of shares of Issuer Common Stock set forth below, together with the related Redemption Rights:
Number of Eligible Shares: ________________________________.
2. The Subscriber acquired such Eligible Shares in the open market or otherwise holds such Eligible Shares, and the purchase price for any Eligible Shares acquired in the open market did not exceed the estimated Per-Share Redemption Price set forth in the Closing Notice.
3. The Subscriber has not exercised, and will not exercise, any Redemption Rights with respect to such Eligible Shares, and has revoked or will revoke any prior redemption or conversion election made with respect to such Eligible Shares.
4. The Subscriber has not Transferred, and will not Transfer, such Eligible Shares prior to the Closing Date.
5. The Subscriber has not voted, and will not vote, such Eligible Shares in favor of approving the Transactions at the extraordinary general meeting of the Issuer’s shareholders or in favor of any proposal contained in the Proxy Statement related thereto.
6. The Subscriber acknowledges that the Issuer and the Company may reasonably request brokerage statements, position reports or other evidence of ownership reasonably necessary to verify the Subscriber’s ownership of the Eligible Shares.
7. The Subscriber acknowledges that, pursuant to Section 2(f) of the Subscription Agreement, the number of Subscriber Committed Units the Subscriber is obligated to purchase under the Subscription Agreement shall be reduced on a one-for-one basis by the number of Non-Redeemed Shares validly certified herein and held through the Merger Closing, subject to the terms and conditions of the Subscription Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned has executed this Non-Redeemed Shares Certificate as of the date set forth below.
| SUBSCRIBER: | ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
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EXHIBIT C
FORM OF PIPE WARRANT CERTIFICATE
THIS PIPE WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO THE
EXPIRATION OF THE EXERCISE PERIOD SET FORTH BELOW
| Certificate No. [●] | [●] PIPE Warrants |
This PIPE Warrant Certificate (this “Warrant Certificate”) is issued by Bluerock Acquisition Corp., a Delaware corporation (the “Issuer”), to [_____________] (the “Holder”), pursuant to the Subscription Agreement (as may be amended, supplemented or otherwise modified from time to time, the “Subscription Agreement”), by and among the Issuer, Bitonic Technology Labs, Inc. d/b/a Yellow.ai, a Delaware corporation, and the Holder.
RECITALS
WHEREAS, the Issuer has entered into a Business Combination Agreement, dated as of July 31, 2026 (the “Business Combination Agreement” and the transactions contemplated thereby, the “Business Combination”), by and among the Issuer, BLRK Merger Sub Inc., a Delaware corporation and direct, wholly-owned subsidiary of the Issuer, Bitonic Technology Labs, Inc. d/b/a Yellow.ai (“Yellow” or the “Company”), and the other parties thereto, pursuant to which, among other things, prior to the Merger Closing the Issuer will domesticate as a Delaware corporation and, at the Merger Closing, the Company will become a wholly-owned subsidiary of the Issuer;
WHEREAS, in connection with the transactions contemplated by the Business Combination Agreement, the Issuer is conducting a private placement of units consisting of shares and warrants (the “PIPE”) to certain subscribers pursuant to subscription agreements (including the Subscription Agreement);
WHEREAS, the PIPE Warrants evidenced by this Warrant Certificate are being issued to the Holder pursuant to the Subscription Agreement in respect of Units purchased by the Holder and/or Non-Redeemed Shares held by the Holder through the Merger Closing;
WHEREAS, the Issuer is party to that certain Warrant Agreement, dated as of December 10, 2025, by and between the Issuer and Continental Stock Transfer & Trust Company, as warrant agent (the “Existing Warrant Agreement”), pursuant to which the Issuer’s public warrants and private placement warrants were issued in connection with the Issuer’s initial public offering; and
WHEREAS, pursuant to the Existing Warrant Agreement, Issuer may issue additional warrants in connection with, or following the consummation by the Issuer of, a Business Combination (as defined therein);
WHEREAS, the Issuer desires to issue to the Holder, and the Holder desires to acquire, PIPE Warrants on the terms set forth herein.
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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer hereby issues to the Holder the PIPE Warrants evidenced by this Warrant Certificate on the following terms:
1. Issuance. The Issuer hereby issues to the Holder [●] warrants (the “PIPE Warrants” and each, a “PIPE Warrant”). Each PIPE Warrant entitles the Holder, upon exercise during the Exercise Period (as defined below) and subject to the terms and conditions set forth herein, to receive from the Issuer one fully paid and non-assessable share of common stock of the Issuer, par value $0.0001 per share (each, a “Warrant Share”), at the exercise price of $11.50 per Warrant Share (the “Exercise Price”), subject to adjustment as provided in the Existing Warrant Agreement.
2. Incorporation of Existing Warrant Agreement. Except as expressly set forth in this Warrant Certificate, the PIPE Warrants shall have the same terms and be subject to the same conditions as the Public Warrants (as defined in the Existing Warrant Agreement) issued under the Existing Warrant Agreement. The terms of the Existing Warrant Agreement are hereby incorporated by reference into this Warrant Certificate and made a part hereof as if fully set forth herein, mutatis mutandis. In the event of any conflict or inconsistency between this Warrant Certificate and the Existing Warrant Agreement, the terms of this Warrant Certificate shall prevail and govern solely with respect to the PIPE Warrants.
3. Exercise Period. The “Exercise Period” shall mean the period commencing on the later of (a) the Merger Closing and (b) twelve (12) months after the date of the Issuer’s initial public offering (the date set forth in clause (a) or (b) that occurs later, the “Exercise Date”), and terminating at 5:00 p.m., New York City time on the date that is five (5) years after the Merger Closing (the “Expiration Date”), or earlier upon (i) the liquidation of the Issuer or (ii) the redemption of the PIPE Warrants in accordance with the terms hereof (if applicable). Any PIPE Warrants not exercised by the Expiration Date shall become void.
4. Redemption. The PIPE Warrants shall be subject to redemption by the Issuer on the same terms and conditions applicable to the Public Warrants under Section 6 of the Existing Warrant Agreement.
5. Cashless Exercise. The PIPE Warrants may be exercised on a “cashless basis” solely as and to the extent provided in Section 3.3.1(d) of the Existing Warrant Agreement applicable to Public Warrants.
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6. Restricted Securities; Legend. The Holder acknowledges that the PIPE Warrants and the Warrant Shares issuable upon exercise thereof have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are “restricted securities” within the meaning of Rule 144 under the Securities Act. Each certificate or book-entry position representing the PIPE Warrants or Warrant Shares shall bear or be subject to a legend substantially in the following form until such securities are registered under the Securities Act or an exemption therefrom is available:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. THESE SECURITIES ARE ALSO SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH IN THE SUBSCRIPTION AGREEMENT.”
7. Transfer Restrictions. The PIPE Warrants and the Warrant Shares may not be sold, transferred, assigned, pledged, or hypothecated by the Holder except: (a) pursuant to an effective registration statement under the Securities Act; (b) pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act; or (c) as otherwise permitted under the transfer restrictions set forth in the Subscription Agreement. Any purported transfer in violation of this Section 7 shall be null and void. A “Permitted Transferee” means any transferee of PIPE Warrants who receives such PIPE Warrants in a transfer permitted by the Subscription Agreement and who agrees in writing to be bound by the terms of this Warrant Certificate.
8. Registration Rights. The Holder shall be entitled to the registration rights with respect to the Warrant Shares as set forth in the Subscription Agreement. Notwithstanding anything in the Existing Warrant Agreement to the contrary, the registration rights provisions of Section 7.4 of the Existing Warrant Agreement shall not apply to the PIPE Warrants or the Warrant Shares; the Holder’s registration rights shall be governed solely by the Subscription Agreement.
9. Exercise Mechanics. To exercise PIPE Warrants, the Holder shall deliver to the Issuer (or its designated warrant agent, if any) (a) this Warrant Certificate (or evidence of loss, theft, or destruction thereof together with an indemnity agreement reasonably satisfactory to the Issuer), (b) the Election to Purchase form annexed hereto as Annex A, duly completed and executed, and (c) payment of the aggregate Exercise Price for the Warrant Shares being purchased (unless exercised on a cashless basis pursuant to Section 5). Upon valid exercise, the Issuer shall, as promptly as practicable, issue and deliver to the Holder the applicable number of Warrant Shares in book-entry form or certificated form. No fractional Warrant Shares shall be issued upon exercise; if upon exercise the Holder would be entitled to a fractional share, the Issuer shall round down to the nearest whole share.
10. No Shareholder Rights. Nothing contained in this Warrant Certificate shall be construed as conferring upon the Holder, prior to the exercise of the PIPE Warrants, any rights as a stockholder of the Issuer, including the right to vote, to receive dividends, to consent, or to receive notice as a stockholder.
11. Adjustments. The Exercise Price and the number of Warrant Shares issuable upon exercise of the PIPE Warrants shall be subject to adjustment from time to time in the same manner and to the same extent as provided in Section 4 of the Existing Warrant Agreement with respect to the Public Warrants, which provisions are incorporated herein by reference.
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12. Loss or Destruction. Upon receipt by the Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant Certificate, and in the case of loss, theft, or destruction, upon receipt of an indemnity agreement or bond reasonably satisfactory to the Issuer, the Issuer shall execute and deliver a new Warrant Certificate of like tenor and denomination.
13. Governing Law. This Warrant Certificate shall be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
14. Amendments. This Warrant Certificate may not be amended, modified, or waived except by a written instrument signed by the Issuer and the Holder.
15. Notices. All notices under this Warrant Certificate shall be given in accordance with the notice provisions of the Subscription Agreement.
16. Entire Agreement. This Warrant Certificate, together with the Subscription Agreement and (to the extent incorporated herein) the Existing Warrant Agreement, constitutes the entire agreement between the Issuer and the Holder with respect to the PIPE Warrants and supersedes all prior and contemporaneous understandings, agreements, and representations with respect thereto.
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IN WITNESS WHEREOF, the Issuer has caused this Warrant Certificate to be duly executed as of the date printed below.
| ISSUER: | BLUEROCK ACQUISITION CORP. | |
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
| HOLDER: | [FOR ENTITY HOLDERS:] | |
| By: | ||
| Name: | ||
| Title: | ||
| [FOR INDIVIDUAL HOLDERS:] | ||
| By: | ||
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Exhibit 10.5
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of July 31, 2026, is by and among Bluerock Acquisition Corp., a Cayman Islands exempted company (which shall transfer by way of continuation and domesticate as a Delaware corporation prior to the Initial Closing (as defined below)), with offices located at 919 Third Avenue New York, NY 10022 (the “Company”), Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation with offices located at 400 Concar Drive San Mateo, CA 94402 (the “Target”) (the “Target” and together with the Company, the “BC Parties”), and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A. On July 31, 2026, the Company has entered into that certain Business Combination Agreement (as in effect as of the date hereof, the “Merger Agreement”), with BLRK Merger Sub Inc., a Delaware corporation, and a wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which, among other things, (i) the Merger Sub shall merge with and into the Target and, at the closing thereof (the “Business Combination Closing”, and such date, the “Business Combination Closing Date”), the Target, as the surviving entity, shall be a wholly-owned subsidiary of the Company (the “Business Combination”) and (ii) at least one (1) calendar day prior to the Business Combination Closing, the Company shall transfer by way of continuation to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and Part XII of the Cayman Companies Act (the “Domestication”).
B. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration requirements afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
C. The Company has authorized a new series of senior secured convertible notes of the Company, in the aggregate original principal amount of $50,000,000, substantially in the form attached hereto as Exhibit A (the “Notes”), which Notes shall be convertible into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms of the Notes, including, without limitation, upon conversion or otherwise, collectively, the “Conversion Shares”), in accordance with the terms of the Notes (the “PIPE Offering”).
D. Each Buyer wishes to purchase, and the Company wishes to sell at the Initial Closing (as defined below), upon the terms and conditions stated in this Agreement, a Note in the aggregate original principal amount as set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate principal amount for all Buyers shall not exceed $25,000,000) (each an “Initial Note”, and collectively, the “Initial Notes”)(the Conversion Shares issuable pursuant to the terms of the Initial Notes, collectively, the “Initial Conversion Shares”).
E. Subject to the terms and conditions set forth in this Agreement, the Company may require each Buyer (or one or more Buyers may require the Company, as applicable) to participate in one or more Additional Closings (as defined below) for the purchase by such Buyer, and the sale by the Company, of one or more Notes with an aggregate original principal amount for all Additional Closings not to exceed the maximum aggregate principal amount as set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (which aggregate principal amount for all Buyers for all Additional Closings shall not exceed $25,000,000 (or such other amount as the Company and each Buyer shall mutually agree in writing)) (each an “Additional Note”, and collectively, the “Additional Notes”, and together with the Initial Notes, the “Notes”)(the Conversion Shares issuable pursuant to the terms of the Additional Notes, collectively, the “Additional Conversion Shares”, and collectively with the Initial Conversion Shares, the “Conversion Shares”).
F. At the Initial Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.
G. The Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below) the Notes will be secured by (a) a first priority perfected security interest in all of the existing and future assets of the Company and its direct and indirect Subsidiaries, including a pledge of all of the capital stock of each of the Subsidiaries, as evidenced by a security agreement in the form attached hereto as Exhibit C (the “Security Agreement” and together with the Perfection Certificate (as defined below) and the other security documents and agreements entered into in connection with this Agreement and each of such other documents and agreements, as each may be amended or modified from time to time, collectively, the “Security Documents”) and (b) a guaranty executed by each U.S. Subsidiary (if any) of the Company, in the form attached hereto as Exhibit D (collectively, the “Guaranties”) pursuant to which each of them guarantees the obligations of the Company under the Transaction Documents (as defined below).
H. Concurrently with the execution of this Agreement, the Target will execute and deliver to each Buyer a promissory note, in the form attached hereto as Exhibit E (the “Target Note”), which pursuant to and subject to the terms and conditions of the Merger Agreement, at the Business Combination Closing, shall automatically be exchanged into (x) an aggregate of 750,000 shares of Common Stock (the “BC Shares”) and warrants (the “BC Warrants”) to purchase an aggregate of 2,000,000 shares of Common Stock at $11.50 per share (such underlying shares, the “BC Warrant Shares”, and together with the BC Shares, the “BC Underlying Shares”, and together with the BC Warrants, the “BC Securities”).
I. The Notes and the Conversion Shares are collectively referred to herein as the “PIPE Securities” and together with the BC Securities, the “Securities”.
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AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES.
(a) Purchase of Notes.
(i) Purchase of Initial Notes. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Initial Closing Date (as defined below) an Initial Note in the original principal amount as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (the “Initial Closing”).
(ii) Purchase of Additional Notes. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 1(b)(ii), 6(b) and 7(b) below, the Company shall issue and sell to such Buyer, and such Buyer severally, but not jointly, agrees to purchase from the Company on the applicable Additional Closing Date (as defined below) an Additional Note in such aggregate original principal amount as is set forth in such applicable Additional Closing Notice (as defined below) (each such closing of the purchase of such Additional Notes, each, an “Additional Closing”).
(b) Closing. Each of the Initial Closing and any Additional Closings (collectively, the “Closings” and each sometimes referred to as a “Closing”) of the purchase of the Notes by the Buyers shall occur at the offices of Kelley Drye & Warren LLP, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007 or through the electronic exchange of documents.
(i) Initial Closing. The date and time of the Initial Closing (the “Initial Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day (as defined below) on which the conditions to the Initial Closing set forth in Sections 6(a) and 7(a) below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein “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 generally are open for use by customers on such day.
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(ii) Additional Closings.
(1) Additional Closing at a Buyer’s Election. Subject to the satisfaction (or waiver) of the conditions set forth in this Section 1(b)(ii) and Sections 6(b) and 7(b) below (the “Additional Closing Conditions”), at any time on or after the Initial Closing Date, each Buyer, severally, shall have the right, exercisable by delivery by e-mail of a written notice to the Company (each, an “Additional Optional Closing Notice”, and the date thereof, each an “Additional Optional Closing Notice Date”) to purchase, and to require the Company to sell to such Buyer, at one or more Additional Closings (each, an “Additional Optional Closing”), up to such aggregate principal amount of such Additional Notes as set forth opposite its name in column (4) on the Schedule of Buyers (less the aggregate principal amount of any Additional Notes issued in any prior Additional Closing) (each, an “Additional Optional Notes Amount”); provided, that the aggregate principal amount of Notes outstanding after giving effect to such Additional Optional Closing may not exceed $25,000,000 without the prior written consent of the Company (which may be given by an e-mail). Each Additional Optional Closing Notice shall specify (A) the proposed date and time of the Additional Optional Closing (which, if unspecified in such Additional Optional Closing Notice, shall be the second (2nd) Trading Day (as defined in the Notes) after such Additional Optional Closing Notice (or such other date as is mutually agreed to by the Company and each Buyer)) (each, an “Additional Optional Closing Date”), and (B) the applicable Additional Optional Notes Amount of the Additional Notes to be issued to such Buyer at such Additional Optional Closing. The Buyers’ rights to effect any Additional Optional Closings hereunder shall terminate upon the fourth (4th) anniversary of the date hereof (or such earlier date as the Buyers shall determine, in their sole discretion, by delivery of a written notice to the Company) (the “Additional Closing Expiration Date”).
(2) Additional Closing at the Company’s Election. Subject to the satisfaction (or waiver) of the Additional Closing Conditions, as long as (i) no more than $500,000 in aggregate principal amount of Notes remain outstanding as of such time of determination, (ii) such date of determination is after the thirtieth (30th) Trading Day after the later of (x) the Stockholder Approval Date (as defined below) and (y) the Effective Date (as defined in the Registration Rights Agreement) of one or more Registration Statements (as defined in the Registration Rights Agreement) registering the resale by the applicable Buyers of the Required Registration Amount (as defined in the Registration Rights Agreement) of Registrable Securities (as defined in the Registration Rights Agreement) issued or issuable pursuant to all Closings that have occurred hereunder on or prior to such date of determination (but also including the Conversion Shares issuable upon conversion of the Additional Notes to be issued in such proposed Additional Closing), and (iii) no Equity Conditions Failure1 (as defined in the Notes) then exists, the Company may deliver one or more written notices (each, an “Additional Mandatory Closing Notice”, and together with each Additional Optional Closing Notice, each an “Additional Closing Notice”, and the date of such applicable Additional Mandatory Closing Notice, each, an “Additional Mandatory Closing Notice Date”, and together with each Additional Optional Closing Notice Date, each an “Additional Closing Notice Date”) to all, but not less than all, of the Buyers, executed by the chief executive officer or chief financial officer of the Company, (I) validly certifying that no Equity Conditions Failure then exists, (II) confirming the aggregate number of Additional Notes to be purchased by such Buyer (which shall not be greater than $5,000,000 without the written consent of the Required Holders, in the aggregate, for all Buyers, and together with the aggregate number of Additional Notes issued to such Buyer at prior Additional Closings, shall not exceed such aggregate number of Additional Notes as set forth opposite its name in column (4) on the Schedule of Buyers (less the aggregate principal amount of any Additional Notes issued in any prior Additional Closing)), and (III) setting forth the proposed Additional Closing Date, which shall be the second (2nd) Trading Day after such Additional Optional Closing Notice (or such other date as is mutually agreed to by the Company and each Buyer, each, an “Additional Mandatory Closing Date,” and together with each other Additional Mandatory Closing Date and Additional Optional Closing Date, each, an “Additional Closing Date”, and together with the Initial Closing Date, each a “Closing Date”). Each Additional Mandatory Closing Notice shall be irrevocable and the Company may only deliver one Additional Mandatory Closing Notice in any thirty (30) Trading Day period. For the avoidance of doubt, the Buyers shall not be required to consummate any Additional Closing if on the Additional Closing Date an Equity Conditions Failure then exists. The Company’s right to require a Buyer to purchase Additional Notes pursuant to an Additional Mandatory Closing Notice shall automatically expire on the Additional Closing Expiration Date.
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(c) Purchase Price.
(i) Initial Purchase Price. The aggregate purchase price for the Initial Notes to be purchased by each Buyer (the “Initial Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers. The aggregate purchase price for the Additional Notes to be purchased by each Buyer at any given Additional Closing (each, an “Additional Purchase Price”, and together with the Initial Purchase Price, each, a “Purchase Price”) shall be approximately $950 for each $1,000 of aggregate principal amount of Additional Notes to be issued in such Additional Closing (which together with the Additional Purchase Price of each prior Additional Closing, shall not exceed the aggregate amount set forth opposite such Buyer’s name in column (6) of the Schedule of Buyers).
(d) Form of Payment.
(i) Initial Closing. On the Initial Closing Date, (A) each Buyer shall pay its respective Initial Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) to the Company for the Initial Notes to be issued and sold to such Buyer at the Initial Closing, by wire transfer of immediately available funds in accordance with the Initial Flow of Funds Letter (as defined below) and (B) the Company shall deliver to each Buyer an Initial Note in such aggregate original principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
(ii) Additional Closing. On each Additional Closing Date, (A) each Buyer shall pay its respective Additional Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) to the Company for such aggregate number of Additional Notes to be issued and sold to such Buyer at such Additional Closing, by wire transfer of immediately available funds in accordance with the Additional Flow of Funds Letter (as defined below) and (B) the Company shall deliver to each such applicable Buyer an Additional Note in the aggregate original principal amount as is set forth in the applicable Additional Closing Notice to be issued to such Buyer, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
2. BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and as of each Closing Date:
(a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
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(b) No Public Sale or Distribution. Such Buyer (i) is acquiring its Note, and (ii) upon conversion of its Note will acquire the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the PIPE Securities for any minimum or other specific term and reserves the right to dispose of the PIPE Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute any of the PIPE Securities in violation of applicable securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity (as defined below) or any department or agency thereof.
(c) Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(d) Reliance on Exemptions. Such Buyer understands that the PIPE Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the PIPE Securities.
(e) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company, the Target, and materials relating to the offer and sale of the PIPE Securities that have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and the Target. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s and the Target’s representations and warranties contained herein. Such Buyer understands that its investment in the PIPE Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the PIPE Securities.
(f) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the PIPE Securities or the fairness or suitability of the investment in the PIPE Securities nor have such authorities passed upon or endorsed the merits of the offering of the PIPE Securities.
(g) Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h) hereof: (i) the PIPE Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such PIPE Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such PIPE Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the PIPE Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the PIPE Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the PIPE Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the PIPE Securities may be pledged in connection with a bona fide margin account with a registered broker-dealer or other loan or financing arrangement with a financial institution that is an “accredited investor” as defined in Rule 501(a) of the 1933 Act, secured by the PIPE Securities and such pledge of PIPE Securities shall not be deemed to be a transfer, sale or assignment of the PIPE Securities hereunder, and no Buyer effecting a pledge of PIPE Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(g).
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(h) Validity; Enforcement. This Agreement and the Transaction Documents (as defined below) to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(i) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and each of the Transaction Documents (as defined below) to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(j) Residency. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.
(k) Experience of Such Buyer. Such Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(l) General Solicitation. Such Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Buyer, any other general solicitation or general advertisement.
(m) No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, such Buyer at the time of sale is not subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3).
(n) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Buyer has not, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, directly or indirectly, executed any purchases or sales, including short sales , of the securities of the Company during the period commencing as of the time that such Buyer first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material pricing terms of the transactions contemplated hereunder and ending immediately prior to the time of execution hereof. Notwithstanding the foregoing, in the case of a Buyer that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Buyer’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Buyer’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the PIPE Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Buyer’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Buyer has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).
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(o) Sufficient Funds. Such Buyer has, or at the applicable Closing will have, sufficient assets and the financial capacity to perform all of its obligations under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE BC PARTIES.
Each BC Party, represents and warrants to each of the Buyers, severally and not jointly as of the date hereof, and jointly and severally as of each Closing Date (each, a “Representation Date”) as follows:
(a) Organization and Qualification. Except as set forth on Schedule 3(a)(i), each BC Entity (as defined below) is an entity duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is organized as of the date hereof and, as of such time of determination, and has the requisite power and authority to own its respective properties and to carry on its respective business as now being conducted and as presently proposed to be conducted. Except as set forth on Schedule 3(a)(ii), each BC Entity is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of any BC Entity, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of any BC Entity to perform any of its respective obligations under any of the Transaction Documents. Except as disclosed in the SEC Documents, other than the Persons (as defined below) set forth on Schedule 3(a)(iii), neither BC Party has any Subsidiaries. “Subsidiaries” means, with respect to a BC Party, any Person in which such BC Party, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary” and together with the BC Parties, the “BC Entities.”
(b) Authorization; Enforcement; Validity. Each BC Party has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents to which it is a party and, in the case of the Company, to issue the PIPE Securities in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by the BC Entities, and the consummation by the BC Entities of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Notes) have been duly authorized by each BC Entity’s board of directors or other governing body, as applicable, and (other than obtaining the Stockholder Approval (as defined below) and the filing (i) with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) of a Listing of Additional Shares application with the Principal Market, (iii (iv) of a Form D with the SEC and (v) any other filings as may be required by any state securities agencies (collectively, the “Required Approvals”)) no further filing, consent or authorization is required by any of the BC Entities, their respective boards of directors or their stockholders or other governing body. This Agreement has been, and the other Transaction Documents to which it is a party will be prior to such Closing, duly executed and delivered by each BC Party, and each constitutes the legal, valid and binding obligations of such BC Party, enforceable against such BC Party in accordance with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. Prior to such Closing, the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by each such Subsidiary, and shall constitute the legal, valid and binding obligations of each such Subsidiary, enforceable against each such Subsidiary in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents” means, collectively, this Agreement, the Notes, the Lock-Up Agreements (as defined below), the Target Notes, the Leak-Out Agreements (as defined below), the BC Securities, the Security Documents, the Guaranties, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
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(c) Issuance of PIPE Securities. The issuance of the Notes has been duly authorized and upon issuance in accordance with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and, except as set forth on Schedule 3(c), free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Initial Closing, the Company shall have reserved from its duly authorized capital stock not less than 100% of the maximum number of Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that (w) all Additional Notes issuable hereunder shall have been issued at an Additional Closing on the Initial Closing Date, (x) the Notes are convertible at the Floor Price (as defined in the Notes) as of the date hereof, (y) interest on the Notes shall accrue through the third anniversary of the Closing Date and will be converted into shares of Common Stock at a conversion price equal to the Floor Price as of the date hereof and (z) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes). Upon issuance or conversion in accordance with the Notes, the Conversion Shares when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and issuance by the Company of the PIPE Securities is exempt from registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the BC Entities and the consummation by the BC Entities of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the Conversion Shares and the reservation for issuance of the Conversion Shares) will not (i) result in a violation of the Org Docs (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of any BC Entity, or any capital stock or other securities of any BC Entity, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which any BC Entity is a party (including, without limitation, the Merger Agreement) except as set forth on of Schedule 3(d)(ii), or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws except as set forth on Schedule 3(d)(iii) and regulations and the rules and regulations of the Eligible Market (as defined below) that the Common Stock is trading on the first Trading Day after the Initial Closing Date (the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations) applicable to any BC Entity or by which any property or asset of any BC Entity is bound or affected.
(e) Consents. Except as set forth on Schedule 3(e), no BC Entity is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than the Required Approvals), any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which any BC Entity is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the applicable Closing Date, and no BC Entity is aware of any facts or circumstances which might prevent any BC Entity from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company, as of the Initial Closing Date, has satisfied all of the initial listing requirements the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
(f) Acknowledgment Regarding Buyer’s Purchase of PIPE Securities. Each BC Party acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of any BC Entity, (ii) an “affiliate” (as defined in Rule 144) of any BC Entity or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)). Each BC Party further acknowledges that no Buyer is acting as a financial advisor or fiduciary of any BC Entity (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the PIPE Securities. Each BC Party further represents to each Buyer that each BC Entity’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by such BC Entity and its representatives.
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(g) No General Solicitation; Capital Markets Advisor’s Fees. No BC Entity nor any of their respective affiliates, nor any Person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The BC Parties shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation, capital markets advisory fees payable to Bluerock Capital Markets, LLC, as capital markets advisor (the “Capital Markets Advisor”) in connection with the sale of the Securities. The fees and expenses of the Capital Markets Advisor to be paid by any of the BC Entities are as set forth on Schedule 3(g). The BC Parties shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. Each BC Party acknowledges that it has engaged the Capital Markets Advisor in connection with the sale of the Securities. Other than the Capital Markets Advisor, no BC Entity has engaged any placement agent or other agent in connection with the offer or sale of the Securities.
(h) No Integrated Offering. Except as set forth on Schedule 3(h), no BC Entity nor any of their respective affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the PIPE Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the PIPE Securities to require approval of stockholders of the Company for purposes of the 1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the Principal Market or any other exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation. No BC Entity, their respective affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the issuance of any of the PIPE Securities under the 1933 Act or cause the offering of any of the PIPE Securities to be integrated with other offerings of securities of the Company.
(i) Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares will increase in certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms of the Notes in accordance with this Agreement and the Notes are, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.
(j) Application of Takeover Protections; Rights Agreement. Each BC Party and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including, without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision under the Org Docs or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.
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(k) SEC Documents; Financial Statements. Since December 10, 2025, the Company has timely filed (or obtained extensions in respect thereof and filed within the applicable grace period) all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to such applicable Representation Date and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments, which will not be material, either individually or in the aggregate). The reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the Company on such applicable Representation Date and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents (including, without limitation, information referred to in Section 2(e) of this Agreement or in the disclosure schedules to this Agreement (as modified or supplemented as of each Closing Date, the “Disclosure Schedules”)) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financial Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of the Financial Statements.
(l) Absence of Certain Changes. Except as set forth on Schedule 3(l), since the date of the Company’s most recent audited financial statements contained in a Form 10-K and except as set forth in the SEC Documents, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of any BC Entity. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K and except as set forth in the SEC Documents, no BC Entity has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. No BC Entity has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does any BC Entity have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The BC Entities, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at such Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means, (i) with respect to the BC Entities, on a consolidated basis, (A) the present fair saleable value of the BC Entities’ assets is less than the amount required to pay the BC Entities’ total Indebtedness (as defined below), (B) the BC Entities are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the BC Entities intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect to each BC Entity, individually, (A) the present fair saleable value of such BC Entity’s assets is less than the amount required to pay its respective total Indebtedness, (B) such BC Entity is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) such BC Entity intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. No BC Entity has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which such BC Entity’s remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
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(m) No Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Documents or on Schedule 3(m), no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to any BC Entity or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(n) Conduct of Business; Regulatory Permits. Except as set forth on Schedule 3(n)(i), no BC Entity is in violation of any term of or in default under its Org Docs, any certificate of designation, preferences or rights of any other outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws (as defined below) or their organizational charter, certificate of formation, memorandum of association, articles of association, Org Docs or certificate of incorporation or bylaws, respectively. Except as set forth on Schedule 3(n)(ii), no BC Entity is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to any BC Entity and no BC Entity will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. Since December 10, 2025, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. Except as set forth on Schedule 3(n)(iii), each BC Entity possesses all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct its business, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and no BC Entity has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. Except as set forth on Schedule 3(n)(iv), there is no agreement, commitment, judgment, injunction, order or decree binding upon any BC Entity or to which any BC Entity is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of any BC Entity, any acquisition of property by any BC Entity or the conduct of business by any BC Entity as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect any BC Entity.
(o) Foreign Corrupt Practices. Neither any BC Entity nor any director, officer, agent, employee, nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of:
(i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting any BC Entity in obtaining or retaining business for or with, or directing business to, any BC Entity.
(p) Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
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(q) Transactions With Affiliates. Except as set forth on Schedule 3(q) or as disclosed in the SEC Documents, no current or former employee, partner, director, officer or stockholder (direct or indirect) of any BC Entity, or any associate, or, to the knowledge of the BC Parties, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction with any BC Entity (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or stockholder or such associate or affiliate or relative (other than for ordinary course services as employees, officers or directors of any BC Entity)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of any BC Entity (except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through an Eligible Market (as defined in the Notes)), nor does any such Person receive income from any source other than the BC Entities which relates to the business of the BC Entities or should properly accrue to the BC Entities. No employee, officer, stockholder or director of any BC Entity or member of his or her immediate family is indebted to any BC Entity, as the case may be, nor is any BC Entity indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of a BC Party, and (iii) for other standard employee benefits made generally available to all employees or executives (including stock option agreements outstanding under any stock option plan approved by the board of directors of such applicable BC Party).
(r) Equity Capitalization.
(i) Definitions:
(A) “Common Stock” means (I) prior to the Domestication, the Company’s Class A Ordinary Shares or (II) after the Domestication (x) the Company’s shares of common stock, $0.0001 par value per share, and (y) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(B) “Preferred Stock” means, after giving effect to the Domestication, (x) the Company’s blank check preferred stock, $0.0001 par value per share, the terms of which may be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).
(ii) Authorized and Outstanding Capital Stock. As of the date hereof, and as otherwise set forth on Schedule 3(r)(ii), the share capital of the Company is $55,500 divided into (A) 500,000,000 shares of Class A Common Stock, of which, 17,250,000 are issued and outstanding, and 16,000,000 shares are reserved for issuance pursuant to Common Stock Equivalents (as defined below) (other than the Notes) exercisable or exchangeable for, or convertible into, shares of Common Stock, (B) 50,000,000 shares of Class B Common Stock, of which 5,750,000 are issued and outstanding, and (C) 5,000,000 shares of Preferred Stock, none of which are issued and outstanding. No shares of Common Stock are held in the treasury of the Company. “Common Stock Equivalents” means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.
(iii) Valid Issuance; Available Shares; Affiliates. All of outstanding shares of Common Stock have been duly authorized and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Schedule 3(r)(iii) sets forth the number of shares of Common Stock that are (A) as of such applicable Representation Date, reserved for issuance pursuant to Common Stock Equivalents (other than the Notes) and (B) that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, except as disclosed in the SEC Documents, no Person owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that all Common Stock Equivalents, whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal securities laws).
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(iv) Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of the Company’s or any Subsidiary’s assets, shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Merger Agreement and the Registration Rights Agreement); (D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(v) Organizational Documents. The Company has furnished to the Buyers true, correct and complete copies of the organization documents (the “Org Docs”) of the Company in effect as of such date of determination, including, without limitation, (x) prior to the Domestication, the Articles of Association and Memorandum of Association of the Company and (y) on or after the Domestication, the Company’s Certificate of Incorporation, as amended and as in effect on the date thereof (the “Certificate of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date thereof (the “Bylaws”), and the terms of all Common Stock Equivalents and the material rights of the holders thereof in respect thereto.
(s) Indebtedness and Other Contracts. No BC Entity, except as set forth on Schedule 3(s), (i) has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of any BC Entity or by which any BC Entity is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing obligations in any amounts filed in connection with any BC Entity; (iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness (as defined below), except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of each BC Party’s officers, has or is expected to have a Material Adverse Effect. No BC Entity has any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents and/or on Schedule 3(s), other than those incurred in the ordinary course of such BC Entity’s business and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations (as defined below) in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
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(t) Litigation. Except as set forth in the SEC Documents or as set forth on Schedule 3(t), there is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of each BC Party, threatened against or affecting any BC Entity, the Common Stock or any of the BC Entities’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, which could result in a judgment for the payment of money aggregating in excess of $1,500,000. No director, officer or employee of any BC Entity has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge of each BC Party, there is not pending or contemplated, any investigation by the SEC involving any BC Entity or any current or former director or officer of any BC Entity. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. After reasonable inquiry of its employees, neither BC Party is aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. No BC Entity is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity.
(u) Insurance. Except as set forth on Schedule 3(u), each BC Entity is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of such BC Party believes to be prudent and customary in the businesses in which such BC Party and its Subsidiaries are engaged. No BC Entity has been refused any insurance coverage sought or applied for, and no BC Entity has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
(v) Employee Relations. Except as set forth on Schedule 3(v)(i), no BC Entity is a party to any collective bargaining agreement or employs any member of a union. Each BC Entity believes that its relations with its employees are good. Except as set forth on Schedule 3(v)(ii), no executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of any BC Entity has notified any BC Entity that such officer intends to leave such BC Entity or otherwise terminate such officer’s employment with such BC Entity, other than in connection with the closing of the Business Combination. Except as set forth on Schedule 3(v)(iii), no current (or former) executive officer or other key employee of any BC Entity is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may be) does not subject any BC Entity to any liability with respect to any of the foregoing matters. Except as set forth on Schedule 3(v)(iv), each BC Entity is in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(w) Title.
(i) Real Property. Except as set forth on Schedule 3(w)(i), each of the BC Entities holds good title to all real property, leases in real property, facilities or other interests in real property owned or held by such BC Entity (the “Real Property”). The Real Property is free and clear of all Liens and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Any Real Property held under lease by any BC Entity is held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by any of the BC Entities.
(ii) Fixtures and Equipment. Except as set forth on Schedule 3(w)(ii), each BC Entity has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by such BC Entity in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the such BC Entity’s business in the manner as conducted prior to such Closing. Each of the BC Entities owns all of its Fixtures and Equipment free and clear of all Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.
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(x) Intellectual Property Rights. Each BC Entity owns or possesses adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct its businesses as now conducted and presently proposed to be conducted. Each of the patents owned by any of the BC Entities is listed on Schedule 3(x)(i). Except as set forth in Schedule 3(x)(ii), none of the BC Parties’ Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three years from the date of this Agreement. No BC Entity has any knowledge of any infringement by any BC Entity of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the BC Entities, being threatened, against any BC Entities regarding its Intellectual Property Rights, except as disclosed in the SEC Documents. No BC Entity is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. Each BC Entity has taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(y) Environmental Laws. (i) Each BC Entity (A) is in compliance with any and all Environmental Laws (as defined below), (B) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (C) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii) No Hazardous Materials:
(1) have been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental Laws; or
(2) are present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation of any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates any Environmental Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
(iii) Neither the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iv) None of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”) list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
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(z) Subsidiary Rights. Except as set forth on Schedule 3(z), each BC Party or one of its respective Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by such BC Party or such Subsidiary.
(aa) Tax Status. Except as set forth on Schedule 3(aa), each BC Entity (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the BC Entities know of no basis for any such claim.
(bb) Internal Accounting and Disclosure Controls. Each BC Entity maintains (or, with respect to entities that will first become Subsidiaries upon consummation of the Business Combination, will maintain as of the Initial Closing Date) internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains (or, with respect to the period following consummation of the Business Combination, will maintain as of the Initial Closing Date) disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. No BC Entity has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of any BC Entity, except as disclosed in the SEC Documents.
(cc) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between any BC Entity and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings or by the Target in the Target Financial Statements (as defined below) and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect. “Target Financial Statements” means the financial statements of the Target and its Subsidiaries included in or delivered pursuant to the Transaction Documents, the Merger Agreement and/or in the SEC Documents.
(dd) Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
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(ee) Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) each Buyer may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion or exchange, as applicable, of the Securities as and when required pursuant to the Transaction Documents for purposes of effecting trading in the Common Stock of the Company. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Initial 8-K Filing (as defined below) one or more Buyers may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Conversion Shares deliverable with respect to the Securities are being determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing stockholders’ equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes or any other Transaction Document or any of the documents executed in connection herewith or therewith.
(ff) Manipulation of Price. No BC Entity has, and, to the knowledge of each BC Party, no Person acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other than the Capital Markets Advisor), (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
(gg) U.S. Real Property Holding Corporation. No BC Party is, or has ever been, and so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended (the “Code”), and each of the BC Parties shall so certify upon any Buyer’s request.
(hh) Registration Eligibility. Except as set for on Schedule 3(hh), the Company is eligible to register the Registrable Securities (defined in the Registration Rights Agreement) for resale by the Buyers using Form S-1 promulgated under the 1933 Act.
(ii) Transfer Taxes. On each Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
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(jj) Bank Holding Company Act; Regulation T, U or X.
(i) No BC Entity is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System of the United States (the “Federal Reserve”). No BC Entity nor any of their respective affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. No BC Entity nor any of their respective affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(ii) The sale of the Notes, the use of proceeds thereof and the other transactions contemplated thereby or by the other Transaction Documents, will not violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System of the United States.
(kk) Illegal or Unauthorized Payments; Political Contributions. No BC Entity nor, to the best of such BC Entity’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of any BC Entity or any other business entity or enterprise with which any BC Entity is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of any BC Entity.
(ll) Money Laundering. Each BC Entity in compliance with, and has not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
(mm) Management. Except as set forth in Schedule 3(mm) hereto, during the past five-year period, no current or former officer or director or, to the knowledge of each BC Party, no current ten percent (10%) or greater stockholder of any BC Entity has been the subject of:
(i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);
(iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
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(2) Engaging in any particular type of business practice; or
(3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;
(v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(nn) Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(oo) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the BC Parties to arise, between any BC Party and the accountants and lawyers formerly or presently employed by such BC Party and each BC Party is current with respect to any fees owed to its accountants and lawyers which could affect such BC Party’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC or otherwise prepared. Except as set forth on Schedule 3(oo), based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(pp) No Disqualification Events. With respect to PIPE Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(qq) Other Covered Persons. The Company is not aware of any Person (other than the Capital Markets Advisor) that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.
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(rr) No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
(ss) Public Utility Holding Act. None of BC Entities is a “holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(tt) Federal Power Act. No BC Entity is subject to regulation as a “public utility” under the Federal Power Act, as amended.
(uu) Ranking of Notes. Other than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in the Notes), if any, no Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in right of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.
(vv) Cybersecurity. Each BC Entity’s information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the BC Entities as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants that would reasonably be expected to have a Material Adverse Effect on the either BC Party’s business. Each BC Entity has implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data” means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person or such, nor any incidents under internal review or investigations relating to the same except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Each BC Entity is presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(ww) Compliance with Data Privacy Laws. Each BC Entity is, and at all prior times were, in compliance with all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and each BC Entity has taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”) except in each case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. To ensure compliance with the Privacy Laws, each BC Entity has in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). Each BC Entity has at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of each of the BC Parties, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. Each BC Party further certifies that no BC Entity: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
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(xx) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents as disclosed in the Initial 8-K Filing, each BC Party confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning any BC Entity, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. Each BC Party understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the BC Entities, their respective businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of any of the BC Entities is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of any BC Entity to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. No event or circumstance has occurred or information exists with respect to any of the BC Entities or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before such applicable Representation Date or announcement by the Company but which has not been so publicly disclosed. The due diligence materials previously provided by or on behalf of the Target to each Buyer (if any) (the “Due Diligence Materials”), have been prepared in a good faith effort by the Target to describe the Target’s present and proposed products, and projected growth of the Target and do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, except that with respect to assumptions, projections and expressions of opinion or predictions contained in the Due Diligence Materials, each BC Party represents only that such assumptions, projections, expressions of opinion and predictions were made in good faith and that the such BC Party believes there is a reasonable basis therefor. Each BC Party acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
4. COVENANTS.
(a) Reasonable Best Efforts. Each Buyer shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 6 of this Agreement. Each BC Party shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Form D and Blue Sky. The Company shall file a Form D with respect to the PIPE Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before each Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the PIPE Securities for sale to the Buyers at the applicable Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to each Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and each BC Party shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Buyers.
(c) Reporting Status. Until the later of (x) the Additional Closing Expiration Date and (y) the date on which the Buyers no longer hold Registrable Securities (the “Reporting Period”), the Company shall timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from the sale of the PIPE Securities for general corporate purposes, but not, directly or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding litigation.
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(e) Financial Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its periodic reports on Form 10-K, Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K, and any registration statements (other than a registration statement on Form S-4 with respect to the Business Combination, a registration statement on Form S-8, or such supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement (as defined below))), (ii) unless the following are either filed with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof, e-mail copies of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.
(f) Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).
(g) Fees. The Company shall reimburse the lead Buyer (i) on the date hereof, a non-accountable amount of $75,000 for the transaction fees and expenses of the lead Buyer, (ii) at the Initial Closing a non-accountable amount of $235,000 for the transaction fees and expenses of the lead Buyer, and (iii) at each Additional Closing, an aggregate amount of $45,000, consisting of (x) a non-accountable amount of $35,000 for the fees and expenses of Kelley Drye & Warren LLP and (y) a non-accountable amount of $10,000 for the fees and expenses of Blank Rome LLP, in each case, for all costs and expenses incurred by it or its affiliates in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including, without limitation, as applicable, all legal fees of outside counsel and disbursements of Kelley Drye & Warren LLP and Blank Rome LLP, any other reasonable fees and expenses in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection therewith) (the “Transaction Expenses”) and shall be withheld by the lead Buyer from its applicable Purchase Price at the applicable Closing, and with respect to the Initial Closing, less $25,000 previously paid by the Company to any such Buyer; provided, that the Company shall promptly reimburse Kelley Drye & Warren LLP and Blank Rome LLP on demand for all Transaction Expenses not so reimbursed through such withholding at such Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions payable to the Capital Markets Advisor, who is the Company’s sole placement agent in connection with the transactions contemplated by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.
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(h) Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that the Securities may be pledged by an Investor (as defined in the Registration Rights Agreement) in connection with a bona fide margin agreement with a registered broker-dealer or other loan or financing arrangement with an accredited investors as defined in Rule 501(a) of the 1933 Act that is secured by the Securities. Such a pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor (as defined in the Registration Rights Agreement) effecting such a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(g) hereof; provided that an Investor (as defined in the Registration Rights Agreement) and its pledgee shall be required to comply with the provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of PIPE Securities to such pledgee; provided, further, that any such pledgee, upon acquiring the Securities through foreclosure or otherwise, shall only be entitled to registration rights under the Registration Rights Agreement if such pledgee qualifies as a Permitted Transferee (as defined in the Registration Rights Agreement) and complies with the assignment requirements set forth in Section 9 of the Registration Rights Agreement. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.
(i) Disclosure of Transactions and Other Material Information.
(i) Disclosure of Transactions.
(1) Disclosure of Agreement. The Company shall, on or before 9:00 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, issue a press release (the “Initial Press Release”) reasonably acceptable to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:00 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement (and all material schedules to this Agreement), the form of Notes, the form of the BC Warrants, the form of Lock-Up Agreement, the form of Leak-Out Agreements the form of Security Documents, the form of Guaranty, and the form of the Registration Rights Agreement, the “Initial 8-K Filing”). From and after the filing of the Initial 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by any BC Entity or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the Initial 8-K Filing, each BC Party acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between any BC Entity or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(2) Initial Closing. The Company shall, on or before 9:00 a.m., New York time, on the first (1st) Business Day after the Initial Closing Date, issue a press release (the “Initial Closing Press Release”) reasonably acceptable to the Buyers disclosing the fact that the Initial Closing occurred or file a Current Report on Form 8-K (the “Initial Closing 8-K Filing”), reasonably acceptable to the Buyers disclosing the fact that the Initial Closing occurred. From and after the filing of the Initial Closing Press Release or Initial Closing 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the Initial Closing 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
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(3) Additional Closings. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day after the Company delivers to the Buyers participating (or receives from a Buyer electing to participate, as applicable, in such Additional Closing) an Additional Closing Notice, either issue a press release (each, an “Additional Press Release”, and together with the Initial Press Release and the Initial Closing Press Release, the “Press Releases”) or file a Current Report on Form 8-K (each, an “Additional 8-K Filing”, and together with the Initial 8-K Filing and the Initial Closing 8-K Filing, the “8-K Filings”), in each case reasonably acceptable to such Buyer participating in such Additional Closing, disclosing that “an institutional investor” has elected to deliver an Additional Closing Notice to the Company or the Company and “an institutional investor” has mutually agreed to effect an Additional Closing, as applicable. From and after the filing of the Additional Press Release or Additional 8-K Filing, solely to the extent such Additional Closing Notice constitutes material non-public information (as specified by the Company in such applicable Additional Closing Notice), the Company shall have disclosed all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the Additional 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii) Limitations on Disclosure. No BC Party shall, and the BC Parties shall cause each BC Entity and each of its and their respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding any BC Entity from and after the date hereof without the express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenant, including, without limitation, Section 4(o) of this Agreement, or any of the covenants or agreements contained in any other Transaction Document, by any BC Entity, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the prior approval by any BC Entity, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to any BC Entity, or any of its or their respective officers, directors, employees, affiliates, stockholders or agents, for any such disclosure. To the extent that any BC Entity delivers any material, non-public information to a Buyer without such Buyer’s consent, each BC Party hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the BC Entities nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Releases, any press releases or SEC filings regarding the Business Combination, and any press release or other public disclosure with respect to the transactions contemplated under this Agreement (i) in substantial conformity with the 8-K Filings and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise, except as required by law. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, each BC Party expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding agreement executed by the applicable BC Party and such particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material, non-public information regarding any BC Entity.
(j) Additional Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration Statement is not effective or the prospectus contained therein is not available for use or any Current Public Information Failure (as defined in the Registration Rights Agreement) exists, the Company shall not file a registration statement or an offering statement under the 1933 Act relating to securities that are not the Registrable Securities (other than a registration statement on Form S-4 with respect to the Business Combination, any other registration statement on Form S-4, any registration statement on Form S-8, or any supplements or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement)). “Applicable Date” means the earlier of (x) the first date on which the resale by the Buyers of all the Registrable Securities required to be filed on the initial Registration Statement (as defined in the Registration Rights Agreement) pursuant to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such date) or (y) the first date on which all of the Registrable Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or, if a Current Public Information Failure has occurred and is continuing, such later date after which the Company has cured such Current Public Information Failure).
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(k) Additional Issuance of Securities. So long as any Buyer beneficially owns any Securities, the Company will not, without the prior written consent of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company shall not issue any other securities that would cause a breach or default under the Notes or the BC Warrants. The Company agrees that for the period commencing on the date hereof and ending on the date immediately following the 30th Trading Day after the Applicable Date (provided that such period shall be extended by the number of calendar days during such period and any extension thereof contemplated by this proviso on which any Registration Statement is not effective or any prospectus contained therein is not available for use or any Current Public Information Failure exists) (the “Restricted Period”), neither the Company nor any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Common Stock Equivalents, any debt, any preferred stock or any purchase rights) (any such issuance, offer, sale, grant, disposition or announcement (whether occurring during the Restricted Period or at any time thereafter) is referred to as a “Subsequent Placement”). Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of the issuance of (i) shares of Common Stock, standard options to purchase Common Stock or other equity awards to directors, officers, employees, or consultants of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below), provided that (1) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options or issuable upon the vesting and settlement of other equity awards) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 10% of the Common Stock issued and outstanding immediately prior to the date hereof; provided that, to the extent applicable, such amount shall increase in accordance with the Evergreen Provision (as defined below) and (2) the exercise price of any such options is not lowered, none of such options or other equity awards are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options or other equity awards are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Common Stock Equivalents (other than standard options to purchase Common Stock or other equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion, exercise or other method of issuance (as the case may be) of any such Common Stock Equivalent is made solely pursuant to the conversion, exercise or other method of issuance (as the case may be) provisions of such Common Stock Equivalent that were in effect on the date immediately prior to the date of this Agreement, the conversion, exercise or issuance price of any such Common Stock Equivalents (other than standard options to purchase Common Stock or other equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such Common Stock Equivalents (other than standard options to purchase Common Stock or other equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Common Stock Equivalents (other than standard options to purchase Common Stock or other equity awards issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) the Conversion Shares; (iv) shares of Common Stock or Common Stock Equivalents issued in connection with any bona fide strategic or commercial alliances, acquisitions, mergers, licensing arrangements, strategic transactions and strategic partnerships (including, without limitation, joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements) approved by a majority of the disinterested directors of the Company, provided that such shares of Common Stock are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the Restricted Period, provided, further, that (w) the primary purpose of such issuance is not to raise capital, and (x) the purchaser or acquirer or recipient of the securities in such issuance solely consists of either (I) the actual participants in such strategic or commercial alliance, strategic or commercial licensing arrangement or strategic or commercial partnership, (II) the actual owners of such assets or securities acquired in such acquisition or merger or (III) the stockholders, partners, employees, consultants, officers, directors or members of the foregoing Persons, in each case, which is, itself or through its subsidiaries, an operating company or an owner of an asset, in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, and (y) the number or amount of securities issued to such Persons by the Company shall not be disproportionate to each such Person’s actual participation in (or fair market value of the contribution to) such strategic or commercial alliance or strategic or commercial partnership or ownership of such assets or securities to be acquired by the Company, as applicable; (v) shares of Common Stock issued pursuant to any Permitted VRT (as defined below); (vi) the securities to be issued in the Business Combination in accordance with the terms of the Merger Agreement; (vii) the BC Securities; and (viii) shares of Common Stock issued in a Permitted PIPE (as defined below) on or prior to the Business Combination Closing Date with an aggregate purchase price not to exceed $20 million in gross purchase price (each of the foregoing in clauses (i) through (viii), collectively the “Excluded Securities”). For purposes of this Agreement, (i) “Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock or other equity awards may be issued to any employee, consultant. officer or director for services provided to the Company in their capacity as such; (ii) “Evergreen Provision” means the provision in the Approved Stock Plan that provides for an annual automatic increase pursuant to which, on the first day of each fiscal year of the Company beginning in 2028 and ending on (and including) the eighth (8th) anniversary of the Business Combination Closing Date, the number of shares of Common Stock reserved for issuance under the Approved Stock Plan shall automatically increase by a number of shares equal to the lesser of (x) 5% of the total number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year, (y) 4,500,000 shares of Common Stock, and (z) such lesser number of shares as determined by the board of directors of the Company; and (iii) “Permitted PIPE” means an offering by the Company of (x) ordinary shares at a fixed purchase price at or above $6.00 per share to investors in connection with the Business Combination and (y) securities pursuant to those certain equity subscription agreements entered into on the date hereof by and between the BC Parties and the subscribers thereto in the form of Exhibit F hereof, together with any additional equity subscription agreements entered into to the Closing in substantially the same form (collectively, the “Equity PIPE Subscription Agreements”); provided that the aggregate value of Non-Redeemed Shares (as such term is defined in the Equity PIPE Subscription Agreements) thereunder shall not exceed $10 million without the consent of the Required Holders; and any warrants issued in connection the Equity PIPE Subscription Agreements shall be in the form of the Company’s existing public warrants.
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(l) Reservation of Shares. Until the later of (x) Additional Closing Expiration Date and (y) such date no Notes remain outstanding (the “Covenant Defeasance Date”) and the date no BC Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of (i) the maximum number of Conversion Shares issuable upon conversion of the Notes then outstanding (assuming for purposes hereof that (w) all Additional Notes issuable hereunder shall have been issued at an Additional Closing on the Initial Closing Date, (x) the Notes are convertible at the Floor Price as of such applicable date of determination, (y) interest on the Notes shall accrue through the third anniversary of the Closing Date and will be converted in shares of Common Stock at a conversion price equal to the Floor Price as of such applicable date of determination and (z) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes) and (ii) the maximum number of BC Warrant Shares issuable upon exercise of all the BC Warrants then outstanding (without regard to any limitations on the exercise of the BC Warrants set forth therein) (collectively, the “Required Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 4(l) be reduced other than proportionally in connection with any conversion, exercise and/or redemption, as applicable, of Notes and BC Warrants. Without limiting the foregoing, the Company shall ensure that the certificate of incorporation of the Company filed with the Secretary of State of the State of Delaware in connection with the Domestication authorizes a sufficient number of shares of Common Stock to satisfy the Required Reserve Amount. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.
(m) Conduct of Business. The business of the BC Entities shall not be conducted in violation of any applicable law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.
(n) Other Notes; Variable Securities. Until the Covenant Defeasance Date, each of the BC Entities shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction (other than a Permitted VRT (as defined below)). “Variable Rate Transaction” means a transaction in which any BC Entity (i) issues or sells any Common Stock Equivalents either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Common Stock Equivalents, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Common Stock Equivalents or upon the occurrence of specified or contingent events directly or indirectly related to the business of one or more BC Entities or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any agreement (including, without limitation, an equity line of credit or an “at-the-market” offering) whereby one or more BC Entities may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights). Each Buyer shall be entitled to obtain injunctive relief against any BC Entity to preclude any such issuance, which remedy shall be in addition to any right to collect damages. “Permitted VRT” means an at-the-market offering with a FINRA registered broker-dealer, which (x) is not available for issuances by any BC Entity until after the Applicable Date and (y) does not result in issuances, directly or indirectly, of securities of any BC Entity on any given Trading Day, in the aggregate, in excess of 5% of the aggregate daily dollar trading volume (as reported on Bloomberg, LP) of the Common Stock on the Principal Market on such Trading Day (or such greater percentage as permitted by the Required Holders in writing, which may be one or more e-mails).
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(o) Participation Right. At any time on or prior to the later of (i) the Additional Closing Expiration Date and (ii) the second anniversary of the later of (x) the Initial Closing Date (or, if later, the date no Notes remain outstanding) and (y) the last Additional Closing Date hereunder, no BC Entity shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4(o). The Company acknowledges and agrees that the right set forth in this Section 4(o) is a right granted by each BC Entity (or, if after the Business Combination, the Company)(as applicable, the “Participation Grantor”), separately, to each Buyer.
(i) At least five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Participation Grantor shall deliver to each Buyer a written notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation, material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains material, non-public information, a statement asking whether the Investor is willing to accept material non-public information or (B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement that the Participation Grantor proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute material, non-public information and (z) a statement informing such Buyer that it is entitled to receive an Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request. Upon the written request of a Buyer within three (3) Trading Days after the Participation Grantor’s delivery to such Buyer of such Pre-Notice, and only upon a written request by such Buyer, the Participation Grantor shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (D) offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro rata portion of 9.9% of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the right to subscribe for under this Section 4(o) shall be (x) based on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes purchased hereunder by all Buyers (the “Basic Amount”), and (y) with respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”), which process shall be repeated until each Buyer shall have an opportunity to subscribe for any remaining Undersubscription Amount.
(ii) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Participation Grantor prior to the end of the fifth (5th) Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Participation Grantor to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Participation Grantor desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Participation Grantor may deliver to each Buyer a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Buyer’s receipt of such new Offer Notice.
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(iii) The Participation Grantor shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Participation Grantor than those set forth in the Offer Notice and (B) to publicly announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.
(iv) In the event the Participation Grantor shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(o)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw its Notice of Acceptance or reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Participation Grantor actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(o) prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Participation Grantor may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Buyers in accordance with Section 4(o)(i) above.
(v) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from the Participation Grantor, and the Participation Grantor shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance, as reduced pursuant to Section 4(o)(iv) above if such Buyer has so elected, upon the terms and conditions specified in the Offer. The purchase by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Participation Grantor and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to such Buyer and its counsel.
(vi) Any Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(o) may not be issued, sold or exchanged until they are again offered to such Buyer under the procedures specified in this Agreement.
(vii) The Participation Grantor and each Buyer agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”) shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities of the Participation Grantor or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, any agreement previously entered into with the Participation Grantor or any instrument received from the Participation Grantor, and (y) any registration rights set forth in such Subsequent Placement Documents shall be similar in all material respects to the registration rights contained in the Registration Rights Agreement.
(viii) Notwithstanding anything to the contrary in this Section 4(o) and unless otherwise agreed to by such Buyer, the Participation Grantor shall either confirm in writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not be in possession of any material, non-public information with respect to the Participation Grantor or any of its Subsidiaries. Should the Participation Grantor decide to pursue such transaction with respect to the Offered Securities, the Participation Grantor shall provide such Buyer with another Offer Notice and such Buyer will again have the right of participation set forth in this Section 4(o). The Participation Grantor shall not be permitted to deliver more than one such Offer Notice to such Buyer in any sixty (60) day period, except as expressly contemplated by the last sentence of Section 4(o)(ii).
(ix) The restrictions contained in this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities. The Participation Grantor shall not circumvent the provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not provided to all.
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(p) Dilutive Issuances. For so long as any Notes or BC Warrants remain outstanding, the Company shall not, in any manner, enter into or affect any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Notes or exercise of any BC Warrant any shares of Common Stock in excess of that number of shares of Common Stock which the Company may issue upon conversion of the Notes and exercise of the BC Warrants without breaching the Company’s obligations under the rules or regulations of the Principal Market.
(q) Passive Foreign Investment Company. From and after the Domestication, the Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the Code.
(r) Restriction on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent of the Buyers.
(s) Corporate Existence. So long as any Buyer beneficially owns any Notes or BC Warrants, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the BC Warrants.
(t) Conversion and Exercise Procedures. Each of the form of Exercise Notice (as defined in the BC Warrants) included in the BC Warrants and the form of Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures required of the Buyers in order to exercise the BC Warrants or convert the Notes. Except as provided in Section 5(d), no additional legal opinion, other information or instructions shall be required of the Buyers to exercise their BC Warrants or convert their Notes. The Company shall honor exercises of the BC Warrants and conversions of the Notes and shall deliver the Conversion Shares and BC Warrant Shares in accordance with the terms, conditions and time periods set forth in the Notes and BC Warrants.
(u) Collateral Agent. Each Buyer hereby (i) appoints [●] as the collateral agent hereunder and under the other Security Documents (in such capacity, the “Collateral Agent”), and (ii) authorizes the Collateral Agent (and its officers, directors, employees and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof. The Collateral Agent shall not have, by reason hereof or any of the other Security Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees or agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or any other Security Document except to the extent caused by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers, directors, employees and agents (collectively, the “Collateral Agent Indemnitees”) from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Holders, and such instructions shall be binding upon all holders of Notes; provided, however, that the Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Collateral Agent, exposes the Collateral Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law. The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
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(v) Successor Collateral Agent.
(i) The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction Documents at any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of Notes. Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses (ii) and (iii) below or as otherwise provided below. If at any time the Collateral Agent (together with its affiliates) beneficially owns less than $100,000 in aggregate principal amount of Notes, the Required Holders may, by written consent, remove the Collateral Agent from all its functions and duties hereunder and under the other Transaction Documents.
(ii) Upon any such notice of resignation or removal, the Required Holders shall appoint a successor collateral agent. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall be discharged from its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s resignation or removal hereunder as the collateral agent, the provisions of this Section 4(v) shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction Documents.
(iii) If a successor collateral agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice of resignation or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral Agent until such time, if any, as the Required Holders appoint a successor collateral agent as provided above.
(iv) In the event that a successor Collateral Agent is appointed pursuant to the provisions of this Section 4(v) that is not a Buyer or an affiliate of any Buyer (or the Required Holders or the Collateral Agent (or its successor), as applicable, notify the Company that they or it wants to appoint such a successor Collateral Agent pursuant to the terms of this Section 4(v)), the Company and each Subsidiary thereof covenants and agrees to promptly take all actions reasonably requested by the Required Holders or the Collateral Agent (or its successor), as applicable, from time to time, to secure a successor Collateral Agent satisfactory to the requesting part(y)(ies), in their sole discretion, including, without limitation, by paying all reasonable and customary fees and expenses of such successor Collateral Agent, by having the Company and each Subsidiary thereof agree to indemnify any successor Collateral Agent pursuant to reasonable and customary terms and by each of the Company and each Subsidiary thereof executing a collateral agency agreement or similar agreement and/or any amendment to the Security Documents reasonably requested or required by the successor Collateral Agent.
(w) Regulation M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Securities contemplated hereby.
(x) General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of the Company or such affiliate, including the Capital Markets Advisor, will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
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(y) Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration of the Securities under the 1933 Act or, other than the Stockholder Approval, require stockholder approval under the rules and regulations of the Principal Market, and the Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market with the issuance of Securities contemplated hereby. For the avoidance of doubt, nothing in this Section 4(y) shall relieve the Company of its obligation to obtain the Stockholder Approval pursuant to Section 4(bb) hereof.
(z) Notice of Disqualification Events. The Company will notify the Buyers in writing, prior to each Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.
(aa) Subsidiary Guarantee. For so long as any Notes remain outstanding:
(i) upon any entity becoming a direct, or indirect, domestic Subsidiary of the Company organized under the laws of the United States, any state thereof or the District of Columbia, the Company shall cause each such Subsidiary to become party to the Guaranty by executing a joinder to the Guaranty reasonably satisfactory in form and substance to the Required Holders;
(ii) upon any entity becoming a direct, or indirect, foreign Subsidiary of the Company, the Company shall, upon request of the Collateral Agent, cause each such foreign Subsidiary to execute and deliver a Foreign Sub Limited Guaranty, provided that the guarantee obligations of each such foreign Subsidiary shall be limited to the maximum amount that such foreign Subsidiary is permitted to guarantee under applicable local law (including, without limitation, FEMA and applicable RBI regulations and directions, in the case of any Subsidiary organized under the laws of India) without the requirement of obtaining any prior governmental or regulatory approval, and shall be subject to such other limitations as may be required under the applicable local law of the jurisdiction of organization of such foreign Subsidiary;
(iii) the Company shall use its reasonable best efforts to obtain any governmental or regulatory approvals (including, without limitation, any approval of the RBI under the Foreign Exchange Management Act, 1999) required to permit any foreign Subsidiary to guarantee amounts in excess of the limitations described in clause (ii) above, and upon receipt of any such approval, shall promptly cause the applicable foreign Subsidiary to increase its guarantee obligations to the maximum extent then permitted;
(iv) each foreign Subsidiary shall covenant that, for so long as any Notes remain outstanding, such foreign Subsidiary shall not create, incur, assume or permit to exist any Lien on any of its assets or properties (whether now owned or hereafter acquired), except for Permitted Liens, without the prior written consent of the Required Holders (a “Foreign Sub Negative Pledge”); and
(v) notwithstanding clauses (i) through (iv) above, solely to the extent that a Subsidiary incurs any Permitted Acquisition Indebtedness (as defined in the Notes) in connection with a Permitted Acquisition (as defined in the Notes), the Guaranty and the Liens granted to secure such Guaranty with respect to such Subsidiary shall be subordinated to such Permitted Acquisition Indebtedness pursuant to a written agreement in form and substance satisfactory to the Company and the Required Holder.
(bb) Stockholder Approval. Prior to the Initial Closing Date, the Company shall either (x) obtain the prior written consent of the requisite stockholders (the “Stockholder Consent”) to the Stockholder Approval (as defined below) and inform the stockholders of the Company of the receipt of the Stockholder Consent by preparing and filing with the SEC, as promptly as practicable after the date hereof an information statement with respect thereto or (y) hold a special meeting of shareholders (which may also be at the annual meeting of shareholders), as applicable, providing for the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Principal Market (without regard to any limitation on conversion or exercise thereof) (the “Stockholder Approval” and the date thereof, the “Stockholder Approval Date”), with the recommendation of the Company’s Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal.
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(cc) No Waiver of Leak-Out Agreement. Neither Company, nor the Target, shall amend, waive, modify or fail to use best efforts to enforce any provision of the Leak-Out Agreement in any manner more favorable to any Investor than any other Investor. For the avoidance of doubt, no Buyer shall be a third-party beneficiary of any Lock-Up Agreement.
(dd) No Waiver of Lock-Up Agreement. Neither Company, nor the Target, shall amend, waive, modify or fail to use reasonable best efforts to enforce any provision of the Lock-Up Agreement. For the avoidance of doubt, no Buyer shall be a third-party beneficiary of any Lock-Up Agreement.
(ee) Business Combination Agreement Covenants. Until the Closing Date, the Company hereby covenants to each Buyer such covenants set forth in the Merger Agreement as if such covenants were incorporated by reference into this Agreement, mutatis mutandis; provided, however, that any amendment to or any waiver of any covenant shall require the approval of Required Holders.
(ff) Closing Documents. On or prior to fourteen (14) calendar days after each Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.
(gg) Limitation on Short Sales. Each Buyer hereby agrees solely with the Company, severally and not jointly, and not with any other Buyer, at any time such Buyer owns any Notes, other than during any Event of Default Redemption Right Period (as defined in the Notes), as follows:
(i) during the period commencing on the date hereof, through, but not including, the first anniversary of the Business Combination Closing Date, such Buyer shall not execute any sale of Common Stock that is marked as a “short sale” (but not including any sale (x) marked “short exempt”, (y) that is a result of a bona-fide trading error on behalf of such Buyer (or its affiliates) or (z) that would otherwise be marked as a “long” sale, but for the occurrence of a Conversion Failure (as defined in the Notes) or any other breach by the Company (or its affiliates or agents, including, without limitation, the Transfer Agent (as defined below)) of any Transaction Document). For the avoidance of doubt, the foregoing prohibition shall apply whether or not such Buyer has an equivalent offsetting long position in the Common Stock. For purposes of determining whether a sale of Common Stock is “long” pursuant to this Section 4(cc)(i), (A) all Common Stock that is owned by such Buyer shall be deemed held “long” by such Buyer, (B) at any time a Conversion Notice is delivered by such Buyer to the Company, any shares of Common Stock issued or issuable to such Buyer (or its designee, if applicable) in connection therewith shall be deemed held “long” by such Buyer from and after the date of such Conversion Notice until such time as such Buyer shall no longer beneficially own such shares of Common Stock, and (C) at any other time the Company is required (or has elected (or is deemed to have elected)) to issue shares of Common Stock to such Buyer pursuant to the terms of the Notes, any shares of Common Stock issued or issuable to such Buyer (or its designee, if applicable) in connection therewith shall be deemed held “long” by such Buyer from and after the date that is one (1) Trading Day prior to the deadline for delivery of such shares of Common Stock to such Buyer, as set forth in the Notes, until such time as such Buyer shall no longer beneficially own such shares of Common Stock.
(ii) from and after the first anniversary of the Business Combination Closing Date, such Buyer shall not maintain a Net Short Position (as defined below). For purposes hereof, a “Net Short Position” by a person means a position whereby such person has executed one or more sales of Common Stock that is marked as a “short sale” (but not including any sale marked “short exempt”) and that is executed at a time when such Buyer has no equivalent offsetting “long” position in the Common Stock (or is deemed to have a “long” position hereunder or otherwise in accordance with Regulation SHO of the 1934 Act); provided, that, for purposes of such calculations, any short sales either (x) consummated at a price greater than or equal to the Conversion Price (as defined in the Notes), (y) that is a result of a bona-fide trading error on behalf of such Buyer (or its affiliates) or (z) that would otherwise be marked as a “long” sale, but for the occurrence of a Conversion Failure or any other breach by the Company (or its affiliates or agents, including, without limitation, the Transfer Agent (as defined below)) of any Transaction Document, in each case, shall be excluded from such calculations. For purposes of determining whether a Buyer has an equivalent offsetting “long” position in the Common Stock, (A) all Common Stock that is owned by such Buyer shall be deemed held “long” by such Buyer, (B) all Common Stock that would be issuable upon conversion or exercise in full of all Common Stock Equivalents then held by such Buyer (assuming that such Common Stock Equivalents were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any conversion or exercise price adjustments that would take effect given only the passage of time) shall be deemed to be held “long” by such Buyer, and (C) at any other time the Company is required (or has elected (or is deemed to have elected)) to issue shares of Common Stock to such Buyer pursuant to the terms of the Notes, any shares of Common Stock issued or issuable to such Buyer (or its designee, if applicable) in connection therewith shall be deemed held “long” by such Buyer from and after the date that is one (1) Trading Day prior to the deadline for delivery of such shares of Common Stock to such Buyer, as set forth in the Notes, until such time as such Buyer shall no longer beneficially own such shares of Common Stock.
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(iii) For the avoidance of doubt, the parties hereto acknowledge and agree that the purchase and/or sale of options, puts, swaps and/or other derivative securities related to the Company and/or its Common Stock by a Buyer shall be excluded from, and not subject to this Section 4(cc).
5. REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes and the BC Warrants in which the Company shall record the name and address of the Person in whose name the Notes and the BC Warrants have been issued (including the name and address of each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable pursuant to the terms of the Notes, the exercise price of the BC Warrants, and the number of BC Warrant Shares issuable upon exercise of the BC Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.
(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent (as applicable, the “Transfer Agent”) in a form reasonably acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Conversion Shares and the BC Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Notes or the exercise of the BC Warrants (as the case may be). The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion Shares or BC Warrant Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on each Effective Date. Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne by the Company.
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(c) Legends. Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d) Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities is effective under the 1933 Act (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than one (1) Trading Day (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program (“FAST”) and such Securities are Conversion Shares, credit the aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in FAST, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit is so required to be made to the balance account of such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith. The BC Shares shall be issued without any legend and, assuming a cashless exercise of the BC Warrants, no legend shall be required with respect to the BC Warrant Shares issuable upon exercise of the BC Warrants.
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(e) Failure to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause to be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in FAST, a certificate for the number of Conversion Shares or BC Warrant Shares (as the case may be) to which such Buyer is entitled and register such Conversion Shares or BC Warrant Shares (as the case may be) on the Company’s share register or, if the Transfer Agent is participating in FAST, to credit the balance account of such Buyer or such Buyer’s designee with DTC for such number of Conversion Shares or BC Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above or (II) if the Registration Statement covering the resale of the Conversion Shares or BC Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify such Buyer and (y) deliver the Conversion Shares or BC Warrant Shares, as applicable, electronically without any restrictive legend by crediting such aggregate number of Conversion Shares or BC Warrant Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 1% of the product of (A) the sum of the number of shares of Common Stock not issued to such Buyer on or prior to the Required Delivery Date and to which such Buyer is entitled, and (B) any trading price of the Common Stock selected by such Buyer in writing as in effect at any time during the period beginning on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares or BC Warrant Shares (as the case may be) and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver a certificate to a Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, credit the balance account of such Buyer or such Buyer’s designee with DTC for the number of shares of Common Stock to which such Buyer submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs, and if on or after such Trading Day such Buyer acquires (in an open market transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d) above (a “Buy-In”), then the Company shall, within two (2) Trading Days after such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (including, without limitation, by any other Person in respect, or on behalf, of the holder) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to such Buyer a certificate or certificates or credit the balance account of such Buyer or such Buyer’s designee with DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Conversion Shares or BC Warrant Shares (as the case may be) that the Company was required to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Notes) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares or BC Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyer’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 certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure, as applicable, pursuant to the analogous sections of the Note or BC Warrant, as applicable, held by such Buyer.
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(f) FAST Compliance. While any Notes or BC Warrants remain outstanding, the Company shall maintain a transfer agent that participates in FAST.
6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
(a) The obligation of the Company hereunder to issue and sell the Initial Notes to each Buyer at the Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer shall have properly completed, executed and delivered the accredited investor status certificate in the form attached hereto as Exhibit G (the “Accredited Investor Status Certificate”).
(iii) Such Buyer and each other Buyer shall have delivered to the Company the Initial Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) for the Initial Note being purchased by such Buyer at the Initial Closing by wire transfer of immediately available funds in accordance with the Initial Flow of Funds Letter.
(iv) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Initial Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Initial Closing Date.
(v) Each Buyer shall have duly executed and delivered to the Company the leak-out agreement in the form attached hereto as Exhibit H (each, a “Leak-Out Agreement”).
(b) The obligation of the Company hereunder to issue and sell the Additional Notes to each Buyer at each Additional Closing is subject to the satisfaction, at or before the applicable Additional Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer shall have properly completed, executed and delivered the Accredited Investor Status Certificate in the form attached hereto as Exhibit G.
(iii) Such Buyer and each other Buyer shall have delivered to the Company the Additional Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g)) for the Additional Note being purchased by such Buyer at the Additional Closing by wire transfer of immediately available funds in accordance with the Additional Flow of Funds Letter.
(iv) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Additional Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Additional Closing Date.
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7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a) The obligation of each Buyer hereunder to purchase its Initial Note at the Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer an Initial Note in such original principal amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers, as being purchased by such Buyer at the Initial Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of Fox Rothschild LLP, the Company’s counsel, dated as of the Initial Closing Date, in the form acceptable to such Buyer.
(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in form and substance reasonably acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent and shall remain in full force and effect as of such Initial Closing Date.
(iv) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Initial Closing Date.
(v) The Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of the Initial Closing Date.
(vi) The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Delaware Secretary of State within ten (10) days of the Initial Closing Date.
(vii) Each Subsidiary shall have delivered to such Buyer a certified copy of its Certificate of Incorporation (or such equivalent organizational document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation within ten (10) days of the Initial Closing Date.
(viii) The Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the Company and each Subsidiary and dated as of the Initial Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s and each Subsidiary’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company and the organizational documents of each Subsidiary and (iii) the Bylaws of the Company and the bylaws of each Subsidiary, each as in effect at the Initial Closing.
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(ix) Each and every representation and warranty of each BC Party shall be true and correct in all material respects (except for representations and warranties qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Initial Closing Date, as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date). Each BC Party shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by such BC Party at or prior to the Initial Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of each BC Party, dated as of the Initial Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(x) The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on the Initial Closing Date immediately prior to the Initial Closing.
(xi) The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of the Initial Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Initial Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(xii) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities, including without limitation, those required by the Principal Market, if any.
(xiii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(xiv) Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material Adverse Effect.
(xv) The Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Initial Conversion Shares.
(xvi) In accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original certificates (I) representing the Subsidiaries’ shares of capital stock to the extent such subsidiary is a corporation or otherwise has certificated equity and (II) representing all other equity interests and all promissory notes required to be pledged thereunder, in each case, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer and (B) appropriate financing statements on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Document.
(xvii) Within two (2) Business Days prior to the Initial Closing, the Company shall have delivered or caused to be delivered to each Buyer and the Collateral Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing statements which name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be created by the Security Agreement, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Collateral Agent, shall cover any of the Collateral (as defined in the Security Agreement), and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent and the Buyers, shall not show any such Liens; and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries, in form and substance satisfactory to the Buyers (the “Perfection Certificate”).
(xviii) The Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of its Subsidiaries, together with the original stock certificates representing all of the equity interests and all promissory notes required to be pledged thereunder, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer.
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(xix) With respect to the Intellectual Property Rights, if any, of the Company or any of its Subsidiaries, the Company and/or such Subsidiaries, as applicable, shall have duly executed and delivered to such Buyer each Assignment For Security for the Intellectual Property Rights of the Company and its Subsidiaries, in the form attached as Exhibit A to the Security Agreement (the “Intellectual Property Security Agreement”).
(xx) Such Buyer shall have received a letter on the letterhead of the Company (the “Initial Flow of Funds Letter”) duly executed by the Chief Executive Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company.
(xxi) The Company shall have consummated the Business Combination Closing, the Business Combination shall have occurred and the Target Notes shall have been exchanged for the BC Shares and the BC Warrants.
(xxii) As of the Initial Closing Date, the Company and its Subsidiaries, on a consolidated basis, shall have Available Cash (as defined in the Notes), in one or more bank accounts in the United States, each subject to an account control agreement reasonably acceptable to the Collateral Agent, in an aggregate amount equal to or exceeding $8,000,000 after giving effect to (A) the release of funds from the Trust Account, net of any redemptions by the Company’s public stockholders, (B) the payment of all, direct and indirect, transaction expenses of the Company and the Target in connection with the Business Combination and the transactions contemplated by the Transaction Documents and (C) the funding of the Initial Closing hereunder.
(xxiii) The Target and the Company shall each have delivered to such Buyer, lock-up agreements, in the form of Exhibit I hereof (each, a “Lock-Up Agreement”), duly executed and delivered by such stockholders of the Target and/or the Company, as applicable, as listed on Schedule 7(a)(xxiii) attached hereto (the “Lock-Up Stockholders”), pursuant to which (A) each Lock-Up Stockholder shall have agreed not to directly, or indirectly, sell 50% of its securities of the Company held as of the Business Combination Closing (including, without limitation, any securities issued pursuant to the Business Combination Registration Statement) until the seven (7) month anniversary of the Business Combination Closing and (B) each Lock-Up Stockholder shall have agreed not to directly, or indirectly, sell the remaining 50% of its securities of the Company held as of the Business Combination Closing until the twelve (12) month anniversary of the Business Combination Closing; provided that any Lock-Up Stockholder that participates in the PIPE Offering in connection with the Business Combination shall be released from all lock-up restrictions on Common Stock received upon conversion of the Notes and Commitment Shares (as defined in the Equity PIPE Subscription Agreements) upon the six (6) month anniversary of the Business Combination Closing.
(xxiv) Each Buyer shall have duly executed and delivered to the Company a Leak-Out Agreement.
(xxv) The Company and Triplepoint Capital LLC shall have duly executed and delivered a payoff letter with respect to the Loan and Security Agreement dated as of August 1, 2025, in form and substance satisfactory to the Collateral Agent.
(xxvi) The Company shall have obtained the Stockholder Approval and such Stockholder Approval shall be effective and unrevoked as of the Initial Closing Date.
(xxvii) The BC Parties shall have delivered to such Buyer the Disclosure Schedules, with, to the extent applicable, any modifications or supplements thereto as of the Initial Closing Date; provided that (A) such Buyer shall have had a reasonable opportunity to review any such modifications or supplements and (B) such modifications or supplements shall not contain any adverse changes from the Disclosure Schedules delivered on the date hereof.
(xxviii) The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
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(b) The obligation of each Buyer hereunder to purchase its Additional Note at any Additional Closing is subject to the satisfaction, at or before such Additional Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and the Company shall have duly executed and delivered to each applicable Transaction Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer such Additional Note being purchased by such Buyer at such Additional Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of Fox Rothschild LLP, the Company’s counsel, dated as of such Additional Closing Date, in the form acceptable to such Buyer.
(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent and shall remain in full force and effect as of such Additional Closing Date.
(iv) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing (if a good standing concept exists in such jurisdiction) of the Company and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of such Additional Closing Date.
(v) The Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of such Additional Closing Date.
(vi) The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Delaware Secretary of State within ten (10) days of the Additional Closing Date.
(vii) Each Subsidiary shall have delivered to such Buyer a certified copy of its Certificate of Incorporation (or such equivalent organizational document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation within ten (10) days of such Additional Closing Date.
(viii) The Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the Company and each Subsidiary and dated as of such Additional Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s and each Subsidiary’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company and the organizational documents of each Subsidiary and (iii) the Bylaws of the Company and the bylaws of each Subsidiary, each as in effect at such Additional Closing.
(ix) Each and every representation and warranty of the Company shall be true and correct in all material respects (except for representations and warranties qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of such Additional Closing Date, as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to such Additional Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of such Additional Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
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(x) The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding on such Additional Closing Date immediately prior to such Additional Closing.
(xi) The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended, as of such Additional Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of such Additional Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(xii) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities to the Buyer from the Company, including without limitation, those required by the Principal Market, if any.
(xiii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(xiv) Since the date of execution of this Agreement, no event or series of events shall have occurred that has had or would reasonably be expected to have a Material Adverse Effect.
(xv) The Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) such Additional Conversion Shares.
(xvi) In accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original certificates (I) representing the Subsidiaries’ shares of share capital to the extent such subsidiary is a corporation or otherwise has certificated equity and (II) representing all other equity interests and all promissory notes required to be pledged thereunder, in each case, accompanied by undated share powers and allonges executed in blank and other proper instruments of transfer and (B) appropriate financing statements on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Document.
(xvii) Within two (2) Business Days prior to such Additional Closing, the Company shall have delivered or caused to be delivered to each Buyer and the Collateral Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing statements which name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be created by the Security Agreement, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Collateral Agent, shall cover any of the Collateral, and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent and the Buyers, shall not show any such Liens.
(xviii) The Collateral Agent shall have received amended and restated schedules to the Security Agreement, if applicable.
(xix) The Collateral Agent shall have received amended and restated schedules to the Intellectual Property Security Agreement, if applicable.
(xx) Such Buyer shall have received a letter on the letterhead of the Company (the “Additional Flow of Funds Letter”) duly executed by the Chief Financial Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company.
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(xxi) The Company shall have delivered to such Buyer the Disclosure Schedules, with, to the extent applicable, any modifications or supplements thereto as of such Additional Closing Date; provided that (A) such Buyer shall have had a reasonable opportunity to review any such modifications or supplements and (B) such modifications or supplements shall not contain any adverse changes from the Disclosure Schedules delivered on the date hereof.
(xxii) The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION.
In the event that the Initial Closing shall not have occurred with respect to a Buyer on or prior to January 31, 2027 (the “Termination Right Commencement Date”), then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes shall be applicable only to such Buyer providing such written notice; provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents. Notwithstanding anything to the contrary herein, if prior to the Termination Right Commencement Date, (x) the Company shall have filed audited financial statements for the fiscal year ended January 31, 2026 with the SEC and (y) a registration statement on Form S-4 with respect to the Business Combination has been declared effective by the SEC, the Termination Right Commencement Date shall be extended to March 17, 2027.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any provision of law or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each of the BC Parties hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such notices to it under this Agreement 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 manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against any BC Party in any other jurisdiction to collect on any BC Party’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
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(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(c) Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(d) Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
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(e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, any BC Entity, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, any BC Entity prior to the date hereof with respect to any prior investment made by such Buyer in any BC Entity or (ii) waive, alter, modify or amend in any respect any obligations of any BC Entity, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior to the date hereof between or among any BC Entity and any Buyer, or any instruments any Buyer received from any BC Entity prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither any BC Party nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by the BC Parties and the Required Holders (as defined below), and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion); and provided further that the provisions of Sections 4(u) and 4(v) above cannot be amended or waived without the additional prior written approval of the Collateral Agent or its successor. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes or all holders of the BC Warrants (as the case may be). From the date hereof and while any Notes or BC Warrants are outstanding, no BC Entity shall be permitted to receive any consideration from a Buyer or a holder of Notes or BC Warrants that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce any BC Entity (i) to treat such Buyer or holder of Notes or BC Warrants in a manner that is more favorable than to other similarly situated Buyers or holders of Notes or BC Warrants, as applicable, or (ii) to treat any Buyer(s) or holder(s) of Notes or BC Warrants in a manner that is less favorable than the Buyer or holder of Notes or BC Warrants that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably than another Buyer shall disregard any securities of the Company purchased or sold by any Buyer. No BC Entity has, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, each BC Party confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to any BC Entity or otherwise. As a material inducement for each Buyer to enter into this Agreement, each BC Party expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, such BC Party’s representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, such BC Party’s representations and warranties contained in this Agreement or any other Transaction Document. “Required Holders” means (I) prior to the Additional Closing Expiration Date, [●] and (II) on or after the Additional Closing Expiration Closing Date, holders of a majority of the Registrable Securities as of such time (excluding any Registrable Securities held by any BC Entity as of such time) issued or issuable hereunder or pursuant to the Notes (or the Buyers, with respect to any waiver or amendment of Section 4(o)).
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(f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Bluerock Acquisition Corp.
919 Third Avenue
New York, New York 10022
Tel: 212-843-1601
Attn: Jason Emala, Harrison Seideman
E-Mail: [email protected]; [email protected]
With a copy (for informational purposes only) to:
Ashurst Perkins Coie US LLP
1155 Avenue of the Americas
New York, New York 10036
Tel: 212-262-6900
Attn: Elliott M. Smith
Email: [email protected]
If to the Target:
Bitonic Technology Labs Inc. d/b/a Yellow.ai
400 Concar Drive
San Mateo, CA 94402
Tel: 650-850-8480
Attn: Raghavendra K. Ravinutala, Vel Kanniappan
E-Mail: [email protected]; [email protected]; [email protected]
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With a copy (for informational purposes only) to:
Fox Rothschild LLP
101 Park Avenue 17th Floor
New York, NY 10178
Tel: 212-878-7900
Attn: Loren Danzis, Lauren Taylor
E-Mail: [email protected]; [email protected]
If to the Transfer Agent:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
Email: [email protected]; [email protected]
If to a Buyer, to its mailing address and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
with a copy (for informational purposes only) to:
Kelley Drye & Warren LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
Telephone: (212) 808-7540
Attention: Michael A. Adelstein, Esq.
E-mail: [email protected]
and to:
Blank Rome LLP
130 North 18th Street
Philadelphia, PA 19103
Telephone: (215) 569-5701
Attention: Heather Sonnenberg
E-Mail: [email protected]
or to such other mailing address and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP and Blank Rome LLP shall only be provided copies of notices sent to the lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
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(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of any of the Notes and BC Warrants. No BC Party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction (as defined in the BC Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the BC Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of any BC Party, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees (as defined below) referred to in Section 9(k).
(i) Survival. The representations, warranties, agreements and covenants shall survive each Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification.
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of each BC Party’s other obligations under the Transaction Documents, each BC Party, severally, shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by any BC Entity in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of any BC Entity contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of any BC Entity) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the status of such Buyer or holder of the Securities either as an investor in any BC Entity pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by a BC Entity may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
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(l) Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Buyer (or its broker or other financial representative) to effect short sales or similar transactions in the future.
(m) Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, each BC Party recognizes that in the event that it or any BC Entity fails to perform, observe, or discharge any or all of its or such BC Entity’s (as the case may be) obligations under the Transaction Documents, any remedy at law would inadequate relief to the Buyers. Each BC Party therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief).
(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and any BC Entity does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to such applicable BC Entity, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
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(o) Payment Set Aside; Currency. To the extent that a BC Entity makes a payment or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to such BC Entity, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.
(p) Judgment Currency.
(i) If for the purpose of obtaining or enforcing judgment against any BC Entity in connection with this Agreement or any other Transaction Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the date actual payment of the amount due, in the case of any proceeding in the courts of Delaware or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or
(2) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
(ii) If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any amount due from any BC Entity under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
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(q) Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and each BC Party acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity, and no BC Entity shall assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and each BC Party acknowledges that the Buyers are not acting in concert or as a group, and no BC Entity shall assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents. Each BC Party and each Buyer confirms that each Buyer has independently participated with the BC Entities in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the BC Parties, not the action or decision of any Buyer, and was done solely for the convenience of the BC Entities and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between applicable BC Entities and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers collectively and not between and among the Buyers.
(r) Trust Account Waiver. Each Buyer hereby acknowledges that the Company has established a trust account (the “Trust Account”) containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of the Company’s public stockholders and certain other parties (including the underwriters of the IPO). For and in consideration of the Company entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Buyer hereby (a) agrees that it does not now and shall not at any time hereafter have any right, title, interest or claim of any kind in or to any assets held in or distributions from the Trust Account, and shall not make any claim against the Trust Account, with respect to any claim based upon, arising out of, resulting from, in connection with or relating to the Transaction Documents or the transactions contemplated hereby, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”), (b) irrevocably waives any Released Claims that it may have against the Trust Account or distributions therefrom now or in the future as a result of, or arising out of, any negotiations, contracts or agreements with the Company, and (c) will not seek recourse against the Trust Account for any Released Claims. Notwithstanding the foregoing, nothing in this Section 9(r) shall be deemed to limit any Buyer’s right, title, interest or claim to any monies held in or distributions from the Trust Account by virtue of its record or beneficial ownership of any shares of Common Stock acquired in the open market and outstanding on the date hereof (whether acquired by such Buyer prior to, on or after the date hereof), pursuant to a validly exercised redemption right with respect to any such shares of Common Stock, and, for the avoidance of doubt, nothing contained herein shall limit any Buyer’s rights, if any, in respect of the Transaction Documents and the transactions contemplated thereby.
[signature pages follow]
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IN WITNESS WHEREOF, each Buyer, the Target and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| COMPANY: | |||
| BLUEROCK ACQUISITION CORP. | |||
| By: | /s/ Jordan Ruddy | ||
| Name: | Jordan Ruddy | ||
| Title: | President | ||
IN WITNESS WHEREOF, each Buyer, the Target and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| TARGET: | |||
| BITONIC TECHNOLOGY LABS INC. D/B/A YELLOW.AI | |||
| By: | /s/ Raghavendra Kumar Ravinutala | ||
| Name: | Raghavendra Kumar Ravinutala | ||
| Title: | CEO | ||
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer, the Target and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| BUYER: | |||
| [●] | |||
| By: | |||
| Name: | |||
| Title: | |||
[Signature Page to Securities Purchase Agreement]
SCHEDULE OF BUYERS
[Omitted.]
EXHIBIT A
FORM OF NOTE
[FORM OF SENIOR SECURED CONVERTIBLE NOTE]
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 21(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), [ ], A REPRESENTATIVE OF THE COMPANY HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). [ ] MAY BE REACHED AT TELEPHONE NUMBER ( ) - .
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[ ] (f/k/a Bluerock Acquisition Corp.)
Senior Secured Convertible Note
|
Issuance Date: [●] 20__ |
Original Principal Amount: U.S. $[●] |
FOR VALUE RECEIVED, [ ] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation (the “Company”), hereby promises to pay to the order of [BUYER] or its registered assigns (“Holder”) the amount set forth above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date (each as defined below), or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the date set forth above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount due on such Installment Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”) is one of an issue of Senior Secured Convertible Notes issued pursuant to the Securities Purchase Agreement, dated as of [ ], 2026 (the “Subscription Date”), by and among the Company and the investors (the “Buyers”) referred to therein, as amended from time to time (collectively, the “Notes”, and such other Senior Secured Convertible Notes, the “Other Notes”). Certain capitalized terms used herein are defined in Section 34.
1. PAYMENTS OF PRINCIPAL. On each Installment Date, the Company shall pay to the Holder an amount equal to the Installment Amount due on such Installment Date in accordance with Section 8. On the Maturity Date, the Company shall pay to the Holder an amount in cash (excluding any amounts paid in shares of Common Stock on the Maturity Date in accordance with Section 8) representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 27(c)) on such Principal and Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.
2. INTEREST; INTEREST RATE.
(a) Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day months and shall be payable in arrears on the first calendar day of each Fiscal Quarter (each, an “Interest Date”) with the first Interest Date being [ ]. Interest shall be payable on each Interest Date, to the record holder of this Note on the applicable Interest Date, in shares of Common Stock (“Interest Shares”) so long as there has been no Equity Conditions Failure; provided however, that the Company may, at its option following notice to the Holder, pay Interest on any Interest Date in cash (“Cash Interest”), increase the Principal by such Interest outstanding as of such Interest Date (“Capitalized Interest”) or in a combination of Cash Interest, Capitalized Interest and/or Interest Shares. The Company shall deliver a written notice (each, an “Interest Election Notice”) to each holder of the Notes on or prior to the Interest Notice Due Date (the date such notice is delivered to all of the holders, the “Interest Notice Date”) which notice (i) either (A) confirms that Interest to be paid on such Interest Date shall be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest or capitalized as Capitalized Interest or a combination of Cash Interest, Capitalized Interest and/or Interest Shares and specifies the amount of Interest that shall be paid as Cash Interest or capitalized as Capitalized Interest and the amount of Interest, if any, that shall be paid in Interest Shares and (ii) certifies that there has been no Equity Conditions Failure. If an Equity Conditions Failure has occurred as of the Interest Notice Date, then unless the Company has elected to pay such Interest as Cash Interest, the Interest Election Notice shall indicate that unless the Holder waives the Equity Conditions Failure, the Interest shall be capitalized as Capitalized Interest. Notwithstanding anything herein to the contrary, if no Equity Conditions Failure has occurred as of the Interest Notice Date but an Equity Conditions Failure occurs at any time prior to the Interest Date, (A) the Company shall provide the Holder a subsequent notice to that effect and (B) unless the Holder waives the Equity Conditions Failure, the Interest shall be capitalized as Capitalized Interest. Interest to be paid on an Interest Date in Interest Shares shall be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a)) of Common Stock equal to the quotient of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and Capitalized Interest capitalized and (2) the Alternate Conversion Price in effect on the applicable Interest Date.
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(b) When any Interest Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company’s transfer agent (the “Transfer Agent”) is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (“FAST”), credit such aggregate number of Interest Shares to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer Agent is not participating in FAST, issue and deliver on the applicable Interest Date, to the address set forth in the register maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as specified by the Holder in writing to the Company at least two (2) Business Days prior to the applicable Interest Date, a certificate, registered in the name of the Holder or its designee, for the number of Interest Shares to which the Holder shall be entitled and (ii) with respect to each Interest Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of any Cash Interest.
(c) Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i) or upon any redemption in accordance with Section 14 or any required payment upon any Bankruptcy Event of Default. From and after the occurrence and during the continuance of any Event of Default, the Interest Rate in effect with respect to such determination shall automatically be increased to the Default Rate. In the event that such Event of Default is subsequently cured (and no other Event of Default then exists, including, without limitation, for the Company’s failure to pay such Interest at the Default Rate on the applicable Interest Date), the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.
3. CONVERSION OF NOTES. At any time after the Floor Initial Measuring Date, this Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a) Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.
(b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion Amount” means the sum of (A) such portion of the Principal of this Note to be converted, redeemed or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest with respect to such Principal of this Note, (D) accrued and unpaid Late Charges with respect to such Principal of this Note and Interest, and (E) any other unpaid amounts pursuant to the Transaction Documents (as defined in the Securities Purchase Agreement), if any.
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(ii) “Conversion Price” means, as of any Conversion Date or other date of determination, $[ ]1, subject to adjustment as provided herein.
(c) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (each, a “Conversion Notice”) to the Company. If required by Section 3(c)(iii), within one (1) Trading Day following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 21(b)). On the date of receipt of a Conversion Notice, the Company shall transmit by electronic mail an acknowledgment, in the form attached hereto as Exhibit II, of confirmation of receipt of such Conversion Notice and representation as to whether such shares of Common Stock may then be resold pursuant to Rule 144 or an effective and available registration statement (each, an “Acknowledgement”) to the Holder and the Transfer Agent which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. On or before the first (1st) Trading Day following the date on which the Company has received a Conversion Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share Delivery Deadline”), the Company shall (1) provided that the Transfer Agent is participating in FAST, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in FAST, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than one (1) Business Day after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 21(d)) representing the outstanding Principal not converted; provided, that during such period the Holder shall be permitted to convert such new Note regardless of the date the actual certificate evidencing such new Note is delivered to the Holder (or its designee). The Person or Persons entitled to receive the shares of Common Stock (the “Conversion Shares”) issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such Conversion Shares on the Conversion Date; provided, that the Holder shall be deemed to have waived any voting rights of any such Conversion Shares during the period commencing on such Conversion Date, through, and including, such applicable Share Delivery Deadline (each, a “Conversion Period”), as necessary, such that the aggregate voting rights of any shares of Common Stock (including such Conversion Shares) beneficially owned by the Holder and/or any Attribution Parties, collectively, on any such date of determination shall not exceed the Maximum Percentage (as defined below) as a result of any such conversion of this Note. In the event of a partial conversion of this Note pursuant hereto, the Principal amount converted shall be deducted from the Installment Amount(s) relating to the Installment Date(s) as set forth in the applicable Conversion Notice. Notwithstanding anything to the contrary contained in this Note or the Registration Rights Agreement, after the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) with respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, and for which the Holder has not yet settled.
| 1 | Insert for Initial Closing (as defined in the Securities Purchase Agreement): $10.00 |
| Insert for any giving Additional Closing (as defined in the Securities Purchase Agreement): the quotient of (x) the sum of the VWAP of the Common Stock of each Trading Day during the twenty (20) consecutive Trading Day period ending and including the Trading Day immediately prior to such applicable Additional Closing Notice Date (as defined in the Securities Purchase Agreement), divided by (y) twenty (20) (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar transactions during such measuring period). |
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(ii) Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery Deadline, either (I) if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its designee) a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of this Note (as the case may be) or (II) if the Registration Statement covering the resale of the shares of Common Stock that are the subject of the Conversion Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify the Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by crediting such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such conversion to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”), then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 1% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Deadline and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Deadline and (2) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant to clause (II) below or (B) a Notice Failure occurs, and if on or after such Share Delivery Deadline the Holder acquires (in an open market transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such conversion that the Holder is entitled to receive from the Company and has not received from the Company in connection with such Conversion Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within one (1) Business Day after receipt of the Holder’s request and in the Holder’s discretion, either: (I) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause (II) (the “Buy-In Payment Amount”). Nothing shall limit the 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 certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of this Note as required pursuant to the terms hereof.
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(iii) Registration; Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered Notes”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell all or part of any Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 21, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within one (1) Business Day of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to record such Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within one (1) Business Day of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
(iv) Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 26.
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(d) Limitations on Conversions. The Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right to convert any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d). For purposes of this Section 3(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of this Note without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 3(d), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail 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 Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d) to the extent necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 3(d) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be amended, modified or waived and shall apply to a successor holder of this Note.
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(e) Right of Alternate Conversion Upon an Event of Default.
(i) General. After the Floor Initial Measuring Date, subject to Section 3(d), at any time during an Event of Default Redemption Right Period (as defined below) (regardless of whether such Event of Default has been cured, or if the Company has delivered an Event of Default Redemption Notice to the Holder or if the Holder has delivered an Event of Default Redemption Notice to the Company or otherwise notified the Company that an Event of Default has occurred) or upon the occurrence and continuance of any Triggering Event, the Holder may, at the Holder’s option, convert (each, an “Alternate Conversion”, and the date of such Alternate Conversion, each, an “Alternate Conversion Date”) all, or any part of, the Conversion Amount (such portion of the Conversion Amount subject to such Alternate Conversion, the “Alternate Conversion Amount”) into shares of Common Stock at a conversion rate equal to the quotient of (x) the product of (A) the Redemption Premium and (B) the Alternate Conversion Amount, divided by (y) the Alternate Conversion Price (the “Alternate Conversion Rate”).
(ii) Mechanics of Alternate Conversion. On any Alternate Conversion Date, the Holder may voluntarily convert any Alternate Conversion Amount pursuant to Section 3(c) at the Alternate Conversion Rate (for the avoidance of doubt, with “Alternate Conversion Price” replacing “Conversion Price” for all purposes hereunder with respect to such Alternate Conversion and, with “Redemption Premium of the Conversion Amount” replacing “Conversion Amount” in clause (x) of the definition of Conversion Rate above with respect to such Alternate Conversion) by designating in the Conversion Notice delivered pursuant to this Section 3(e) of this Note that the Holder is electing to use the Alternate Conversion Price for such conversion; provided that in the event of the Conversion Floor Price Condition, on the applicable Alternate Conversion Date the Company shall also deliver to the Holder the applicable Alternate Conversion Floor Amount (or, at the option of the Company, effect a Conversion Floor Price Deferral with respect thereto). Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of Common Stock representing the applicable Alternate Conversion Amount to the Holder, such Alternate Conversion Amount may be converted by the Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 3(e). In the event of an Alternate Conversion pursuant to this Section 3(e) of all, or any portion, of this Note, the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 3(e), together the Alternate Conversion Price used in such Alternate Conversion, as applicable, is intended by the parties to be, and shall be deemed, a reasonable estimate of, the Holder’s actual loss of its investment opportunity and not as a penalty.
4. RIGHTS UPON EVENT OF DEFAULT.
(a) Event of Default. Each of the following events shall constitute an “Event of Default” and each of the events in clauses (ix), (x) and (xi) shall constitute a “Bankruptcy Event of Default”:
(i) the failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on or prior to the date that is five (5) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement) or the failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is five (5) days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);
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(ii) while the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable Securities (as defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the Registration Rights Agreement));
(iii) the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of ten (10) consecutive Trading Days;
(iv) the Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or exercise date (as the case may be) or (B) notice, written or oral, to any holder of the Notes, including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant to Section 3(d);
(v) except to the extent the Company is in compliance with Section 13(b) below, at any time following the tenth (10th) consecutive day that the Holder’s Authorized Share Allocation (as defined in Section 13(a) below) is less than the sum of the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise);
(vi) the Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least seven (7) consecutive Trading Days;
(vii) the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii) the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $1,000,000 of Indebtedness (as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other Notes;
(ix) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within thirty (30) days of their initiation;
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(x) the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under federal, state or foreign law;
(xi) the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;
(xii) a final judgment or judgments for the payment of money aggregating in excess of $1,500,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $1,500,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(xiii) the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness in excess of $1,500,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $1,500,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;
(xiv) other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect), or any covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of seven (7) consecutive Trading Days;
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(xv) a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity Conditions are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Event of Default has occurred;
(xvi) any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 16 of this Note;
(xvii) any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xviii) any provision of any Transaction Document (including, without limitation, the Security Documents and the Guaranties) shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document (including, without limitation, the Security Documents and the Guaranties);
(xix) any Security Document shall for any reason fail or cease to create a separate valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien (as defined in the Securities Purchase Agreement) on the Collateral (as defined in the Security Documents) in favor of the Collateral Agent (as defined in the Securities Purchase Agreement) or any material provision of any Security Document shall at any time for any reason cease to be valid and binding on or enforceable against the Company or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any governmental authority having jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof;
(xx) any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could have a Material Adverse Effect; or
(xxi) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b) Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other Note, the Company shall within two (2) Business Day deliver written notice thereof via electronic mail and overnight courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default (such earlier date, the “Event of Default Right Commencement Date”) and ending (such ending date, the “Event of Default Right Expiration Date”, and each such period, an “Event of Default Redemption Right Period”) on the twentieth (20th) Trading Day after the later of (x) the date such Event of Default is cured and (y) the Holder’s receipt of an Event of Default Notice that includes (I) a reasonable description of the applicable Event of Default, (II) a certification as to whether, in the opinion of the Company, such Event of Default is capable of being cured and, if applicable, a reasonable description of any existing plans of the Company to cure such Event of Default and (III) a certification as to the date the Event of Default occurred and, if cured on or prior to the date of such Event of Default Notice, the applicable Event of Default Right Expiration Date, the Holder may require the Company to redeem (regardless of whether such Event of Default has been cured on or prior to the Event of Default Right Expiration Date) all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the quotient of (1) the Conversion Amount to be redeemed divided by (2) the Alternate Conversion Price then in effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the date the Company makes the entire payment required to be made under this Section 4(b) (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 14. To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4(b), but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note. In the event of a partial redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Event of Default Redemption Notice. In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by the Holder, and all other rights and remedies of the Holder shall be preserved.
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(c) Mandatory Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity Date, the Company shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption Premium, in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption Price or any other Redemption Price, as applicable.
5. RIGHTS UPON FUNDAMENTAL TRANSACTION.
(a) Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking and security to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any 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 Note 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 this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 6 and 18, which shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.
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(b) Notice of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via electronic mail and overnight courier to the Holder (a “Change of Control Notice”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on twenty (20) Trading Days after the later of (A) the date of consummation of such Change of Control or (B) the date of receipt of such Change of Control Notice or (C) the date of the announcement of such Change of Control, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company in cash at a price equal to the greatest of (i) the product of (w) the Change of Control Redemption Premium multiplied by (y) the Conversion Amount being redeemed, (ii) the product of (x) the Change of Control Redemption Premium multiplied by (y) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change of Control and (2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption Notice by (II) the Alternate Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied by (z) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common Stock upon consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such Change of Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of such proposed Change of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public announcement of such proposed Change of Control) divided by (II) the Alternate Conversion Price then in effect (the “Change of Control Redemption Price”). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 14 and shall have priority to payments to stockholders in connection with such Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the Change of Control Redemption Notice. In the event of the Company’s redemption of any portion of this Note under this Section 5(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.
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6. RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase Rights. In addition to any adjustments pursuant to Sections 7 or 18 below, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record holders of any class 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 Note (without taking into account any limitations or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the Alternate Conversion Price as of the applicable record date) immediately prior to 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 and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable)) to the same extent as if there had been no such limitation).
(b) Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.
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7. RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 7(a) is deemed to have granted, issued or sold, any shares of Common Stock (including the granting, issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities granted, issued or sold or deemed to have been granted, issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price (or, if such Subsequent Placement solely consists of shares of Common Stock (and does not include any Adjustment Right(s), Option(s) and/or Convertible Security(ies)), 110% of the New Issuance Price). For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Price and the New Issuance Price under this Section 7(a)), the following shall be applicable:
(i) Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. For purposes of this Section 7(a)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) with respect to any one share of Common Stock upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration (including, without limitation, consideration consisting of cash, debt forgiveness, assets or any other property) received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
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(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) with respect to any one share of Common Stock upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable (including, without limitation, any consideration consisting of cash, debt forgiveness, assets or other property) by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b) below), the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding as of the Subscription Date) are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.
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(iv) Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing), the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 7(a)(i) or 7(a)(ii) above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as determined by the Holder in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 7(a)(iv). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(b) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 6, Section 18 or Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision of Section 6, Section 18 or Section 7(a), if the Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.
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(c) Holder’s Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section 7, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (other than pursuant to the Permitted VRT (as defined in the Securities Purchase Agreement)) (any such securities, “Variable Price Securities”), after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion Price upon conversion of this Note by designating in the Conversion Notice delivered upon any conversion of this Note that solely for purposes of such conversion the Holder is relying on the Variable Price rather than the Conversion Price then in effect. The Holder’s election to rely on a Variable Price for a particular conversion of this Note shall not obligate the Holder to rely on a Variable Price for any future conversion of this Note. In addition, from and after the date the Company enters into such agreement or issues any such Variable Price Securities, for purposes of calculating the Installment Conversion Price as of any time of determination, the “Conversion Price” as used therein shall mean the lower of (x) the Conversion Price as of such time of determination and (y) the Variable Price as of such time of determination.
(d) Stock Combination Event Adjustments. If at any time and from time to time on or after the Subscription Date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 7(b) above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event Date, the Conversion Price then in effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made.
(e) Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 7(e) will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f) Calculations. All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
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(g) Voluntary Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of this Note, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then current Conversion Price of each of the Notes to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(h) Six Month Adjustment. On [ ]2 (the “Six Month Adjustment Date”), if the Conversion Price then in effect is greater than the greater of (i) $6.00 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar transactions) and (ii) the Six Month Adjustment Measuring Price, at 8:00 am, New York city time on the Six Month Adjustment Date (such greater price, the “Sixth Month Adjustment Price”), the Conversion Price shall automatically lower to the Six Month Adjustment Price.
8. INSTALLMENT CONVERSION OR REDEMPTION.
(a) General. On each applicable Installment Date, provided there has been no Equity Conditions Failure, the Company shall pay to the Holder of this Note the applicable Installment Amount due on such date by converting such Installment Amount in accordance with this Section 8 (a “Installment Conversion”); provided, however, that the Company may, at its option following notice to the Holder as set forth below, pay the Installment Amount by redeeming such Installment Amount in cash (a “Installment Redemption”) or by any combination of an Installment Conversion and an Installment Redemption so long as all of the outstanding applicable Installment Amount due on any Installment Date shall be converted and/or redeemed by the Company on the applicable Installment Date, subject to the provisions of this Section 8. On or prior to the date which is the eleventh (11th) Trading Day prior to each Installment Date (each, an “Installment Notice Due Date”), the Company shall deliver written notice (each, a “Installment Notice” and the date all of the holders receive such notice is referred to as to the “Installment Notice Date”), to each holder of Notes and such Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of such holder’s Note shall be converted in whole pursuant to an Installment Conversion or (B) (1) state that the Company elects to redeem for cash, or is required to redeem for cash in accordance with the provisions of the Notes, in whole or in part, the applicable Installment Amount pursuant to an Installment Redemption and (2) specify the portion of such Installment Amount which the Company elects or is required to redeem pursuant to an Installment Redemption (such amount to be redeemed in cash, the “Installment Redemption Amount”) and the portion of the applicable Installment Amount, if any, with respect to which the Company will, and is permitted to, effect an Installment Conversion (such amount of the applicable Installment Amount so specified to be so converted pursuant to this Section 8 is referred to herein as the “Installment Conversion Amount”), which amounts when added together, must at least equal the entire applicable Installment Amount and (ii) if the applicable Installment Amount is to be paid, in whole or in part, pursuant to an Installment Conversion, certify that there is not then an Equity Conditions Failure as of the applicable Installment Notice Date. Each Installment Notice shall be irrevocable. If the Company does not timely deliver an Installment Notice in accordance with this Section 8 with respect to a particular Installment Date, then the Company shall be deemed to have delivered an irrevocable Installment Notice confirming an Installment Conversion of the entire Installment Amount payable on such Installment Date and shall be deemed to have certified that there is not then an Equity Conditions Failure in connection with such Installment Conversion. Except as expressly provided in this Section 8(a), the Company shall convert and/or redeem the applicable Installment Amount of this Note pursuant to this Section 8 and the corresponding Installment Amounts of the Other Notes pursuant to the corresponding provisions of the Other Notes in the same ratio of the applicable Installment Amount being converted and/or redeemed hereunder. The applicable Installment Conversion Amount (whether set forth in the applicable Installment Notice or by operation of this Section 8) shall be converted in accordance with Section 8(b) and the applicable Installment Redemption Amount shall be redeemed in accordance with Section 8(c).
| 2 | Insert six month anniversary of Issuance Date |
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(b) Mechanics of Installment Conversion. Subject to Section 3(d), if the Company delivers an Installment Notice or is deemed to have delivered an Installment Notice certifying that such Installment Amount is being paid, in whole or in part, in an Installment Conversion in accordance with Section 8(a), then the remainder of this Section 8(b) shall apply. The applicable Installment Conversion Amount, if any, shall be converted on the applicable Installment Date at the applicable Installment Conversion Price and the Company shall, on such Installment Date, (A) deliver to the Holder’s account with DTC such shares of Common Stock issued upon such conversion (subject to the reduction contemplated by the immediately following sentence and, if applicable, the penultimate sentence of this Section 8(b)) and (B) in the event of the Conversion Floor Price Condition, the Company shall deliver to the Holder the applicable Installment Conversion Floor Amount (or, at the option of the Company, effect a Conversion Floor Price Deferral with respect thereto), provided that the Equity Conditions are then satisfied (or waived in writing by the Holder) on such Installment Date and an Installment Conversion is not otherwise prohibited under any other provision of this Note, provided that the Equity Conditions are then satisfied (or waived in writing by the Holder) on such Installment Date and an Installment Conversion is not otherwise prohibited under any other provision of this Note. If the Company confirmed (or is deemed to have confirmed by operation of Section 8(a)) the conversion of the applicable Installment Conversion Amount, in whole or in part, and there was no Equity Conditions Failure as of the applicable Installment Notice Date (or is deemed to have certified that the Equity Conditions in connection with any such conversion have been satisfied by operation of Section 8(a)) but an Equity Conditions Failure occurred between the applicable Installment Notice Date and any time through the applicable Installment Date (the “Interim Installment Period”), the Company shall provide the Holder a subsequent notice to that effect. If there is an Equity Conditions Failure (which is not waived in writing by the Holder) during such Interim Installment Period or an Installment Conversion is not otherwise permitted under any other provision of this Note, then, at the option of the Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following: (i) the Company shall redeem all or any part designated by the Holder of the unconverted Installment Conversion Amount (such designated amount is referred to as the “Designated Redemption Amount”) and the Company shall pay to the Holder within one (1) day of such Installment Date, by wire transfer of immediately available funds, an amount in cash equal to 125% of such Designated Redemption Amount, and/or (ii) the Installment Conversion shall be null and void with respect to all or any part designated by the Holder of the unconverted Installment Conversion Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to such designated part of the Installment Conversion Amount; provided, however, the Conversion Price for such designated part of such unconverted Installment Conversion Amount shall thereafter be adjusted to equal the lesser of (A) the Installment Conversion Price as in effect on the date on which the Holder voided the Installment Conversion and (B) the Installment Conversion Price that would be in effect on the date on which the Holder delivers a Conversion Notice relating thereto as if such date was an Installment Date. If the Company fails to redeem any Designated Redemption Amount by the first (1st) day following the applicable Installment Date by payment of such amount by such date, then the Holder shall have the rights set forth in Section 14(a) as if the Company failed to pay the applicable Installment Redemption Price (as defined below) and all other rights under this Note (including, without limitation, such failure constituting an Event of Default described in Section 4(a)(vi)). Notwithstanding anything to the contrary in this Section 8(b), but subject to 3(d), until the Company delivers Common Stock representing the Installment Conversion Amount to the Holder, the Installment Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3. In the event that the Holder elects to convert the Installment Conversion Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Installment Conversion Amount so converted shall be deducted from the Installment Amount(s) relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice. The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of any shares of Common Stock in any Installment Conversion hereunder.
(c) Mechanics of Installment Redemption. If the Company elects or is required to effect an Installment Redemption, in whole or in part, in accordance with Section 8(a), then the Installment Redemption Amount, if any, shall be redeemed by the Company in cash on the applicable Installment Date by wire transfer to the Holder of immediately available funds in an amount equal to 105% of the applicable Installment Redemption Amount (the “Installment Redemption Price”). If the Company fails to redeem such Installment Redemption Amount on such Installment Date by payment of the Installment Redemption Price, then, at the option of the Holder designated in writing to the Company (any such designation shall be a “Conversion Notice” for purposes of this Note), the Holder may require the Company to convert all or any part of the Installment Redemption Amount at the Installment Conversion Price (determined as of the date of such designation as if such date were an Installment Date). Conversions required by this Section 8(c) shall be made in accordance with the provisions of Section 3(c). Notwithstanding anything to the contrary in this Section 8(c), but subject to Section 3(d), until the Installment Redemption Price (together with any Late Charges thereon) is paid in full, the Installment Redemption Amount (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event the Holder elects to convert all or any portion of the Installment Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Installment Redemption Amount so converted shall be deducted from the Installment Amounts relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice. Redemptions required by this Section 8(c) shall be made in accordance with the provisions of Section 14.
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(d) Deferred Installment Amount. Notwithstanding any provision of this Section 8(d) to the contrary, the Holder may, at its option and in its sole discretion, deliver a written notice to the Company no later than the Trading Day immediately prior to the applicable Installment Date electing to have the payment of all or any portion of an Installment Amount payable on such Installment Date deferred (such amount deferred, the “Deferral Amount”, and such deferral, each a “Deferral”) until any subsequent Installment Date selected by the Holder, in its sole discretion, in which case, the Deferral Amount shall be added to, and become part of, such subsequent Installment Amount and such Deferral Amount shall continue to accrue Interest hereunder. Any notice delivered by the Holder pursuant to this Section 8(d) shall set forth (i) the Deferral Amount and (ii) the date that such Deferral Amount shall now be payable.
(e) Acceleration of Installment Amounts. Notwithstanding any provision of this Section 8 to the contrary, but subject to Section 3(d), during the period commencing on [ ]3 an Installment Date (an “Acceleration Right Commencement Date”) and ending on the Trading Day immediately prior to the next Installment Date (each, an “Installment Period”), at the option of the Holder, at one or more times, the Holder may convert all, or any part, of (x) if on or after an Installment Notice Date for the Acceleration Right Commencement Date and prior to such Acceleration Right Commencement Date, any shares of Common Stock subject to an Installment Conversion hereunder for such Acceleration Right Commencement Date, (y) any amounts Deferred with respect to such Acceleration Right Commencement Date or (z) any additional amounts the Company may elect in writing (which may be an e-mail), from time to time, to permit to be subject to one or more Accelerations hereunder (each, an “Acceleration”, and each such amount, an “Acceleration Amount”, and the Conversion Date of any such Acceleration, each an “Acceleration Date”), in whole or in part, at the Acceleration Conversion Price of such Acceleration Date in accordance with the conversion procedures set forth in Section 3 hereunder (with “Acceleration Conversion Price” replacing “Conversion Price” for all purposes therein), mutatis mutandis; provided, that if a Conversion Floor Price Condition exists with respect to such Acceleration Date, with each Acceleration the Company shall also deliver to the Holder the Acceleration Floor Amount on each applicable Share Delivery Deadline with respect thereto (or, at the option of the Company, effect a Conversion Floor Price Deferral with respect thereto).
9. REDEMPTIONS AT THE COMPANY’S ELECTION.
(a) Company Optional Redemption. At any time after the date hereof, the Company shall have the right to redeem all, or any part, of the Conversion Amount then remaining under this Note (each, a “Company Optional Redemption Amount”) on a Company Optional Redemption Date (each as defined below) (each, a “Company Optional Redemption”). The portion of this Note subject to redemption pursuant to this Section 9(a) shall be redeemed by the Company in cash at a price (each “Company Optional Redemption Price”) equal to Company Optional Redemption Applicable Percentage of the greater of (i) the Conversion Amount being redeemed as of the Company Optional Redemption Date and (ii) if an Equity Conditions Failure then exists, the product of (1) the Conversion Rate (or, if an Event of Default then exists, the Alternate Conversion Rate) with respect to the Conversion Amount being redeemed as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Company Optional Redemption Notice Date and ending on the Trading Day immediately prior to the date the Company makes the entire payment required to be made under this Section 9(a). The Company may exercise its right to require redemption under this Section 9(a) by delivering a written notice thereof by electronic mail and overnight courier to all, but not less than all, of the holders of Notes (the “Company Optional Redemption Notice” and the date all of the holders of Notes received such notice is referred to as the “Company Optional Redemption Notice Date”). The Company Optional Redemption Notice shall be irrevocable and the Company may deliver only one (1) Company Optional Redemption Notice in any twenty (20) Trading Day period. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption shall occur (the “Company Optional Redemption Date”) which date shall not be less than twenty (20) Trading Days nor more than forty (40) Trading Days following the Company Optional Redemption Notice Date, and (y) state the aggregate Conversion Amount of the Notes which is being redeemed in such Company Optional Redemption from the Holder and all of the other holders of the Notes pursuant to this Section 9(a) (and analogous provisions under the Other Notes) on the Company Optional Redemption Date. Notwithstanding anything herein to the contrary, at any time prior to the date the Company Optional Redemption Price is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3. All Conversion Amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce the Company Optional Redemption Amount of this Note required to be redeemed on the Company Optional Redemption Date. Redemptions made pursuant to this Section 9(a) shall be made in accordance with Section 14. In the event of the Company’s redemption of any portion of this Note under this Section 9, the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 9 is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. For the avoidance of doubt, the Company shall have no right to effect a Company Optional Redemption if any Event of Default has occurred and continuing, but any Event of Default shall have no effect upon the Holder’s right to convert this Note in its discretion.
| 3 | Insert in Additional Notes only: (I) if prior to the initial Installment Date, the Issuance Date or (II) at any time on or after the initial Installment Date, |
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(b) Pro Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section 9(a) above, then it must simultaneously take the same action with respect to all of the Other Notes.
10. SUBSEQUENT PLACEMENT OPTIONAL REDEMPTION
(a) General. At any time from and after the earlier of (x) the date the Holder (the “Holder Subsequent Placement Notice Date”) becomes aware of the occurrence of a Subsequent Placement (as defined in the Securities Purchase Agreement) (in each case, other than with respect to Excluded Securities (as defined in the Securities Purchase Agreement)) (each, an “Eligible Subsequent Placement”), and (y) the time of consummation of such Eligible Subsequent Placement, the Holder shall have the right, in its sole discretion, to require that the Company redeem (each, a “Subsequent Placement Optional Redemption”) all, or any portion, of the Outstanding Amount under this Note not in excess of (together with any Subsequent Placement Optional Redemption Amount (as defined in the applicable other Note of the Holder) of any other Notes of the Holder) the Holder’s Holder Pro Rata Amount of 30% of the net proceeds of such Eligible Subsequent Placement (the “Eligible Subsequent Placement Optional Redemption Amount”) by delivering written notice thereof (an “Subsequent Placement Optional Redemption Notice”) to the Company. The Company shall notify the Holder in writing no later than five (5) Trading Days after the occurrence of any Eligible Subsequent Placement, which notice shall include (i) the sale price of each Eligible Subsequent Placement, (ii) the date of each Eligible Subsequent Placement and (iii) the aggregate gross proceeds of each Eligible Subsequent Placement.
(b) Mechanics. Each Subsequent Placement Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the applicable Subsequent Placement Optional Redemption Notice, of the Conversion Amount of this Note (with a Subsequent Placement Optional Redemption Price not in excess of such applicable Eligible Subsequent Placement Optional Redemption Amount) the Holder is electing to have redeemed (the “Subsequent Placement Optional Redemption Amount”) and the date of such Subsequent Placement Optional Redemption (the “Subsequent Placement Optional Redemption Date”), which shall be the later of (x) the fifth (5th) Business Day after the date of the applicable Subsequent Placement Optional Redemption Notice and (y) the date of the consummation of such Eligible Subsequent Placement. The portion of the Conversion Amount of this Note subject to redemption pursuant to this Section 10 shall be redeemed by the Company in cash at a price equal to 30% of the greater of (i) Subsequent Placement Optional Redemption Amount being redeemed as of the Subsequent Placement Optional Redemption Date and (ii) the product of (1) the quotient of (A) the Subsequent Placement Optional Redemption Amount being redeemed divided by (B) the Alternate Conversion Price then in effect as of the Subsequent Placement Optional Redemption Date multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Subsequent Placement Redemption Notice Date and ending on the Trading Day immediately prior to the date the Company makes the entire payment required to be made under this Section 10 (the “Subsequent Placement Optional Redemption Price”). Redemptions required by this Section 10 shall be made in accordance with the provisions of Section 14.
11. ASSET SALE OPTIONAL REDEMPTION
(a) General. At any time from and after the earlier of (x) the date the Holder becomes aware of the occurrence of an Asset Sale (as defined below)(including any insurance and condemnation proceeds thereof) (each, a “Holder Asset Sale Notice Date”) and (y) the time of consummation of an Asset Sale (other than sales of inventory and product in the ordinary course of business) (each, an “Eligible Asset Sale”), the Holder shall have the right, in its sole discretion, to require that the Company redeem (each an “Asset Sale Optional Redemption”) all, or any portion, of the Conversion Amount under this Note not in excess of (together with any Asset Sale Optional Redemption Amount (as defined in the applicable other Note of the Holder) of any other Notes of the Holder) the Holder’s Holder Pro Rata Amount of 15% of the net proceeds (including any insurance and condemnation proceeds with respect thereto) of such Eligible Asset Sale (each, an “Eligible Asset Sale Optional Redemption Amount”) by delivering written notice thereof (each, an “Asset Sale Optional Redemption Notice”, and each date thereof, an “Asset Sale Redemption Notice Date”) to the Company.
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(b) Mechanics. Each Asset Sale Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the applicable Asset Sale Optional Redemption Notice, of the Conversion Amount of this Note (with an Asset Sale Optional Redemption Price not in excess of such applicable Eligible Asset Sale Optional Redemption Amount) the Holder is electing to have redeemed (each, an “Asset Sale Optional Redemption Amount”) and the date of such Asset Sale Optional Redemption (each, an “Asset Sale Optional Redemption Date”), which shall be the later of (x) the fifth (5th) Business Day after the date of the applicable Asset Sale Optional Redemption Notice and (y) the date of the consummation of such Eligible Asset Sale. The portion of the Conversion Amount of this Note subject to redemption pursuant to this Section 11 shall be redeemed by the Company in cash at a price equal to 115% of the greater of (i) the Asset Sale Optional Redemption Amount being redeemed as of the Asset Sale Optional Redemption Date and (ii) the product of (1) the quotient of (A) the Asset Sale Optional Redemption Amount being redeemed divided by (B) the Alternate Conversion Price then in effect as of the Asset Sale Optional Redemption Date multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Asset Sale Redemption Notice Date and ending on the Trading Day immediately prior to the date the Company makes the entire payment required to be made under this Section 11 (each, an “Asset Sale Optional Redemption Price”). Redemptions required by this Section 11 shall be made in accordance with the provisions of Section 14.
12. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note or the other Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this Note. Notwithstanding anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not permitted to convert this Note in full for any reason (other than pursuant to restrictions set forth in Section 3(d) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to permit such conversion into shares of Common Stock.
13. RESERVATION OF AUTHORIZED SHARES.
(a) Reservation. So long as any Notes remain outstanding, the Company shall at all times reserve at least 300% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion, including without limitation, Installment Conversions, Alternate Conversions and Accelerations, of all of the Notes then outstanding (without regard to any limitations on conversions and assuming such Notes remain outstanding until the Maturity Date) at the Alternate Conversion Price then in effect (the “Required Reserve Amount”). The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the Notes based on the original principal amount of the Notes held by each holder on the Applicable Closing Date or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders.
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(b) Insufficient Authorized Shares. If, notwithstanding Section 13(a), and not in limitation thereof, at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date of such issuance and payment under this Section 13(a); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in Section 13(a) or this Section 13(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
14. REDEMPTIONS.
(a) Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder in cash concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and within five (5) Business Days after the Company’s receipt of such notice otherwise. The Company shall deliver the applicable Installment Redemption Price to the Holder in cash on the applicable Installment Date. The Company shall deliver the applicable Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. The Company shall deliver the applicable Asset Sale Optional Redemption Price to the Holder in cash on the applicable Asset Sale Optional Redemption Date. The Company shall deliver the applicable Subsequent Placement Optional Redemption Price to the Holder in cash on the applicable Subsequent Placement Optional Redemption Date. Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time the Holder is entitled to receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered in writing to the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder under such other Transaction Document and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s payment obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 21(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 21(d)), to the Holder, and in each case the principal amount of this Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable Redemption Price (as the case may be, and as adjusted pursuant to this Section 14, if applicable) minus (2) the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of this Note or such new Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter by the Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) the greater of (x) the Floor Price and (y) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is voided and (C) the greater of (x) the Floor Price and (y) 75% of the quotient of (I) the sum of the five (5) lowest VWAPs of the Common Stock during the twenty (20) consecutive Trading Day period ending and including the applicable Conversion Date divided by (II) five (5) (it being understood and agreed that all such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period). The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice.
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(b) Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(b) (each, an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by electronic mail a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is two (2) Business Days prior to the Company’s receipt of the Holder’s applicable Redemption Notice and ending on and including the date which is two (2) Business Days after the Company’s receipt of the Holder’s applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.
15. VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, the Delaware General Corporation Law) and as expressly provided in this Note.
16. COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries).
(b) Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) other Permitted Indebtedness).
(c) Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens.
(d) Restricted Payments and Investments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other than the Notes) whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness or make any Investment (other than any Investment constituting a Permitted Acquisition), as applicable, if at the time such payment with respect to such Indebtedness and/or Investment, as applicable, is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.
(e) Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
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(f) Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions (each, an “Asset Sale”), other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries in the ordinary course of business consistent with its past practice and (ii) sales of inventory and product in the ordinary course of business.
(g) Maturity of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, permit any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.
(h) Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
(i) Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.
(j) Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.
(k) Maintenance of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable to maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.
(l) Maintenance of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.
(m) Transactions with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate, except (i) transactions existing as of the Subscription Date and set forth on Schedule 16(m) hereto or (ii) transactions in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an affiliate thereof.
(n) Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the Securities Purchase Agreement and the Notes) or (ii) issue any other securities that would cause a breach or default under the Notes.
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(o) New Subsidiaries. Within ten (10) Trading Days following the acquisition or formation of each New Subsidiary, the Company shall cause such New Subsidiary to execute, and deliver to each holder of Notes, all Security Documents (as defined in the Securities Purchase Agreement) and Guaranties (as defined in the Securities Purchase Agreement) as requested by the Collateral Agent or the Required Holders, as applicable. The Company shall also deliver to the Collateral Agent an opinion of counsel to such New Subsidiary that is reasonably satisfactory to the Collateral Agent and the Required Holders covering such legal matters with respect to such New Subsidiary becoming a guarantor of the Company’s obligations, executing and delivering the Security Document and the Guaranties and any other matters that the Collateral Agent or the Required Holders may reasonably request. The Company shall deliver, or cause the applicable Subsidiary to deliver to the Collateral Agent, each of the physical stock certificates of such New Subsidiary, along with undated stock powers for each such certificates, executed in blank (or, if any such shares of capital stock are uncertificated, confirmation and evidence reasonably satisfactory to the Collateral Agent and the Required Holders that the security interest in such uncertificated securities has been transferred to and perfected by the Collateral Agent, in accordance with Sections 8-313, 8-321 and 9-115 of the Uniform Commercial Code or any other similar or local or foreign law that may be applicable).
(p) Change in Collateral; Collateral Records. The Company shall (i) give the Collateral Agent not less than thirty (30) days’ prior written notice of any change in the location of any Collateral (as defined in the Security Documents), other than to locations set forth in the Perfection Certificate (as defined in the Securities Purchase Agreement) hereto and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Holder and holders of the Other Notes from time to time, solely for the Collateral Agent’s convenience in maintaining a record of Collateral, such written statements and schedules as the Collateral Agent or any Holder may reasonably require, designating, identifying or describing the Collateral.
(q) Stay, Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will 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 (wherever or whenever enacted or in force) that may affect the covenants or the performance of this Note; and (B) expressly waives all benefits or advantages of any such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holder by this Note, but will suffer and permit the execution of every such power as though no such law has been enacted.
(r) Taxes. The Company and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except where the failure to pay would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). The Company and its Subsidiaries shall file on or before the due date therefor all personal property tax returns (except where the failure to file would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). Notwithstanding the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain adequate reserves therefor in accordance with GAAP.
(s) Financial Covenants; Announcement of Operating Results.
(i) The Company shall maintain, at all times, a balance of Available Cash in one or more bank accounts in the United States, each subject to an account control agreement with the Collateral Agent (in accordance with the deadline set forth in Section 6(n)(i) of the Security Agreement), in an aggregate amount equal to or exceeding $7,500,000 (the “Financial Test”).
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(ii) Operating Results Announcement. Commencing as of the eighth (8th) Trading Day of each calendar month after the date hereof (each, a “Compliance Disclosure Date”), the Company shall provide to the Holder a certification, executed on behalf of the Company, by the Chief Financial Officer of the Company, certifying that the Company satisfied the Financial Test for such calendar month, if that is the case (each, a “Financial Covenant Success Notice”). If the Company has failed to meet the Financial Test for such calendar month (each a “Financial Covenant Failure”), on or prior to the applicable Compliance Disclosure Date, the Company shall provide to the Holders a written certification, executed on behalf of the Company by the Chief Financial Officer of the Company, certifying that the Financial Test has not been met for such calendar month (each, a “Financial Covenant Failure Notice”). If a Financial Covenant Success Notice contains material non-public information, concurrently with the delivery of such Financial Covenant Success Notice to the Holder, the Company shall also make publicly available (as part of a Quarterly Report on Form 10-Q, Annual Report on Form 10-K or on a Current Report on Form 8-K, or otherwise) the Financial Covenant Success Notice and/or such material non-public information included in such Financial Covenant Success Notice. Concurrently with the delivery of each Financial Covenant Failure Notice to the Holder, the Company shall also make publicly available (as part of a Quarterly Report on Form 10-Q, Annual Report on Form 10-K or on a Current Report on Form 8-K, or otherwise) the Financial Covenant Failure Notice and the fact that an Event of Default has occurred under the Notes.
(t) Independent Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing, (y) upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z) at any time the Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent, reputable investment bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note has occurred (the “Independent Investigator”). If the Independent Investigator determines that such breach of this Note has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written notice to each holder of a Note of such breach. In connection with such investigation, the Independent Investigator may, during normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants’ work papers) and any books of account, records, reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and operating data and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably requested.
17. SECURITY. This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including, without limitation, the Security Agreement, the other Security Documents and the Guaranties).
18. DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Sections 6(a) or 7, if the Company shall declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “Distributions”), then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the Alternate Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
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19. AMENDING THE TERMS OF THIS NOTE. Except for Section 3(d) and this Section 19, which may not be amended, modified or waived by the parties hereto, the prior written consent of the Holder shall be required for any change, waiver or amendment to this Note.
20. TRANSFER. This Note may not be transferred by the Holder to any Person (other than an affiliate, partner, limited partner or member of the Holder) without the prior written consent of the Company, and only upon the execution and delivery to the Company by the transferee of a Leak-Out Agreement in customary form; provided, that at any time during the continuance of an Event of Default, this Note may be transferred by the Holder without the consent of the Company to any Person. Any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.
21. REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 21(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 21(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 21(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 21(d) and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 21(a) or Section 21(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
22. REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note 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 Note. No failure on the part of the Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy of the Holder at law or equity or under this Note or any of the documents shall not be deemed to be an election of Holder’s rights or remedies under such documents or at law or equity. 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 specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. 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 Note (including, without limitation, compliance with Section 7).
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23. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal amount hereof.
24. CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Note instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Initial Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
25. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 25 shall permit any waiver of any provision of Section 3(d).
26. DISPUTE RESOLUTION.
(a) Submission to Dispute Resolution.
(i) In the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Installment Conversion Price, an Acceleration Conversion Price, an Alternate Conversion Price, a Six Month Adjustment Price, a Black Scholes Consideration Value, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate or Alternate Conversion Rate, or the applicable Redemption Price (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Installment Conversion Price, such Acceleration Conversion Price, such Alternate Conversion Price, such a Six Month Adjustment Price, such Black Scholes Consideration Value, such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate or Alternate Conversion Rate or such applicable Redemption Price (as the case may be), at any time after the first (1st) Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 26 and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
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(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 26 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the Delaware Uniform Arbitration Act, as amended, (ii) a dispute relating to a Conversion Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 7(a), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Note and any other applicable Transaction Documents, (iv) either the Company or the Holder, in its sole discretion, shall have the right to submit any dispute described in this Section 26 to any state or federal court sitting in Wilmington, Delaware in lieu of utilizing the procedures set forth in this Section 26 and (v) nothing in this Section 26 shall limit either party from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 26).
27. NOTICES; CURRENCY; PAYMENTS.
(a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
(b) Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).
(c) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).
28. CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
29. WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.
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30. GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Delaware, without giving effect to any provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 26 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 26. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
31. JUDGMENT CURRENCY.
(a) If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 31 referred to as the “Judgment Currency”) an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(i) the date actual payment of the amount due, in the case of any proceeding in the courts of Delaware or in the courts of any other jurisdiction that will give effect to such conversion being made on such date: or
(ii) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 31(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b) If in the case of any proceeding in the court of any jurisdiction referred to in Section 31(a)(ii) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Note.
32. SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
33. MAXIMUM PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
34. CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Acceleration Conversion Price” means, with respect to any given Acceleration Date, the lower of (i) the Installment Conversion Price for such Acceleration Right Commencement Date related to such Acceleration Date and (ii) the greater of (x) the Floor Price and (y) the lower of (I) 95% of the lowest VWAP of the Common Stock of any Trading Day during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately prior to the applicable Acceleration Date and (II) solely respect to any Deferral Amount subject to an Acceleration, the lowest Acceleration Conversion Price of any Installment Date in which such Deferral Amount has been Deferred hereunder (each, a “Current Acceleration Conversion Price”), shall replace such Current Acceleration Conversion Price for any Acceleration of such Deferral Amount hereunder. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.
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(d) “Acceleration Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Acceleration Date with respect to such Acceleration and (II) the applicable Acceleration Conversion Price of such Acceleration Date and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery Deadline with respect to such Acceleration from (II) the quotient obtained by dividing (x) the applicable Acceleration Amount that the Holder has elected to be the subject of the applicable Acceleration, by (y) the applicable Acceleration Conversion Price of such Acceleration Date without giving effect to clause (x) of such definition or clause (x) of the definition of the Installment Conversion Price, as applicable.
(e) “Adjusted Floor Price” means as of any date of determination, the lower of (i) if such determination is not with respect to the initial Floor Price, the Floor Price then in effect and (ii) 20% of the lower of (x) the closing price of the Common Stock of the Principal Market (as reported by the Principal Market) as of the Trading Day ended immediately prior to such applicable date of determination and (y) the quotient of (I) the sum of each the closing price of the Common Stock of the Principal Market (as reported by the Principal Market) on each Trading Day of the five (5) Trading Day period ended on, and including, the Trading Day ended immediately prior to such applicable date of determination, divided by (II) five (5). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.
(f) “Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than rights of the type described in Section 6(a) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(g) “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(h) “Alternate Conversion Price” means, with respect to any Alternate Conversion that price which shall be the lowest of (i) the applicable Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion, and (ii) the greater of (x) the Floor Price and (y) 90% of the lowest VWAP of the Common Stock of any Trading Day during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice (such period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such Alternate Conversion Measuring Period.
(i) “Alternate Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the VWAP on the day the Holder delivers the applicable Conversion Notice and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery Deadline with respect to such Alternate Conversion from (II) the quotient obtain by dividing (x) the applicable Conversion Amount that the Holder has elected to be the subject of the applicable Alternate Conversion, by (y) the applicable Alternate Conversion Price without giving effect to clause (x) of such definition.
(j) “Applicable Closing Date” means the Closing Date (as defined in the Securities Purchase Agreement) that the Company initially issued this Note pursuant to the terms of the Securities Purchase Agreement.
(k) “Approved Stock Plan” means any employee or consultant benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the Subscription Date (including, without limitation, the 2026 Incentive Plan and the 2026 Milestone Equity Plan) pursuant to which shares of Common Stock, options to purchase Common Stock, restricted stock units, performance restricted stock units, stock appreciation rights, restricted stock awards and other equity-based awards may be issued to any employee, officer, director, consultant or advisor of the Company or any of its Subsidiaries for services provided to the Company or any of its Subsidiaries in their capacity as such.
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(l) “Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(m) “Available Cash” means, with respect to any date of determination, an amount equal to the aggregate amount of the Cash of the Company and its Subsidiaries (excluding for this purpose cash held in restricted accounts or otherwise unavailable for unrestricted use by the Company or any of its Subsidiaries for any reason) as of such date of determination held in bank accounts of financial banking institutions in the United States of America.
(n) “Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(o) “Bloomberg” means Bloomberg, L.P.
(p) “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 generally are open for use by customers on such day.
(q) “Cash” of the Company and its Subsidiaries on any date shall be determined from such Persons’ books maintained in accordance with GAAP, and means, without duplication, the cash, cash equivalents and Eligible Marketable Securities accrued by the Company and its wholly owned Subsidiaries on a consolidated basis on such date.
(r) “Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries, (iv) the Business Combination (as defined in the Securities Purchase Agreement) or (v) a merger in connection with a bona fide acquisition by the Company of any Person in which (x) the gross consideration paid, directly or indirectly, by the Company in such acquisition is not equal to or greater than 20% of the Company’s market capitalization as calculated on the date of the announcement of such merger and the date of the consummation of such merger, (y) such merger does not contemplate a change to the identity of a majority of the board of directors of the Company and (z) holders of the Company’s voting power immediately prior to such merger and/or acquisition continue after such merger and/or acquisition to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such merger and/or acquisition..
(s) “Change of Control Redemption Premium” means 125%.
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(t) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 26. All such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such period.
(u) “Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(v) “Company Optional Redemption Applicable Percentage” means, with respect to any given Company Optional Redemption, as applicable, if such Company Optional Redemption Date (i) is prior to [ ]4, [120%]5[120%; provided that, once the Company has delivered a Company Optional Redemption Notice to the Holder with respect to the Initial Notes, 115% shall apply until the Company has redeemed an aggregate Conversion Amount of Additional Notes equal to the aggregate Company Optional Redemption Amount of Initial Notes as of such time of determination)]6, (ii) on or after [ ]7, but prior to [ ]8, 110% or (iii) if on or after [ ]9, 108%.
(w) “Conversion Floor Price Condition” means that the relevant Alternate Conversion Price, Acceleration Conversion Price (including any Installment Conversion Price referred to therein) or Installment Conversion Price, as applicable, is being determined based on clause (x) of such definitions
(x) “Conversion Floor Price Deferral” means, solely with respect to any conversion of this Note at a time a Conversion Floor Price Condition exists, the election by the Company to defer the delivery of the applicable Alternate Conversion Floor Amount, Acceleration Conversion Floor Amount, and/or Installment Conversion Floor Amount until the time of a written demand by the Holder to the Company with respect thereto; provided, that any such amount deferred by the Company shall accrue Late Charges hereunder during such deferral.
(y) “Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(z) “Current Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly, (i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Current Subsidiaries”.
(aa) “Default Rate” means, with respect to any determination of the aggregate amount of outstanding accrued and unpaid Interest hereunder, eighteen percent (18%) per annum.
(bb) “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market.
| 4 | Insert first anniversary of issuance date |
| 5 | Insert in the Initial Notes only. |
| 6 | Insert in the Additional Notes only. |
| 7 | Insert first anniversary of issuance date |
| 8 | Insert eighteen month anniversary of issuance date |
| 9 | Insert eighteen month anniversary of issuance date |
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(cc) “Eligible Marketable Securities” as of any date means marketable securities which would be reflected on a consolidated balance sheet of the Company and its Subsidiaries prepared as of such date in accordance with GAAP, and which are permitted under the Company’s investment policies as in effect on the Issuance Date or approved thereafter by the Company’s Board of Directors.
(dd) “Equity Conditions” means, with respect to an given date of determination: (i) on each day during the period beginning thirty calendar days prior to such applicable date of determination and ending on and including such applicable date of determination either (x) one or more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective and the prospectus contained therein shall be available on such applicable date of determination (with, for the avoidance of doubt, any shares of Common Stock previously sold pursuant to such prospectus deemed unavailable) for the resale of all shares of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion Amount being redeemed, as applicable, in the event requiring this determination at the Alternate Conversion Price then in effect (without regard to any limitations on conversion set forth herein)) (each, a “Required Minimum Securities Amount”), in each case, in accordance with the terms of the Registration Rights Agreement and there shall not have been during such period any Grace Periods (as defined in the Registration Rights Agreement) or (y) all Registrable Securities shall be eligible for sale pursuant to Rule 144 (as defined in the Securities Purchase Agreement) without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Notes and exercise of the Warrants) and no Current Public Information Failure (as defined in the Registration Rights Agreement) exists or is continuing; (ii) on each day during the period beginning thirty calendar days prior to the applicable date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”), the Common Stock (including all Registrable Securities) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market or (B) the Company falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (iii) during the Equity Conditions Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination) may be issued in full without violating Section 3(d) hereof; (v) any shares of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may be issued in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably be expected to cause (1) any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not be effective or the prospectus contained therein to not be available for the resale of the applicable Required Minimum Securities Amount of Registrable Securities in accordance with the terms of the Registration Rights Agreement or (2) any Registrable Securities to not be eligible for sale pursuant to Rule 144 without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Notes and exercise of the Warrants) and no Current Public Information Failure exists or is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall be in) possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, including, without limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document; (x) on each Trading Day during the Equity Conditions Measuring Period, there shall not have occurred any Volume Failure or Price Failure as of such applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share Failure shall exist or be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are available under the certificate of incorporation of the Company and reserved by the Company to be issued pursuant to the Notes and (B) all shares of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may be issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Equity Conditions Measuring Period, there shall not have occurred and there shall not exist an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default; (xiii) no bone fide dispute shall exist, by and between any of holder of Notes or Warrants, the Company, the Principal Market (or such applicable Eligible Market in which the Common Stock of the Company is then principally trading) and/or FINRA with respect to any term or provision of any Note or any other Transaction Document and (xiv) the shares of Common Stock issuable pursuant the event requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction on an Eligible Market.
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(ee) “Equity Conditions Failure” means that on any day during the period commencing ten (10) Trading Days prior to the applicable date of determination, one or more Equity Conditions have not been satisfied (or waived in writing by the Holder).
(ff) “Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five (5) Trading Days with the lowest VWAP of the Common Stock during the fifteen (15) consecutive Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date, divided by (y) five (5).
(gg) “Excluded Securities Cap” means, as of any date of determination, the sum of (i) []10 shares of Common Stock reserved under the 2026 Incentive Plan, as such number may be automatically increased from time to time pursuant to any evergreen or automatic share increase provision of the 2026 Incentive Plan (or any successor equity incentive plan approved by the board of directors of the Company), plus (ii) 17,500,000 shares of Common Stock reserved under the 2026 Milestone Equity Plan, in each case as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar transactions.
(hh) “Excluded Securities” means (i) shares of Common Stock or options, restricted stock units, performance restricted stock units, restricted stock awards, stock appreciation rights or other equity-based awards (and shares of Common Stock issued or issuable upon exercise, vesting or settlement thereof) issued or granted to directors, officers, employees, consultants or advisors of the Company or any of its Subsidiaries for services rendered to the Company or any of its Subsidiaries in their capacity as such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise, vesting or settlement of such awards) after the Subscription Date pursuant to this clause (i) do not, in the aggregate, exceed the Excluded Securities Cap and (B) the exercise price of any such options is not lowered, none of such awards are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such awards are otherwise materially changed in any manner that adversely affects any of the Buyers; provided, further, that shares subject to awards that are forfeited, cancelled, expire unexercised or unvested, or otherwise revert to the plan reserve (including, without limitation, unearned performance restricted stock units that revert to the general incentive pool reserve of the 2026 Incentive Plan upon failure to achieve the applicable performance milestones under the 2026 Milestone Equity Plan) shall not count against the foregoing cap and may be reissued or regranted under an Approved Stock Plan without constituting a new issuance for purposes of this clause (i); (ii) shares of Common Stock issued or issuable pursuant to the 2026 Milestone Equity Plan adopted in connection with the Merger, including, without limitation, shares of Common Stock underlying performance restricted stock units (“PRSUs”) awarded to Eligible PRSU Participants under the Management Earn-Out program, in an aggregate amount not to exceed 17,500,000 shares of Common Stock (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar transactions); (iii) shares of Common Stock issued or issuable pursuant to the 2026 Incentive Plan, including, without limitation, shares of Common Stock underlying awards made from the general incentive pool reserve (whether upon reversion of unearned PRSU shares from the 2026 Milestone Equity Plan or otherwise), in an aggregate amount not to exceed 3,500,000 shares of Common Stock (as such number may be automatically increased from time to time pursuant to any evergreen or automatic share increase provision of the 2026 Incentive Plan) (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar transactions) (and, for the avoidance of doubt, shares counted under clauses (ii) and (iii) shall also count toward the cap set forth in clause (i) above, and the caps in clauses (i), (ii) and (iii) shall not be additive); (iv) shares of Common Stock issued upon the conversion or exercise of Convertible Securities or Options (other than awards issued pursuant to an Approved Stock Plan that are covered by clause (i), (ii) or (iii) above) issued prior to the Subscription Date, provided that the conversion price of any such Convertible Securities is not lowered, none of such Convertible Securities or Options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities or Options are otherwise materially changed in any manner that adversely affects any of the Buyers; (v) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes; provided, that the terms of the Notes are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date); (vi) the shares of Common Stock issuable upon exercise of the Warrants; provided, that the terms of the Warrants are not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date); (vii) shares of Common Stock issued (or issuable) in connection with the Merger Agreement (as defined in the Securities Purchase Agreement); and (viii) shares of Common Stock issued in a Permitted PIPE (as defined in the Securities Purchase Agreement) solely to the extent such Permitted PIPE is consummated on or prior to the Business Combination Closing Date (as defined in the Securities Purchase Agreement).
| 10 | 1,865,079 rollover vested options from existing pool + 6% of the fully-diluted |
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(ii) “Fiscal Quarter” means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond to the Company’s fiscal year as of the date hereof that ends on January 31.
(jj) “Floor Initial Measuring Date” means earlier of (i) the date the initial Registration Statement (as defined in the Registration Rights Agreement) filed pursuant to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such date), and (ii) the initial date any of the Conversion Shares (as defined in the Securities Purchase Agreement) are eligible to be resold pursuant to Rule 144.
(kk) “Floor Price” means the Adjusted Floor Price as of the Floor Initial Measuring Date (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events) provided that if on each six month anniversary of the Floor Initial Measuring Date (each, an “Adjustment Date”), the Floor Price then in effect is higher than the Adjusted Floor Price with respect to such Adjustment Date, on such Adjustment Date the Floor Price shall be automatically lowered to such applicable Adjusted Floor Price.
(ll) “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of more than either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of more than 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire in any transaction or series or related transactions, either (x) more than 50% of the outstanding shares of Common Stock, (y) more than 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of more than 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) more than 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) more than 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
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(mm) “GAAP” means United States generally accepted accounting principles, consistently applied.
(nn) “Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(oo) “Holder Pro Rata Amount” means, as of any time of determination, a fraction (i) the numerator of which is the original Principal amount of this Note on the Applicable Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued pursuant to the Securities Purchase Agreement.
(pp) “Indebtedness” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(qq) “Initial Closing Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(rr) “Installment Amount” means the sum of (A) (i) with respect to any Installment Date other than the Maturity Date, the lesser of (x) the quotient of (I) the Principal amount outstanding under this Note as of the initial Installment Date, divided by (II) the number of Installment Dates occurring hereunder (as determined as of the initial Installment Date assuming no Deferrals, Accelerations, redemptions or conversions hereunder prior to the Maturity Date) and (y) the Principal amount then outstanding under this Note as of such Installment Date, and (ii) with respect to the Installment Date that is the Maturity Date, the Principal amount then outstanding under this Note as of such Installment Date (in each case, as any such Installment Amount may be reduced pursuant to the terms of this Note, whether upon conversion, redemption or Deferral), (B) any Deferral Amount deferred pursuant to Section 8(d) and included in such Installment Amount in accordance therewith, (C) any Acceleration Amount accelerated pursuant to Section 8(e) and included in such Installment Amount in accordance therewith and (D) in each case of clauses (A) through (C) above, the sum of any accrued and unpaid Interest as of such Installment Date under this Note, if any, and accrued and unpaid Late Charges, if any, under this Note as of such Installment Date. In the event the Holder shall sell or otherwise transfer any portion of this Note, the transferee shall be allocated a pro rata portion of the each unpaid Installment Amount hereunder.
(ss) “Installment Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Installment Date and (II) the applicable Installment Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery Deadline with respect to such Installment Conversion from (II) the quotient obtained by dividing (x) such portion of the Conversion Amount that is to be converted into shares of Common Stock in such applicable Installment Conversion, by (y) the applicable Installment Conversion Price without giving effect to clause (x) of such definition.
(tt) “Installment Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect, and (ii) the greater of (x) the Floor Price and (y) 95% of the lowest VWAP of the Common Stock of any Trading Day during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately prior to the applicable Installment Date.
(uu) “Installment Date” means (i) [ ]11 and (ii) thereafter, the first Trading Day of the calendar month immediately following the previous Installment Date until the Maturity Date, and (iii) the Maturity Date.
(vv) “Interest Date” means (x) if prior to the initial Installment Date or after the Maturity Date, the first Trading Day of each Fiscal Quarter or (y) if on or after the initial Installment Date, but on or prior to the Maturity Date, such Installment Date, if any, in such calendar month.
(ii) “Interest Notice Due Date” means, with respect to any given Interest Date, the twenty-first (21st) Trading Day immediately prior to such Interest Date.
| 11 | Insert for the Initial Notes: the first Trading Day after the twelve (12)-month anniversary of the Issuance Date of the Initial Notes. Insert for any Additional Note: the first Trading Day after the forty-fifth (45th) day following the Issuance Date of such Additional Note. |
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(ww) “Interest Rate” means twelve percent (12%) per annum, as may be adjusted from time to time in accordance with Section 2.
(xx) “Investment” means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person or the purchase of any assets of another Person for greater than the fair market value of such assets.
(yy) “Maturity Date” shall mean [ ]12; provided, however, the Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Change of Control Notice is delivered prior to the Maturity Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not limit the conversion of this Note.
(zz) “New Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription Date, directly or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “New Subsidiaries”.
(aaa) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(bbb) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(ccc) “Permitted Acquisition” means any acquisition by the Company or any of its Subsidiaries (whether by purchase of stock, purchase of assets, merger, consolidation or otherwise) of all or a substantial portion of the assets of, or a majority of the equity interests in, any Person; provided that (i) no Event of Default shall have occurred and be continuing at the time of such acquisition or would result therefrom (after giving pro forma effect thereto), (ii) the Person or assets so acquired are in the same or a substantially related or complementary line of business as that conducted by the Company and its Subsidiaries as of the Subscription Date, (iii) the aggregate cash consideration paid or payable by the Company and its Subsidiaries for all Permitted Acquisitions, excluding any portion of such cash consideration funded with the proceeds of Permitted Acquisition Indebtedness, shall not exceed $25,000,000 in the aggregate in any twelve (12) month period without the prior written consent of the Holder (for the avoidance of doubt, (A) any non-cash consideration, including shares of Common Stock or other equity securities of the Company, paid or payable in connection with a Permitted Acquisition shall not count toward the foregoing cap, and (B) any cash consideration funded with the proceeds of Permitted Acquisition Indebtedness shall likewise not count toward the foregoing cap), (iv) the Company shall be in compliance with the Financial Test (on a pro forma basis after giving effect to such acquisition), (v) the Person acquired (or the Subsidiary formed to consummate such acquisition) shall comply with the requirements of Section 16(o) hereof (including, without limitation, any applicable requirements or exceptions relating to such Subsidiary incurring such Permitted Acquisition Indebtedness set forth therein), and (vi) the Company shall have delivered to the Holder at least ten (10) Business Days’ prior written notice of such proposed acquisition, together with a reasonably detailed description of the material terms thereof and a pro forma compliance certificate demonstrating satisfaction of the conditions set forth in clauses (i) and (iv) above.
(ddd) “Permitted Acquisition Indebtedness” means Indebtedness incurred by a Subsidiary of the Company solely to fund the cash consideration payable in connection with a Permitted Acquisition; provided that (i) such Indebtedness is incurred by, and is secured solely by a Lien on the assets of, the Person acquired in such Permitted Acquisition (or the Subsidiary formed or utilized to consummate such Permitted Acquisition, in either case, the “Acquired Entity”), (ii) such Indebtedness is non-recourse to, and is not guaranteed by, the Company or any Subsidiary of the Company other than the Acquired Entity, (iii) such Indebtedness does not extend to, and is not secured by, any assets of the Company or any Subsidiary of the Company other than the assets of the Acquired Entity, (iv) such Indebtedness is incurred substantially concurrently with, or within ninety (90) days after, the consummation of the applicable Permitted Acquisition, and (v) the aggregate original principal amount of all Indebtedness incurred pursuant to this definition, together with all other Indebtedness previously incurred pursuant to this definition, shall not exceed $25,000,000 in the aggregate in any twelve (12) month period.
| 12 | Insert third anniversary of the Issuance Date. |
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(eee) “Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes (including any guaranty with respect thereto to the Collateral Agent and/or any other holder of Notes), (ii) Indebtedness set forth on Schedule 3(s) to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) Indebtedness secured by Permitted Liens or unsecured but as described in clauses (iv) and (v) of the definition of Permitted Liens, (iv) Permitted Subordinated Indebtedness, (v) Permitted Sole Recourse Indebtedness, in an aggregate amount not to exceed $5,000,000 (excluding any Permitted Acquisition Indebtedness), (vi) Indebtedness arising from obligations under workers’ compensation, unemployment insurance, social security and other similar legislation, (vi) Indebtedness in respect of insurance premiums financed in the ordinary course of business, (viii) Indebtedness incurred in the ordinary course of business in respect of credit cards, corporate purchasing cards and similar working capital facilities in an aggregate amount not to exceed $5,000,000, (ix) Indebtedness in respect of surety bonds, letters of credit or similar instruments issued in the ordinary course of business (including to satisfy landlord or vendor requirements) in an aggregate amount not to exceed $3,000,000, (x) Indebtedness arising from hedging or interest rate swap obligations entered into in the ordinary course of business for bona fide hedging purposes and not for speculation, (xi) Indebtedness in respect of earnout, contingent consideration or deferred purchase price obligations arising from the Merger or any other Permitted Acquisition, and (xii) Permitted Acquisition Indebtedness; provided, that the aggregate amount of Indebtedness pursuant to clauses (vi) to (xii) shall not exceed $25,000,000, in the aggregate, but, for the avoidance of doubt, excluding any Permitted Sole Recourse Indebtedness.
(fff) “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens with respect to Permitted Sole Recourse Indebtedness, in an aggregate amount not to exceed $5,000,000, (v) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods, (vii) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 4(a)(xii)), (viii) Liens on assets of a Person existing at the time such Person is acquired in a Permitted Acquisition (or on assets acquired in a Permitted Acquisition), provided that (A) such Liens were not created in contemplation of such Permitted Acquisition, (B) such Liens do not extend to any assets of the Company or any of its Subsidiaries other than the assets so acquired (nor shall such Indebtedness include any guaranty of the Company or any of its Subsidiaries), and (C) the Indebtedness secured thereby is Permitted Indebtedness, and (ix) Liens on assets of the Acquired Entity created in connection with, and contemporaneously with or promptly (but in any event within ninety (90) days) following the consummation of, a Permitted Acquisition to secure Permitted Acquisition Indebtedness, provided that (A) such Liens are secured solely by the assets of the Acquired Entity, (B) such Liens do not extend to any assets of the Company or any of its other Subsidiaries, and (C) the Indebtedness secured thereby qualifies as Permitted Acquisition Indebtedness.
(ggg) “Permitted Sole Recourse Indebtedness” means Indebtedness in respect of capital leases, operating leases and purchase money obligations for fixed or capital assets, in each case incurred in the ordinary course of business, which Indebtedness is not guaranteed by the Company or any other Subsidiary and the sole recourse of which is to the fixed or capital assets leased and/or purchased in connection therewith.
(hhh) “Permitted Subordinated Indebtedness” means unsecured Indebtedness (other than Convertible Securities) incurred by the Company or any Subsidiary that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement reasonably acceptable to the Holder, which does not include any equity or equity-linked features or the issuance or transfer of any securities (including, with limitation, any Options or the right to convert, exchange or otherwise satisfy the payment of such Indebtedness with any equity security of the Company or any of its Subsidiaries) and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until at least ninety-one (91) days after the Maturity Date and (2) total interest and fees at a rate in excess of 12% per annum.
(iii) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
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(jjj) “Price Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock on any Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately preceding such date of determination fails to exceed the greater of (x) the Floor Price then in effect and (y) $2.00 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during any such measuring period. Notwithstanding the foregoing, at any time, and for any period of time, as applicable, the Holder may lower any dollar threshold specified in this definition to any lower dollar threshold, in each case, as specified by the Holder in a written notice to the Company.
(kkk) “Principal Market” means the Eligible Market that the Common Stock is trading on the first Trading Day after the Initial Closing Date.
(lll) “Redemption Notices” means, collectively, the Event of Default Redemption Notices, the Installment Notices with respect to any Installment Redemption, Company Optional Redemption Notices, the Asset Sale Optional Redemption Notices, the Subsequent Placement Optional Redemption Notices and the Change of Control Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”
(mmm) “Redemption Premium” means 125%.
(nnn) “Redemption Prices” means, collectively, Event of Default Redemption Prices, the Change of Control Redemption Prices, the Asset Sale Optional Redemption Prices, the Subsequent Placement Optional Redemption Prices, the Installment Redemption Prices and the Company Optional Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”
(ooo) “Registration Rights Agreement” means that certain registration rights agreement, dated as of the Initial Closing Date, by and among the Company and the initial holders of the Notes relating to, among other things, the registration of the resale of the Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes, as may be amended from time to time.
(ppp) “SEC” means the United States Securities and Exchange Commission or the successor thereto.
(qqq) “Securities Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
(rrr) “Security Agreement” shall have the meaning as set forth in the Securities Purchase Agreement.
(sss) “Six Month Adjustment Measuring Price” means, with respect to the Six Month Adjustment Date, the greater of (x) the Floor Price and (y) the quotient of (i) the sum of the VWAP of the Common Stock for each Trading Day during the ten (10) consecutive Trading Day period ending and including the Trading Day immediately prior to the Six Month Adjustment Date, divided by (B) ten (10). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.
(ttt) “Subscription Date” means _________ __, 2026.
(uuu) “Subsidiaries” means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing, individually, a “Subsidiary.”
(vvv) “Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(www) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
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(xxx) “Subsequent Placement” means any direct or indirect issuance, offer, sale, grant of any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) by the Company and/or any of its Subsidiaries of any equity security and/or any equity-linked and/or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities, any Options, any debt, any preferred stock and/or any purchase rights).
(yyy) “Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(zzz) “Triggering Event” means the suspension (or threatened suspension) from trading or the failure (or threatened failure) of the Common Stock to be trading or listed (as applicable) on an Eligible Market.
(aaaa) “Volume Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading volume (as reported on Bloomberg) of the Common Stock on the Principal Market on any Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately preceding such date of determination (such period, the “Volume Failure Measuring Period”), is less than $50,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions occurring after the Subscription Date). Notwithstanding the foregoing, at any time, and for any period of time, as applicable, the Holder may lower any dollar threshold specified in this definition to any lower dollar threshold, in each case, as specified by the Holder in a written notice to the Company.
(bbbb) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 26. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
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35. DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public 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 any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 35 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
36. ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.
[signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
| [ ] (f/k/a BLUEROCK ACQUISITION CORP.) | |||
| By: | |||
| Name: | |||
| Title: | |||
Senior Convertible Note - Signature Page
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EXHIBIT I
[ ] (f/k/a BLUEROCK ACQUISITION CORP.)
CONVERSION NOTICE
Reference is made to the Senior [Secured] Convertible Note (the “Note”) issued to the undersigned by [ ] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.001 par value per share (the “Common Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Note.
| Date
of Conversion: |
| Aggregate Principal to be converted: | ||
| Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: |
| AGGREGATE CONVERSION AMOUNT TO BE CONVERTED: |
Please confirm the following information:
| Conversion Price: |
| Number of shares of Common Stock to be issued: |
| Installment Amount(s) to be reduced (and corresponding Installment Date(s)) and amount of reduction: |
☐ If this Conversion Notice is being delivered with respect to an Alternate Conversion, check here if Holder is electing to use the following Alternate Conversion Price:____________
| ☐ | If this Conversion Notice is being delivered with respect to an Acceleration, check here if Holder is electing to use _________ as the Installment Conversion Price related to the following Installment Date:____________ |
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Please issue the Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
| ☐ | Check here if requesting delivery as a certificate to the following name and to the following address: |
| Issue to: | ||
| ☐ | Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
| DTC Participant: | ||
| DTC Number: | ||
| Account
Number: |
| Date: | _____________ __, ___ |
Name of Registered Holder
| By: | |||
| Name: | |||
| Title: | |||
| Tax ID:_____________________ | |||
E-mail Address:
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Exhibit II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not] eligible to be resold by the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the Company of a customary 144 representation letter) or (ii) an effective and available registration statement and (c) hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.
| [ ] (f/k/a BLUEROCK ACQUISITION CORP.) | ||
| By: | ||
| Name: | ||
| Title: | ||
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EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of [___], 2026, is by and among [ ] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation with offices located at 400 Concar Drive San Mateo, CA 94402 (the “Company”), and the undersigned buyers (each, a “Buyer,” and collectively, the “Buyers”).
RECITALS
A. In connection with the Securities Purchase Agreement by and among the Company, Bitonic Technology Labs Inc. d/b/a Yellow.ai, and the Buyers, dated as of ______, 2026 (the “Securities Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue and sell to each Buyer the Notes (as defined in the Securities Purchase Agreement) which will be convertible into Conversion Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Notes.
B. To induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
(a) “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 generally are open for use by customers on such day.
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(b) “Effective Date” means the date that the applicable Registration Statement has been declared effective by the SEC.
(c) “Effectiveness Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the earlier of the (A) eightieth (80th) calendar day (or, if subject to a full review by the SEC, the one hundred tenth (110th) calendar day) after the Initial Closing Date and (B) third (3rd) Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement, the earlier of the (A) eightieth (80th) calendar day (or, if subject to a review by the SEC, the one hundred tenth (110th) calendar day) following the date on which the Company was required to file such additional Registration Statement and (B) third (3rd) Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review.
(d) “Filing Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the thirty-fifth (35th) calendar day after the Initial Closing Date and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional Registration Statement pursuant to the terms of this Agreement.
(e) “Initial Closing Date” means the date of the Initial Closing (as defined in the Securities Purchase Agreement) at which the Company issues and sells the Initial Notes to the Buyers pursuant to the Securities Purchase Agreement.
(f) “Investor” means a Buyer or any transferee or assignee of any Registrable Securities or Notes, as applicable, to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities or Notes, as applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.
(g) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof.
(h) “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration Statement(s) by the SEC.
(i) “Registrable Securities” means (i) the Conversion Shares, and (ii) any capital stock of the Company issued or issuable with respect to the Conversion Shares or the Notes, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock (as defined in the Notes) are converted or exchanged and shares of capital stock of a Successor Entity (as defined in the Notes) into which the shares of Common Stock are converted or exchanged, in each case, without regard to any limitations on conversion of the Notes.
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(j) “Registration Statement” means any registration statement required to be filed hereunder under the 1933 Act covering the resale of the Registrable Securities, including (in each case) the prospectus, amendments and supplements to any such registration statement or prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
(l) “Required Holders” shall have the meaning as set forth in the Securities Purchase Agreement.
(m) “Required Registration Amount” means, as of any time of determination, 100% of the maximum number of Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that (w) all Additional Notes (as defined in the Securities Purchase Agreement) issuable pursuant to the Securities Purchase Agreement shall have been issued at an Additional Closing (as defined in the Securities Purchase Agreement) on the Initial Closing Date, (x) the Notes are convertible at the Floor Price (as defined in the Notes) assuming a Conversion Date (as defined in the Notes) as of such time of determination, (y) interest on the Notes shall accrue through the third anniversary of the Initial Closing Date and will be converted into shares of Common Stock at the Floor Price assuming a Conversion Date as of such time of determination, and (z) any such conversion shall not take into account any limitations on the conversion of the Notes set forth in the Notes, all subject to adjustment as provided in Section 2(d) and/or Section 2(f).
(n) “Rule 144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration.
(o) “Rule 415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
(p) “SEC” means the United States Securities and Exchange Commission or any successor thereto.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and, as soon as reasonably practicable, but in no event later than the Filing Deadline, file with the SEC an initial Registration Statement on Form S-3 covering the resale of all of the Registrable Securities, provided that such initial Registration Statement shall register for resale at least the number of shares of Common Stock equal to the Required Registration Amount as of the date such Registration Statement is initially filed with the SEC; provided further that if Form S-3 is unavailable for such a registration, the Company shall use such other form as is required by Section 2(c). Such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, shall include the information set forth in (except if otherwise directed by the Required Holders) the “Selling Stockholders” and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit B. The Company shall use its reasonable best efforts to have such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as soon as reasonably practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.
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(b) Legal Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP, counsel solely to the lead investor (“Legal Counsel”), shall review and oversee, as outlined in Section 3(e), any registration, solely on behalf of the lead investor, pursuant to this Section 2.
(c) Ineligibility to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on Form S-1 or another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the resale of the Registrable Securities on Form S-3 as soon as reasonably practicable after such form is available, provided that the Company shall maintain the effectiveness of all Registration Statements then in effect until such time as a Registration Statement on Form S-3 covering the resale of all the Registrable Securities has been declared effective by the SEC and the prospectus contained therein is available for use.
(d) Sufficient Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated portion of the Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible), or file with the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least the Required Registration Amount as of the Trading Day (as defined in the Notes) immediately preceding the date of the filing of such amendment or new Registration Statement, in each case, as soon as reasonably practicable, but in any event not later than thirty (30) calendar days after the Company is aware that the necessity therefor arises (but taking account of any Staff position with respect to the date on which the Staff will permit such amendment to the Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC). The Company shall use its reasonable best efforts to cause such amendment to such Registration Statement and/or such new Registration Statement (as the case may be) to become effective as soon as reasonably practicable following the filing thereof with the SEC, but in no event later than the applicable Effectiveness Deadline for such Registration Statement. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities” if at any time the number of shares of Common Stock available for resale under the applicable Registration Statement is less than the product determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90. The calculation set forth in the foregoing sentence shall be made without regard to any limitations on conversion, amortization and/or redemption of the Notes (and such calculation shall assume (A) that the Notes are then convertible in full into shares of Common Stock at the then prevailing Conversion Rate (as defined in the Notes) and (B) the initial outstanding principal amount of the Notes remains outstanding through the scheduled Maturity Date (as defined in the Notes) and no redemptions of the Notes occur prior to the scheduled Maturity Date).
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(e) Effect of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering the resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section 2(f)) and required to be filed by the Company pursuant to this Agreement is (A) not filed with the SEC on or before the Filing Deadline for such Registration Statement (a “Filing Failure”) (it being understood that if the Company files a Registration Statement without affording each Investor and Legal Counsel the opportunity to review and comment on the same as required by Section 3(c) hereof, the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B) not declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement (an “Effectiveness Failure”) (it being understood that if on the Business Day immediately following the Effective Date for such Registration Statement the Company shall not have filed a “final” prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance with Section 3(b) (whether or not such a prospectus is technically required by such rule), the Company shall be deemed to not have satisfied this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure), (ii) other than during an Allowable Grace Period (as defined below), on any day after the Effective Date of a Registration Statement sales of all of the Registrable Securities required to be included on such Registration Statement (disregarding any reduction pursuant to Section 2(f)) cannot be made pursuant to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of (or a failure to timely list) the shares of Common Stock on the Principal Market (as defined in the Securities Purchase Agreement) or any other limitations imposed by the Principal Market, or a failure to register a sufficient number of shares of Common Stock or by reason of a stop order) or the prospectus contained therein is not available for use for any reason (a “Maintenance Failure”), or (iii) if a Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for any reason, and either (x) the Company fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Current Public Information Failure”) as a result of which any of the Investors are unable to sell Registrable Securities without restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific performance), the Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to one percent (1%) of such Investor’s original principal amount stated in such Investor’s Note on the Initial Closing Date (1) on the date of such Filing Failure, Effectiveness Failure, Maintenance Failure or Current Public Information Failure, as applicable, and (2) on every thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness Failure is cured; (III) a Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current Public Information Failure until the earlier of (i) the date such Current Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144 (in each case, prorated for periods totaling less than thirty (30) calendar days). The payments to which a holder of Registrable Securities shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.” Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such event or failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment shall be made on the third (3rd) Business Day after such cure. In the event the Company fails to make Registration Delay Payments in a timely manner in accordance with the foregoing, such Registration Delay Payments shall bear interest at the rate of one percent (1%) per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration Delay Payments shall be owed to an Investor (other than with respect to a Maintenance Failure resulting from a suspension or delisting of (or a failure to timely list) the shares of Common Stock on the Principal Market) with respect to any period during which all of such Investor’s Registrable Securities may be sold by such Investor without restriction under Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
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(f) Offering. Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Registration Delay Payments pursuant to Section 2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Investors participating therein (or as otherwise may be reasonably acceptable to each Investor) without being named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by all Investors until such time as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making such reduction, the Company shall reduce the number of shares to be included by all Investors on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of shares by a particular Investor or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction (and if by a set of Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least number of shares by all such Investors); provided, that, with respect to such pro rata portion allocated to any Investor, such Investor may elect the allocation of such pro rata portion among the Registrable Securities of such Investor. In addition, in the event that the Staff or the SEC requires any Investor seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Investor, until such time as the Staff or the SEC does not require such identification or until such Investor accepts such identification and the manner thereof. Any reduction pursuant to this paragraph will first reduce all Registrable Securities other than those issued pursuant to the Securities Purchase Agreement. In the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to require, upon delivery of a written request to the Company signed by such Investor, the Company to file a registration statement within ten (10) calendar days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale by such Investor in a manner reasonably acceptable to such Investor, and the Company shall following such request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an effective Registration Statement in a manner reasonably acceptable to such Investor or (ii) all Registrable Securities may be resold by such Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff position with respect to “affiliate” status) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any such Registration Statement in a manner reasonably acceptable to such Investor as to all Registrable Securities held by such Investor and that have not theretofore been included in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Investor as contemplated above).
(g) Piggyback Registrations. Without limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there is not an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not available for use and the Company shall determine to prepare and file with the SEC a registration statement or offering statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans), then the Company shall deliver to each Investor a written notice of such determination and, if within five (5) Trading Days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement or offering statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however, the Company shall not be required to register any Registrable Securities pursuant to this Section 2(g) that are eligible for resale pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of a then-effective Registration Statement. Notwithstanding the foregoing, if the Company is advised by the managing underwriter or placement agent (if any) for such offering that the total amount of securities to be included in such registration exceeds the amount that can be sold in such offering without adversely affecting the price, timing, or distribution of the offering, then the Company shall include in such registration: (i) first, the securities the Company proposes to sell for its own account or the account of any other Person at whose request such registration is being effected, and (ii) second, the Registrable Securities requested to be included by the Investors, allocated on a pro rata basis among such Investors based on the number of Registrable Securities requested to be included by each such Investor.
(h) Allocation of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement, other than a piggyback registration pursuant to Section 2(g) hereof (the allocations of which shall be made pursuant to Section 2(g)) and any increase in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable Securities, each transferee or assignee (as the case may be) that becomes an Investor pursuant to Section 9 of this Agreement shall be allocated a pro rata portion of the then-remaining number of Registrable Securities included in such Registration Statement for such transferor or assignee (as the case may be). Any shares of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which are covered by such Registration Statement.
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(i) No Inclusion of Other Securities. Except for the securities described on Schedule 2(i) attached hereto (the “Third Party Securities”), the Company shall in no event include any securities other than Registrable Securities on any Registration Statement filed in accordance with Section 2(a) or Section 2(d) above without the prior written consent of the Required Holders; provided, that in the event of any reduction in the aggregate number of shares subject to registration in such registration Statement in accordance herewith, the Company shall reduce all Third Party Securities before reducing any of the Registrable Securities. Until the Applicable Date (as defined in the Securities Purchase Agreement), the Company shall not enter into any agreement providing any registration rights to any of its security holders, except as otherwise permitted under the Securities Purchase Agreement.
3. Related Obligations.
The Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but in no event later than the applicable Filing Deadline) and use its reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable after such filing (but in no event later than the Effectiveness Deadline).
(b) Subject to Allowable Grace Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein available for use) pursuant to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and not fixed prices) at all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities required to be covered by such Registration Statement (disregarding any reduction pursuant to Section 2(f)) without restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”).
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(c) Notwithstanding anything to the contrary contained in this Agreement, the Company shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection with such Registration Statement (1) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the extent permitted) all material information regarding the Company and its securities.
(d) The Company shall submit to the SEC, within two (2) Business Days after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be made by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be) and (ii) the consent of Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be promptly sought), a request for acceleration of effectiveness of such Registration Statement to a time and date as soon as reasonably practicable but not later than two (2) Business Days after the submission of such request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement as soon as reasonably practicable, but in no event later than ten (10) Business Days after the receipt of comments by or notice from the SEC that an amendment is required in order for a Registration Statement to be declared effective.
(e) Subject to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation, post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep each such Registration Statement effective at all times during the Registration Period for such Registration Statement, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day immediately following each Effective Date, the Company shall file with the SEC in accordance with Rule 424(b) under the 1933 Act the final prospectus to be used in connection with sales pursuant to the applicable Registration Statement (whether or not such a prospectus is technically required by such rule). In the case of amendments and supplements to any Registration Statement which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a report on Form 8-K, Form 10-Q, Form 10-K, or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall, if permitted under the applicable rules and regulations of the SEC, have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC promptly following the date on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.
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(f) The Company shall (A) permit Legal Counsel and legal counsel for each other Investor to review and comment upon (i) each Registration Statement at least three (3) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel or any such legal counsel for any other Investor reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto or to any prospectus contained therein without the prior consent of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall promptly furnish to Legal Counsel and any such legal counsel for each other Investor, without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives relating to each Registration Statement, provided that such correspondence shall not contain any material, non-public information regarding the Company or any of its Subsidiaries (as defined in the Securities Purchase Agreement), (ii) after the same is prepared and filed with the SEC, one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel and any such legal counsel for each other Investor in performing the Company’s obligations pursuant to this Section 3.
(g) If requested by an Investor, the Company shall promptly furnish to such Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
(h) The Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(h), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
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(i) The Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, may include an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement and such prospectus contained therein to correct such untrue statement or omission and deliver ten (10) copies of such supplement or amendment to Legal Counsel, any such legal counsel for each other Investor and each Investor (or such other number of copies as Legal Counsel, any such legal counsel for each other Investor or such Investor may reasonably request). The Company shall also promptly notify Legal Counsel, any such legal counsel for each other Investor and each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel, any such legal counsel for each other Investor and each Investor by e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information relating to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as promptly as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it being understood and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than fifteen (15) Business Days after the receipt thereof).
(j) The Company shall (i) use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel, any such legal counsel for each other Investor and each Investor who holds Registrable Securities of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
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(k) If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor may reasonably request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investors.
(l) If any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available for inspection by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other agents retained by such Investor (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure (except to such Investor) or use of any Record or other information which the Company’s board of directors determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (1) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (3) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document (as defined in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor, if any) shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.
(m) The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
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(n) Without limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its reasonable best efforts either to (i) cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, (ii) secure designation and quotation of all of the Registrable Securities covered by each Registration Statement on an Eligible Market (as defined in the Securities Purchase Agreement), or (iii) if, despite the Company’s reasonable best efforts to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the preceding clauses (i) or (ii), without limiting the generality of the foregoing, to use its reasonable best efforts to arrange for at least two market makers to register with the Financial Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable Securities. In addition, the Company shall cooperate with each Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 3(m).
(o) The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (to the extent such legend is not required in accordance with Section 5(d) of the Securities Purchase Agreement) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.
(p) If requested by an Investor, the Company shall as soon as reasonably practicable after receipt of notice from such Investor and subject to Section 3(r) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or prospectus contained therein if reasonably requested by an Investor holding any Registrable Securities.
(q) Subject to Section 3(h) of this Agreement, the Company shall use its reasonable best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
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(r) The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) calendar days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the applicable Effective Date of each Registration Statement.
(s) The Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
(t) Within one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.
(u) Notwithstanding anything to the contrary herein (but subject to the last sentence of this Section 3(r)), at any time after the Effective Date of a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”), provided that the Company shall promptly notify the Investors in writing of the (i) existence of material, non-public information giving rise to a Grace Period (provided that in each such notice the Company shall not disclose the content of such material, non-public information to any of the Investors) and the date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided further that (I) no Grace Period shall exceed twenty (20) consecutive calendar days and during any three hundred sixty five (365) day period all such Grace Periods shall not exceed an aggregate of fourty-five (45) calendar days, (II) the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period and (III) no Grace Period may exist during the forty-five (45) Trading Day period immediately following the Effective Date of such Registration Statement (provided that such forty five (45) Trading Day period shall be extended by the number of Trading Days during such period and any extension thereof contemplated by this proviso during which such Registration Statement is not effective or the prospectus contained therein is not available for use) (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, prior to such Investor’s receipt of the notice of a Grace Period and for which the Investor has not yet settled.
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(v) The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable Securities pursuant to each Registration Statement.
(w) Neither the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing with the SEC, the Principal Market or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the Securities Purchase Agreement); provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution” section attached hereto as Exhibit B in the Registration Statement. Notwithstanding the foregoing, if after the required reduction of the number of shares of Common Stock to be included in a Registration Statement to comply with Rule 415 of the 1933 Act, the SEC still insists that a Buyer be named as an “underwriter” in such Registration Statement and such Buyer refuses to be named as an “underwriter” in such Registration Statement, no Registration Delay Payments shall accrue hereunder with respect to such Buyer.
(x) Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
4. Obligations of the Investors.
(a) At least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
(b) Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f) and for which such Investor has not yet settled.
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5. Expenses of Registration.
All reasonable expenses, other than underwriting discounts and commissions and brokerage fees, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall reimburse Legal Counsel for its fees and disbursements in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000 for each such registration, filing or qualification.
6. Indemnification.
(a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each of its directors, officers, stockholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, stockholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Indemnified Person”), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of such Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d); and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities by any of the Investors pursuant to Section 9.
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(b) In connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed, provided further that such Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the applicable sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities by any of the Investors pursuant to Section 9.
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(c) Promptly after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Indemnified Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Indemnified Person or Indemnified Party (as the case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party), provided further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as the case may be). The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person (as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.
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(d) The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7. Contribution.
To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission or alleged omission.
8. Reports Under the 1934 Act.
So long as any Investor owns any Notes and/or Registrable Securities and/or any BC Securities (as defined in the Securities Purchase Agreement) (or, if later, the Additional Closing Expiration Date as defined in the Securities Purchase Agreement)) and with a view to making available to such Investors the benefits of Rule 144, the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations of the Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and
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(c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, that it has complied with the reporting, submission and posting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights.
All or any portion of the rights under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case may be) of all or any portion of such Investor’s Registrable Securities or Notes (other than any transferee or assignee upon a registered offering or sale of Registrable Securities pursuant to Rule 144) if: (i) such Investor agrees in writing with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such transfer or assignment (as the case may be); (ii) the Company is, within a reasonable time after such transfer or assignment (as the case may be), furnished with written notice of (a) the name and address of such transferee or assignee (as the case may be), and (b) the securities with respect to which such registration rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer or assignment (as the case may be) the further disposition of such securities by such transferee or assignee (as the case may be) is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement and the Notes (as the case may be); and (vi) such transfer or assignment (as the case may be) shall have been conducted in accordance with all applicable federal and state securities laws (any such transferee or assignee, a “Permitted Transferee”.
10. Amendment of Registration Rights.
Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver that complies with the foregoing, but that disproportionately, materially and adversely affects the rights and obligations of any Investor relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company, provided that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of Registrable Securities or (2) imposes any obligation or liability on any Investor without such Investor’s prior written consent (which may be granted or withheld in such Investor’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to this Agreement.
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11. Termination.
This Agreement shall terminate upon the date after the Additional Closing Expiration Date (as defined in the Securities Purchase Agreement) after which no Investor or any Permitted Transferee holds any Registrable Securities or Notes.
12. Miscellaneous.
(a) Solely for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
[ ] (f/k/a Bluerock Acquisition Corp.)
________________________
________________________
Telephone: (___) ___-____
Attention: Chief Executive Officer
Email:
With a copy (for informational purposes only) to:
________________________
________________________
________________________
Telephone: (___) ___-____
Attention: _____________
Email:
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If to the Transfer Agent:
______________________
______________________
______________________
Telephone: (___) ___-____
Attention: _____________
Email:
If to Legal Counsel:
Kelley Drye & Warren LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
Telephone: (212) 808-7540
Attention: Michael A. Adelstein, Esq.
E-mail: [email protected]
and to:
Blank Rome LLP
130 North 18th Street
Philadelphia, PA 19103
Telephone: (215) 569-5701
Attention: Heather Sonnenberg
E-Mail: [email protected]
If to a Buyer, to its mailing address and/or email address set forth on the Schedule of Buyers attached to the Securities Purchase Agreement, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other mailing address and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) calendar days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP and Blank Rome LLP shall only be provided notices sent to the lead investor. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which any party may be entitled by law or equity.
B-21
(d) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware without giving effect to any provision of law or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such notices to it under this Agreement 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e) If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(f) This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Investor in the Company, (ii) waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Investor and all such agreements shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.
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(g) Subject to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections 6 and 7 hereof.
(h) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(i) This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original, but all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an email which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(j) Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms used in this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Initial Closing Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders, determined as if all of the outstanding Notes then held by the Investors have been converted for Registrable Securities without regard to any limitations on redemption, amortization and/or conversion of the Notes then held by Investors.
B-23
(m) This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
(n) The obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Investor. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and an Investor, solely, and not between the Company and the Investors collectively and not between and among Investors.
[signature page follows]
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
COMPANY: | ||
| [ ] (f/k/a BLUEROCK ACQUISITION CORP.) | ||
| By: | ||
| Name: | ||
| Title: | ||
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
BUYERS: | ||
[LEAD BUYER] | ||
| By: | ||
| Name: | ||
| Title: | ||
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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
[OTHER BUYERS] | ||
| By: | ||
| Name: | ||
| Title: | ||
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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______________________
______________________
______________________
Attention: _____________
Re: [ ] (f/k/a Bluerock Acquisition Corp.)
Ladies and Gentlemen:
[We are][I am] counsel to [ ] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation (the “Company”), and have represented the Company in connection with that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into by and among the Company and the buyers named therein (collectively, the “Holders”) pursuant to which the Company issued to the Holders senior secured convertible notes (the “Notes”) convertible into the Company’s shares of common stock, $[ ] par value per share (the “Common Stock”). Pursuant to the Securities Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion of the Notes under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form [S-1][S-3] (File No. 333-_____________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, [we][I] advise you that [a member of the SEC’s staff has advised [us][me] by telephone that [the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] [an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] has been posted on the web site of the SEC at www.sec.gov] and [we][I] have no knowledge, after a review of information posted on the website of the SEC at http://www.sec.gov/litigation/stoporders.shtml, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.
Based on the foregoing, [we][I] advise you that, as of the date hereof, the shares of Common Stock underlying the Notes are freely transferable by the Holders pursuant to the Registration Statement, subject to the continued effectiveness of the Registration Statement and compliance with the prospectus delivery requirements of the 1933 Act. This letter speaks only as of the date hereof, and [we][I] assume no obligation to update or supplement this letter to reflect any facts or circumstances that may hereafter come to [our][my] attention or any changes in law that may hereafter occur. This letter is limited to the matters expressly set forth herein, and no opinion is implied or may be inferred beyond the matters expressly stated.
| Very truly yours, | ||
| [ISSUER’S COUNSEL] | ||
| By: |
| CC: | [LEAD BUYER] |
[OTHER BUYERS]
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EXHIBIT B
SELLING STOCKHOLDERS
The shares of common stock being offered by the selling stockholders are those issuable to the selling stockholders upon conversion of the notes. For additional information regarding the issuance of the notes, see “Private Placement of Notes” above. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the notes issued pursuant to the Securities Purchase Agreement and except as otherwise disclosed below, the selling stockholders have not had any material relationship with us within the past three years.
The table below lists the selling stockholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock held by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by the selling stockholders, based on their respective ownership of shares of common stock and notes, as of ________, 20__, assuming conversion of the notes held by each such selling stockholder on that date but taking account of any limitations on conversion set forth therein.
The third column lists the shares of common stock being offered by this prospectus by the selling stockholders and does not take in account any limitations on conversion of the notes set forth therein.
In accordance with the terms of a registration rights agreement with the holders of the notes, this prospectus generally covers the resale of 100% of the maximum number of shares of common stock issued or issuable pursuant to the Notes (assuming for purposes hereof that all additional notes issuable pursuant to the Securities Purchase Agreement shall have been issued as of such time of determination), including payment of interest on the notes through [DATE], determined as if the outstanding notes (including interest on the notes through [DATE]) were converted in full (without regard to any limitations on conversion contained therein solely for the purpose of such calculation) at the floor price in effect on the date this registration statement was initially filed with the SEC. Because the conversion price and floor price of the notes may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under the terms of the notes, a selling stockholder may not convert the notes to the extent (but only to the extent) such selling stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 4.99% of the outstanding shares of the Company. The number of shares in the second column reflects these limitations. The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
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|
Name of Selling Stockholder |
Number of Shares of Common Stock Owned Prior to Offering | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus | Number of Shares of Common Stock of Owned After Offering | |||
[LEAD BUYER] |
||||||
| [OTHER BUYERS] | ||||||
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PLAN OF DISTRIBUTION
We are registering the shares of common stock issuable upon conversion of the notes to permit the resale of these shares of common stock by the holders of the notes from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
| ● | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| ● | in the over-the-counter market; |
| ● | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| ● | through the writing or settlement of options, whether such options are listed on an options exchange or otherwise; |
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | short sales made after the date the Registration Statement is declared effective by the SEC; |
| ● | broker-dealers may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share; |
| ● | a combination of any such methods of sale; and | |
| ● | any other method permitted pursuant to applicable law. |
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The selling stockholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described in this prospectus. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in some or all of the notes or shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
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There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.
The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.
We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.
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EXHIBIT C
FORM OF SECURITY AGREEMENT
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT, dated as of July [●], 2026 (this “Agreement”), made by [●] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation with offices located at 919 Third Avenue, New York, NY 10022 (the “Company”), and each of the undersigned direct and indirect Subsidiaries (as defined below) of the Company from time to time, if any (each a “Grantor” and together with the Company, collectively, the “Grantors”), in favor of [●], with offices located at One Penn, 1 Pennsylvania Plaza, Suite 4810, New York, New York 10119, in its capacity as collateral agent (together with its successors and assignees, in such capacity, the “Collateral Agent”) for the Noteholders (as defined below) party to the Securities Purchase Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Company is party to that certain Securities Purchase Agreement, dated as of July [●], 2026 (as amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, the “Securities Purchase Agreement”) by and among the Company and each party listed as a “Buyer” on the Schedule of Buyers attached thereto (each a “Buyer” and collectively, the “Buyers”), pursuant to which the Company shall be required to sell, and the Buyers shall purchase or have the right to purchase, the “Notes” and “Additional Notes”, in each case, issued pursuant thereto (as such Notes and Additional Notes may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, collectively, the “Notes”);
WHEREAS, subject to the terms hereof, certain Grantors (other than the Company) from time to time (each a “Guarantor” and collectively, the “Guarantors”) may execute and deliver one or more guarantees (each, a “Guaranty” and collectively, the “Guaranties”) in form and substance acceptable to and in favor of the Collateral Agent, for the ratable benefit of itself and the holders of the Notes, with respect to the Company’s obligations under the Securities Purchase Agreement, the Notes and certain other applicable Transaction Documents (as defined in the Securities Purchase Agreement);
WHEREAS, it is a condition precedent to the Buyers’ obligation to purchase certain Notes that the Grantors shall have executed and delivered to the Collateral Agent this Agreement providing for the grant to the Collateral Agent, for the ratable benefit of itself and the Noteholders, of a valid, enforceable, and perfected security interest in all personal property of each Grantor to secure all of the Company’s obligations under the Transaction Documents;
WHEREAS, the Grantors are Affiliates that are part of a common enterprise such that each Grantor will derive substantial direct and indirect financial and other benefits from the consummation of the transactions contemplated under the Transaction Documents and, accordingly, the consummation of such transactions are in the best interests of each Grantor; and
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NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities Purchase Agreement, each Grantor agrees with the Collateral Agent, for the ratable benefit of the Collateral Agent and the Noteholders, as follows:
SECTION 1. Definitions.
(a) Reference is hereby made to the Securities Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Agreement and the recitals hereto which are defined in the Securities Purchase Agreement, the Notes or in the Code, and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Code on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of the Code except as the Collateral Agent may otherwise reasonably determine.
(b) Without limiting the generality of, and subject to the proviso at the end of, Section 1(a) of this Agreement, the following terms shall have the respective meanings provided for in the Code: “Accounts”, “Account Debtor”, “Cash Proceeds”, “Certificate of Title”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”, “Record”, “Security Account”, “Software”, “Supporting Obligations” and “Uncertificated Securities”.
(c) As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:
“Affiliate” of any Person means any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and any officer or director of such Person. Without limiting the generality of the foregoing, a Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy, insolvency or similar laws).
“Bankruptcy Event of Default” shall have the meaning set forth in the Note.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City 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 generally are open for use by customers on such day.
“Buyer” or “Buyers” shall have the meaning set forth in the recitals hereto.
“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is not an individual or a corporation, any and all partnership, membership, trust or other equity interests of such Person.
“CFC” means any Foreign Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Internal Revenue Code of 1986, as amended.
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“Closing Date” means the date the Company issues the Initial Notes pursuant to the terms of the Securities Purchase Agreement.
“Code” means Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Code” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“Collateral” shall have the meaning set forth in Section 3(a) of this Agreement.
“Collateral Agent” shall have the meaning set forth in the preamble hereto.
“Company” shall have the meaning set forth in the preamble hereto.
“Controlled Account Agreement” means a deposit account control agreement or securities account control agreement with respect to a Pledged Account, pursuant to which the Collateral Agent is granted control over such Pledged Account in a manner that perfects its security interest in such Pledged Account under applicable law, all in form and substance satisfactory to the Collateral Agent, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time.
“Controlled Account Bank” shall have the meaning set forth in Section 6(i) of this Agreement.
“Controlled Accounts” means the Deposit Accounts, Commodity Accounts, Securities Accounts, and/or Foreign Currency Controlled Account of the Grantors listed on Schedule IV attached hereto.
“Copyright Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any Copyright (including, without limitation, all Copyright Licenses set forth in Schedule II hereto).
“Copyrights” means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by any Grantor (including, without limitation, all copyrights described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.
“Domestic Subsidiary” means any Subsidiary other than a Foreign Subsidiary.
“Event of Default” shall have the meaning set forth in Section 4(a) of the Notes.
“Foreign Currency Controlled Accounts” means any Controlled Account of a Grantor or any of its Subsidiaries holding a deposit denominated in a currency other than United States dollar.
“Foreign Subsidiary” means any Subsidiary of a Grantor organized under the laws of a jurisdiction other than the United States, any of the states thereof, Puerto Rico or the District of Columbia.
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“GAAP” means U.S. generally accepted accounting principles consistently applied.
“Governmental Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political subdivision thereof or thereto and any department, commission, board, bureau, court, tribunal, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed Obligations” shall have the meaning set forth in each Guaranty. “Guarantor” or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Guarantor” or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Guaranty” or “Guaranties” shall have the meaning set forth in the recitals hereto.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law or law for the relief of debtors, any proceeding relating to assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or any proceeding seeking reorganization, arrangement, or other similar relief.
“Intellectual Property” means, collectively, all intellectual property rights and assets, and all rights, interests and protections that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, under the applicable laws of any jurisdiction throughout the world, whether registered or unregistered, including, without limitation, any and all: (a) Trademarks; (b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses, web pages, websites and related content; (c) accounts with YouTube, LinkedIn, Twitter, Instagram, Facebook and other social media companies and the content found thereon (to the extent that such accounts and content are transferable pursuant to the terms, conditions, and policies of each applicable social media platform); (d) Copyrights; (e) Patents; and (f) business and technical information, databases, data collections and other confidential and proprietary information and all rights therein.
“Intellectual Property Security Agreement” means the Intellectual Property Security Agreement required to be delivered pursuant to Section 6(h)(i) of this Agreement, substantially in the form attached hereto as Exhibit A.
“Licenses” means, collectively, the Copyright Licenses, the Trademark Licenses and the Patent Licenses.
“Lien” means any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance upon or in any property or assets.
“Noteholders” means, at any time, the holders of the Notes at such time.
“Notes” shall have the meaning set forth in the recitals hereto.
“Obligations” shall have the meaning set forth in Section 4 of this Agreement.
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“Paid in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Obligations.
“Patent Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses set forth in Schedule II hereto).
“Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how and formulae described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, reexaminations, divisions, continuations, continuations in part and extensions or renewals thereof.
“Perfection Requirement” or “Perfection Requirements” shall have the meaning set forth in Section 5(j) of this Agreement.
“Permitted Liens” shall have the meaning set forth in the Notes.
“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
“Pledged Accounts” means all of each Grantor’s right, title and interest in all of its Deposit Accounts, Commodity Accounts and Securities Accounts (in all cases, including, without limitation, all Controlled Accounts and Foreign Currency Controlled Accounts).
“Pledged Collateral” shall have the meaning set forth in Section 2(a).
“Pledged Debt” shall have the meaning set forth in Section 2(a).
“Pledged Entity” means, each Person listed from time to time on Schedule IV hereto as a “Pledged Entity,” together with each other Person, any right in or interest in or to all or a portion of whose Securities or Capital Stock is acquired or otherwise owned by a Grantor after the date hereof.
“Pledged Equity” means all of each Grantor’s right, title and interest in and to all of the Securities and Capital Stock now or hereafter owned by such Grantor (including, without limitation, those interests listed opposite the name of such Grantor on Schedule IV), regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, also including, without limitation, any certificates representing such Securities and/or Capital Stock, the right to receive any certificates representing any of such Securities and/or Capital Stock, all warrants, options, subscription, share appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing; provided, however, that with respect to any Foreign Subsidiary that is a CFC, “Pledged Equity” shall be limited to sixty-five percent (65%) of the total outstanding voting stock to the extent any percentage in excess of sixty-five percent (65%) would result in material adverse tax consequences for the Grantors and one hundred percent (100%) of the total outstanding non-voting stock of such Foreign Subsidiary.
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“Pledged Operating Agreements” means all of each Grantor’s rights, powers and remedies under the limited liability company operating agreements of each of the Pledged Entities that is a limited liability company, as may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time.
“Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and remedies under the general or limited partnership agreements of each of the Pledged Entities that is a general or limited partnership, as may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time.
“Pledged Securities” means any Promissory Notes, stock certificates, limited liability membership interests or other Securities, certificates or Instruments now or hereafter included in the Pledged Collateral, including all Pledged Equity, Pledged Debt and all other certificates, instruments or other documents representing or evidencing any Pledged Collateral.
“Securities Purchase Agreement” shall have the meaning set forth in the recitals hereto.
“Subsidiary” means any Person in which a Grantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Subsidiaries”.
“Trademark Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by any Grantor and now or hereafter covered by such licenses, contracts or agreements (including, without limitation, all Trademark Licenses described in Schedule II hereto).
“Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, assumed names, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, assumed names, Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of any Grantor relating to the distribution of products and services in connection with which any of such marks are used.
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SECTION 2. Pledge of Pledged Collateral.
(a) As collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest in, all of such Grantor’s right, title and interest in, to and under all of the following, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired: (i) the Pledged Equity; (ii) all Promissory Notes, Securities and Instruments evidencing debt now owned or at any time hereafter acquired by it (including, without limitation, those listed opposite the name of such Grantor on Schedule IV) (collectively, the “Pledged Debt”); (iii) subject to Section 2(g) and 2(h), all payments of principal or interest, dividends, distributions, cash, Promissory Notes, Securities, Instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the Pledged Equity and the Pledged Debt; (iv) all rights and privileges of such Grantor with respect to the Securities and other property referred to in clauses (i), (ii), and (iii) above; and (v) all Proceeds of, and Security Entitlements in respect of, any of the foregoing (the items referred to in clauses (i) through (v) above being collectively referred to as the “Pledged Collateral”).
(b) On the Closing Date (in the case of any Grantor that grants a Lien on any of its assets hereunder on the Closing Date) or on the date on which it becomes a party to this Agreement pursuant to Section 6(m) (in the case of any other Grantor), each Grantor shall deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities (other than any Uncertificated Securities, but only for so long as such Securities remain uncertificated) to the extent such Pledged Securities, in the case of Promissory Notes and other Instruments evidencing debt, are required to be delivered pursuant to Section 2(c). Thereafter, whenever such Grantor acquires any other Pledged Security (other than any Uncertificated Securities, but only for so long as such Uncertificated Securities remain uncertificated), such Grantor shall promptly, and in any event within 30 days (or such longer period as the Collateral Agent may agree to in writing), deliver or cause to be delivered to the Collateral Agent such Pledged Security as Collateral hereunder to the extent such Pledged Securities, in the case of Promissory Notes and Instruments evidencing debt, are required to be delivered pursuant to Section 2(c).
(c) Each Grantor will cause all debt for borrowed money in an aggregate principal amount of $10,000 or more owed to such Grantor by any other Person to be evidenced by a duly executed Promissory Note, and shall cause each such Promissory Note to be pledged and delivered to the Collateral Agent, (i) on the date hereof, in the case of any such debt existing on the date hereof (or, in the case of any Grantor that becomes a party hereto after the date hereof, on the date such Grantor becomes a party hereto, in the case of any such debt existing on such date) or (ii) promptly following the incurrence thereof, in the case of any such debt incurred after the date hereof (or such other date), in each case pursuant to the terms hereof.
(d) Upon delivery to the Collateral Agent, (i) any Pledged Securities required to be delivered pursuant to Section 2(b) and/or 2(c) shall be accompanied by undated stock or note powers duly executed by the applicable Grantor in blank or other instruments of transfer reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request in order to effect the transfer of such Pledged Securities and (ii) all other property comprising part of the Pledged Collateral required to be delivered pursuant to Section 2(b) and/or 2(c) shall be accompanied by undated proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request in order to effect transfer of such Pledged Collateral. Each delivery of Pledged Securities or other Pledged Collateral shall be accompanied by a schedule describing such Pledged Securities or Pledged Collateral, as the case may be, which schedule shall be deemed to supplement Schedule IV and be made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
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(e) The assignment, pledge, Lien and security interest granted in Section 2(a) are granted as security only and shall not subject the Collateral Agent or any Noteholder to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Pledged Collateral.
(f) If an Event of Default shall occur and be continuing and, other than in the case of a Bankruptcy Event of Default, the Collateral Agent shall have notified the Borrower of its intent to exercise such rights, (a) the Collateral Agent, shall have the right (in its sole and absolute discretion) to cause each of the Pledged Securities to be transferred of record into the name of the Collateral Agent or into the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent and (b) to the extent permitted by the documentation governing such Pledged Securities and applicable law, the Collateral Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement. Each Grantor will promptly give to the Collateral Agent copies of any material notices received by it with respect to Pledged Securities registered in the name of such Grantor. Each Grantor will take any and all actions reasonably requested by the Collateral Agent to facilitate compliance with this Section 2(f).
(g) Unless and until an Event of Default shall have occurred and be continuing and, other than in the case of a Bankruptcy Event of Default, the Collateral Agent shall have notified the Grantors that the rights of the Grantors under this Section 2(g) are being suspended:
(i) Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral or any part thereof for any purpose consistent with the terms of this Agreement and the other Transaction Documents.
(ii) The Collateral Agent shall promptly execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request in writing for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to Section 2(g)(i), in each case as shall be specified in such request.
(iii) Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Collateral, to the extent (and only to the extent) that such dividends, interest, principal and other distributions are permitted by, the other Transaction Documents and applicable laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity or Pledged Debt, whether resulting from a subdivision, combination or reclassification of the outstanding equity interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall be held in trust for the benefit of the Collateral Agent and shall, to the extent required by Section 2(b) and/or 2(c) be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement or documents set forth in Section 2(d) or as otherwise reasonably requested by the Collateral Agent). So long as no Event of Default has occurred and is continuing, the Collateral Agent shall promptly deliver to each Grantor any Pledged Securities in its possession if requested to be delivered to the issuer thereof in connection with any exchange or redemption of such Pledged Securities.
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(h) Upon the occurrence and during the continuance of an Event of Default and, other than in the case of a Bankruptcy Event of Default, after the Collateral Agent shall have notified the Grantors of the suspension of the rights of the Grantors under Section 2(g)(iii), all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to Section 2(g)(iii) shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions as part of the Pledged Collateral, subject to Section 2(k) and the last sentence of this Section 2(h). All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of Section 2(g) or this Section 2(h) shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of Section 2(g) and/or this Section 2(h) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property, shall be held as security for the payment and performance of the Obligations and shall be applied in accordance with the provisions of Section 8. After all Events of Default have been cured or waived, and the Grantors have delivered to the Collateral Agent a certificate of an executive officer to such effect, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of Section 2(g)(iii) in the absence of an Event of Default and that remain in such account.
(i) Upon the occurrence and during the continuance of an Event of Default and, other than in the case of a Bankruptcy Event of Default, after the Collateral Agent shall have notified the Grantors of the suspension of the rights of the Grantors under Section 2(g)(i), all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 2(g)(i), and the obligations of the Collateral Agent under Section 2(g)(ii), shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers subject to Section 2(k) and the last sentence of this Section 2(i); provided that, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived, and the Grantors have delivered to the Collateral Agent a certificate of an executive officer to such effect, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of Section 2(g)(i), and the obligations of the Collateral Agent under Section 2(g)(ii) shall be reinstated.
(j) Any notice given by the Collateral Agent to the Grantors under Section 2(f), Section 2(g), Section 2(h) or Section 2(i) (i) may be given by telephone if promptly confirmed in writing, (ii) may be given with respect to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under Section 2(g)(i) or 2(g)(iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
(k) Nothing contained in this Agreement shall be construed to make the Collateral Agent or any Noteholder liable as a member of any limited liability company or as a partner of any partnership, and neither the Collateral Agent nor any Noteholder by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Collateral Agent shall become the absolute owner of Pledged Equity consisting of a limited liability company interest or a partnership interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Collateral Agent, any Noteholder, any Grantor and/or any other Person.
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SECTION 3. Grant of Security Interest.
(a) As collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby pledges and assigns to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest in, all of such Grantor’s right, title and interest in, to and under all personal property and assets of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind, nature and description, whether tangible or intangible (together with the Pledged Collateral, the “Collateral”), including, without limitation, the following:
(i) all Accounts;
(ii) all Chattel Paper (whether tangible or Electronic Chattel Paper);
(iii) all Commercial Tort Claims, including, without limitation, those specified on Schedule VI hereto;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all General Intangibles (including, without limitation, all Payment Intangibles);
(viii) all Goods;
(ix) all Instruments;
(x) all Inventory;
(xi) all Investment Property (and, regardless of whether classified as Investment Property under the Code, all Pledged Equity, Pledged Operating Agreements and Pledged Partnership Agreements);
(xii) all Intellectual Property and all Licenses;
(xiii) all Letter-of-Credit Rights;
(xiv) all Pledged Accounts, all cash and other property from time to time deposited therein, and all monies and property in the possession or under the control of the Collateral Agent or any Noteholder or any Affiliate, representative, agent or correspondent of the Collateral Agent or any such Noteholder;
(xv) all Supporting Obligations;
(xvi) all other tangible and intangible personal property of each Grantor (whether or not subject to the Code), including, without limitation, all Deposit Accounts and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of any Grantor described in the preceding clauses of this Section 3(a) (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by each Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of any Grantor or any other Person from time to time acting for any Grantor, in each case, to the extent of such Grantor’s rights therein, that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 3(a) or are otherwise necessary or helpful in the collection or realization thereof; and
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(xvii) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;
in each case howsoever any Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).
(b) Except for the Permitted Liens existing as of the date hereof, each Grantor agrees not to further encumber, or permit any other Lien to exist that encumbers, any of its Intellectual Property, including, without limitation, any of its Copyrights, Copyright applications, Copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, Licenses, Patents, Patent applications and like protections, including, without limitation, improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, Trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of such Grantor connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, in each case without the Collateral Agent’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
(c) Each Grantor agrees that the pledge of the shares of Capital Stock acquired by such Grantor of any and all Persons now or hereafter existing that is a Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges or other similar agreements or instruments, executed and delivered by such Grantor in favor of the Collateral Agent, which agreements or instruments will provide for the pledge of such shares of Capital Stock and perfection of the Lien on such shares in accordance with the laws of the applicable foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time, in its sole and absolute discretion, take such actions in such foreign jurisdictions that will result in the perfection of the Lien created in such shares of Capital Stock. Notwithstanding the foregoing, the pledge of shares of Capital Stock of any Foreign Subsidiary that is a CFC shall be limited to sixty-five percent (65%) of the total outstanding voting stock to the extent any percentage in excess of sixty-five percent (65%) would result in material adverse tax consequences for the Grantors and one hundred percent (100%) of the total outstanding non-voting stock of such Foreign Subsidiary, and no Grantor shall be required to execute any supplemental pledge agreement, deed of pledge, share charge or other instrument that would require the pledge of a greater percentage of the Capital Stock of any such CFC to the extent any percentage in excess of sixty-five percent (65%) would result in material adverse tax consequences for the Grantors.
(d) In addition, to secure the due and punctual payment and performance in full of the Obligations, as and when due, and in order to induce the Buyers as aforesaid, each Grantor hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a right of set-off against the property of such Grantor held by the Collateral Agent, for itself and for the ratable benefit of the Noteholders, consisting of property described above in Section 2(a) and/or Section 3(a) now or hereafter in the possession or custody of or in transit to the Collateral Agent, for any purpose, including safekeeping, collection or pledge, for the account of such Grantor, or as to which such Grantor may have any right or power; provided that such right shall only to be exercised after an Event of Default has occurred and is continuing.
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SECTION 4. Security for Obligations. The Lien and security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether direct or indirect, absolute or contingent, and whether now existing or hereafter incurred (collectively, the “Obligations”):
(a) (i) the payment by the Company and each other Grantor, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Securities Purchase Agreement, this Agreement, the Notes and the other Transaction Documents, and (ii) in the case of the Guarantors, the payment by such Guarantors, as and when due and payable of all Guaranteed Obligations under the Guaranties, including, without limitation, in both cases, (A) all principal of, interest, make-whole and other amounts on the Notes (including, without limitation, all interest, make-whole and other amounts that accrues after the commencement of any Insolvency Proceeding of any Grantor, whether or not the payment of such interest is enforceable or is allowable in such Insolvency Proceeding), and (B) all fees, interest, premiums, penalties, contract causes of action, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under this Agreement or any of the Transaction Documents; and
(b) the due and punctual performance and observance by each Grantor of all of its other obligations from time to time existing in respect of any of the Transaction Documents, including without limitation, with respect to any conversion or redemption rights of the Noteholders under the Notes.
SECTION 5. Representations and Warranties. Each Grantor represents and warrants as follows:
(a) Schedule I hereto sets forth (i) the exact legal name of each Grantor, and (ii) the state of incorporation, organization or formation and the organizational identification number of each Grantor in such state. The information set forth in Schedule I hereto with respect to such Grantor is true and accurate in all respects. Such Grantor has not previously changed its name (or operated under any other name), jurisdiction of organization or organizational identification number from those set forth in Schedule I hereto except as disclosed in Schedule I hereto.
(b) There is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting any Grantor before any Governmental Authority or any arbitrator, or any order, judgment or award issued by any Governmental Authority or arbitrator, in each case, that may adversely affect the grant by any Grantor, or the perfection, of the Lien and security interest purported to be created hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.
(c) All Federal, state and local tax returns and other reports required by applicable law to be filed by any Grantor have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges or levies imposed upon any Grantor or any property of any Grantor (including, without limitation, all federal income and social security taxes on employees’ wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP.
(d) All Equipment, Fixtures, Goods and Inventory of each Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of each Grantor hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto, except that each Grantor will give the Collateral Agent written notice of any change in the location of any such Collateral within 20 days of such change, other than to locations set forth on Schedule III hereto (and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon). Each Grantor’s principal place of business and chief executive office, the place where each Grantor keeps its Records concerning the Collateral and all originals of all Chattel Paper in which any Grantor has any right, title or interest are located and will continue to be located at the addresses specified therefor in Schedule III hereto. None of the Accounts in which any Grantor has any right, title or interest is or will be evidenced by Promissory Notes or other Instruments.
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(e) Set forth in Schedule IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) all Pledged Debt, specifying the debtor thereof and the outstanding principal amount thereof as of the Closing Date, Securities and other Instruments in which any Grantor has any right, title or interest, (ii) each Pledged Account of each Grantor, together with the name and address of each institution at which each such Pledged Account is maintained, the account number for each such Pledged Account and a description of the purpose of each such Pledged Account and (iii) the name of each Foreign Currency Controlled Account of each Grantor, together with the name and address of each institution at which each such Foreign Currency Controlled Account is maintained and the amount of cash or cash equivalents held in each such Foreign Currency Controlled Account. Set forth in Schedule I hereto is a complete and correct list of each trade name used by each Grantor and the name of, and each trade name used by, each Person from which each Grantor has acquired any substantial part of the Collateral. All of the Pledged Debt, to the best of the Grantors’ knowledge (provided that no such knowledge qualification applies to Pledged Debt issued by a Grantor or a Subsidiary), is the legal, valid and binding obligation of the issuer thereof, enforceable against such issuer in accordance with its terms.
(f) Each Grantor has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II hereto, including all schedules and exhibits thereto, which represent all of the Licenses of the Grantors existing on the date of this Agreement. Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of such Grantor or any of its Affiliates in respect thereof. Each material License now existing is, and any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms. No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party.
(g) Each Grantor owns and controls, or otherwise possesses adequate rights to use, all of its Intellectual Property, which is the only Intellectual Property necessary to conduct its business in substantially the same manner as conducted as of the date hereof. Schedule II hereto sets forth a true and complete list of all Intellectual Property and Licenses owned or used by each Grantor as of the date hereof, and applications for grant or registration of Intellectual Property. To the knowledge of each Grantor, all such Intellectual Property of such Grantor is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual Property is the subject of any licensing or franchising agreement. Except as set forth in Schedule II, no Grantor has any knowledge of any infringement upon or conflict with the Patent, Trademark, Copyright, trade secret rights of others and, each Grantor is not now infringing or in conflict with any Patent, Trademark, Copyright, trade secret or similar rights of others, and to the knowledge of each Grantor, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by each Grantor. No Grantor has received any notice that it is violating or has violated the Trademarks, Patents, Copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.
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(h) Each Grantor is and will be at all times the sole and exclusive owner of the Collateral in which such Grantor has granted a Lien and security interest hereunder free and clear of any Liens, except for (i) Permitted Liens thereon and (ii) certain Intellectual Property rights of the Company which is jointly owned by the Company with certain third parties as described in Schedule II hereto. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as (i) may have been filed in favor of the Collateral Agent and/or the Noteholders relating to this Agreement or the other Transaction Documents, or (ii) are intended to perfect Permitted Liens existing as of the date hereof and disclosed on Schedule VII hereto.
(i) The exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual restriction binding on or otherwise affecting any Grantor or any of its properties and will not result in or require the creation of any Lien, upon or with respect to any of its properties other than as granted pursuant to this Agreement.
(j) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, is required for (i) the grant by each Grantor, or the perfection, of the Lien and security interest purported to be created hereby in the Collateral, or (ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except for (A) the filing under the Code as in effect in the applicable jurisdiction of the financing statements described in Schedule V hereto, all of which financing statements have been duly filed and are in full force and effect, (B) with respect to all Pledged Accounts, and all cash and other property from time to time deposited therein, the execution of a Controlled Account Agreement with the depository or other institution with which the applicable Pledged Accounts are maintained, as provided in Section 6(i), (C) with respect to Commodity Contracts, the execution of a control agreement with the commodity intermediary with which such Commodity Contract is carried, as provided in Section 6(i), (D) with respect to the perfection of the security interest created hereby in the United States Intellectual Property and Licenses, the recording of the appropriate Intellectual Property Security Agreement in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (E) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (F) with respect to the perfection of the security interest created hereby in any Letter-of-Credit Rights, the consent of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Code as in effect in the applicable jurisdiction, (G) with respect to Investment Property constituting uncertificated securities, the applicable Grantor causing the issuer thereof either (i) to register the Collateral Agent as the registered owner of such securities or (ii) to agree in an authenticated record with such Grantor and the Collateral Agent that such issuer will comply with instructions with respect to such securities originated by the Collateral Agent without further consent of such Grantor, such authenticated record to be in form and substance satisfactory to the Collateral Agent, (H) with respect to Investment Property constituting certificated securities or instruments, such items to be delivered to and held by or on behalf of the Collateral Agent pursuant hereto in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent, (I) with respect to any action that may be necessary to obtain control of Collateral constituting Commodity Contracts, Electronic Chattel Paper or Letter of Credit Rights, the taking of such actions, and (J) the Collateral Agent having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral (subclauses (A) through (J) each a “Perfection Requirement” and collectively, the “Perfection Requirements”).
(k) This Agreement creates in favor of the Collateral Agent a legal, valid and enforceable Lien on and security interest in the Collateral, as security for the Obligations. The performance of the Perfection Requirements results in the perfection of such Lien on and security interest in the Collateral. Such Lien and security interest is (or in the case of Collateral in which any Grantor obtains any right, title or interest after the date hereof, will be), subject only to Permitted Liens and the Perfection Requirements, a first priority, valid, enforceable and perfected Lien on and security interest in all personal property of each Grantor. Such recordings and filings and all other action necessary to perfect and protect such Lien and security interest have been duly taken (and, in the case of Collateral in which any Grantor obtains right, title or interest after the date hereof, will be duly taken), except for the Collateral Agent’s having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral after the date hereof and the other actions, filings and recordations described above, including the Perfection Requirements.
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(l) As of the date hereof, no Grantor holds any Commercial Tort Claims or has knowledge of any pending Commercial Tort Claims, except for the Commercial Tort Claims described in Schedule VI.
(m) All of the Pledged Equity is presently owned by the applicable Grantor as set forth in Schedule IV free and clear of all Liens other than Permitted Liens, and is presently represented by the certificates listed on Schedule IV hereto (if applicable). As of the date hereof, there are no existing options, warrants, calls or commitments of any character whatsoever relating to the Pledged Equity other than as contemplated and permitted by the Transaction Documents. Each Grantor is the sole holder of record and the sole beneficial owner of the Pledged Equity, as applicable. None of the Pledged Equity has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject. The Pledged Equity constitutes 100% or such other percentage as set forth on Schedule IV of the issued and outstanding shares of Capital Stock of the applicable Pledged Entity. All of the Pledged Equity has been duly and validly authorized and issued by the issuer thereof and in the case of Pledged Equity (other than Pledged Equity consisting of limited liability company interests or partnership interests which, pursuant to the relevant organizational or formation documents, cannot be fully paid and non-assessable), is fully paid and non-assessable.
(n) Such Grantor (i) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (ii) has all requisite corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated and to execute and deliver this Agreement and each other Transaction Document to which such Grantor is a party, and to consummate the transactions contemplated hereby and thereby and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the failure to be so qualified would not result in a Material Adverse Effect.
(o) The execution, delivery and performance by each Grantor of this Agreement and each other Transaction Document to which such Grantor is a party (i) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (ii) do not and will not contravene its charter or by-laws, limited liability company or operating agreement, certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on such Grantor or its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Transaction Document) upon or with respect to any of its assets or properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to it or its operations or any of its assets or properties.
(p) This Agreement has been duly executed and delivered by each Grantor and is the legal, valid and binding obligation of such Grantor, enforceable against such Grantor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or other similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law). Each of the other Transaction Documents to which any Grantor is or will be a party, when duly executed and delivered by such Grantor, will be the legal, valid and binding obligation of such Grantor, enforceable against such Grantor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or other similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
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(q) There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived.
SECTION 6. Covenants as to the Collateral. Until all of the Obligations shall have been fully performed and Paid in Full, unless the Collateral Agent shall otherwise consent in writing (in its sole and absolute discretion):
(a) Further Assurances. Each Grantor will, at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that the Collateral Agent may reasonably request in order to: (i) perfect and protect the Lien and security interest of the Collateral Agent created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral, including, without limitation, the Controlled Accounts; or (iii) otherwise effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously all Chattel Paper and each License and, at the request of the Collateral Agent, each of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to the Collateral Agent, indicating that such Chattel Paper, License or Collateral is subject to the Lien and security interest created hereby, (B) delivering and pledging to the Collateral Agent each Promissory Note, Security (subject to the limitations set forth in Section 3), Chattel Paper or other Instrument, now or hereafter owned by any Grantor, duly endorsed and accompanied by executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent, (C) executing and filing (to the extent, if any, that any Grantor’s signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, as may be necessary or that the Collateral Agent may reasonably request in order to perfect and preserve the security interest created hereby, (D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request, all in reasonable detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral Agent’s security interest created hereby and obtaining a written acknowledgment from such Person, in form and substance satisfactory to the Collateral Agent, that such Person holds possession of the Collateral for the benefit of the Collateral Agent (for the ratable benefit of the Collateral Agent and the Noteholders), (F) if at any time after the date hereof, any Grantor acquires or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by such Grantor setting forth a brief description of such Commercial Tort Claim and granting to the Collateral Agent a Lien and security interest therein and in the Proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the Collateral Agent, (G) upon the acquisition after the date hereof by any Grantor of any motor vehicle or other Equipment subject to a certificate of title or ownership (other than a motor vehicle or Equipment that is subject to a purchase money security interest), causing the Collateral Agent to be listed as the lienholder on such certificate of title or ownership and delivering evidence of the same to the Collateral Agent in accordance with Section 6(j) hereof; and (H) taking all actions required by the Code or by other law, as applicable, in any relevant Code jurisdiction, or by other law as applicable in any foreign jurisdiction.
(b) Location of Collateral. Each Grantor will keep the Collateral (i) at the locations specified therefor on Schedule III hereto, or (ii) at such other locations set forth on Schedule III and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, or (iii) at such other locations in the United States, provided that thirty (30) days prior to any change in the location of any Collateral to such other location, or upon the acquisition of any Collateral to be kept at such other locations, the Grantors shall give the Collateral Agent written notice thereof and deliver to the Collateral Agent a new Schedule III indicating such new locations and such other written statements and schedules as the Collateral Agent may require.
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(c) Condition of Equipment. Each Grantor will maintain or cause to be maintained and preserved in good condition, repair and working order, ordinary wear and tear excepted, the Equipment (necessary or useful to its business) and will forthwith, or in the case of any loss or damage to any Equipment of any Grantor within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Collateral Agent may request to such end. Any Grantor will promptly furnish to the Collateral Agent a statement describing in reasonable detail any such loss or damage in excess of $25,000 per occurrence to any Equipment.
(d) Taxes, Etc. Each Grantor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.
(e) Insurance.
(i) Each Grantor will, at its own expense, maintain insurance (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks, in such form and with responsible and reputable insurance companies or associations as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event, in amount, adequacy and scope reasonably satisfactory to the Collateral Agent.
(ii) To the extent requested by the Collateral Agent at any time and from time to time, each such policy for liability insurance shall provide for all losses to be paid on behalf of the Collateral Agent and any Grantor as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent. In addition to and without limiting the foregoing, to the extent requested by the Collateral Agent at any time and from time to time, each such policy shall in addition (A) name the Collateral Agent as an additional insured party and/or loss payee, as applicable, thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as its interests may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding any action, inaction or breach of representation or warranty by any Grantor, (C) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that at least 30 days’ prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the Collateral Agent by the insurer. Any Grantor will, if so requested by the Collateral Agent, deliver to the Collateral Agent original or duplicate policies of such insurance (including certificates demonstrating compliance with this Section 6(e)) and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance. Any Grantor will also, at the request of the Collateral Agent, execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.
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(iii) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 6(e) may be paid directly to the Person who shall have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment or Inventory, to the extent paragraph (iv) of this Section 6(e) is not applicable, any proceeds of insurance involving such damage shall be paid to the Collateral Agent, and any Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by any Grantor pursuant to this Section 6(e) (except as otherwise provided in paragraph (iv) in this Section 6(e)) shall be paid by the Collateral Agent to any Grantor as reimbursement for the reasonable costs of such repairs or replacements.
(iv) Notwithstanding anything to the contrary in subsection 6(e)(iii) above, following and during the continuance of an Event of Default, all insurance payments in respect of each Grantor’s properties and business shall be paid to the Collateral Agent and applied as specified in Section 8(b) hereof.
(f) Provisions Concerning Name, Organization, Location, Accounts and Licenses.
(i) Each Grantor will (A) give the Collateral Agent at least fifteen (15) Business Days’ prior written notice of any change in such Grantor’s name, identity or organizational structure (or, in the case of a change resulting from a merger, acquisition, or reorganization that constitutes or gives rise to an Event of Default, immediate notice), (B) maintain its jurisdiction of incorporation, organization or formation as set forth in Schedule I hereto, (C) notify the Collateral Agent within fifteen (15) Business Days upon obtaining an organizational identification number, if on the date hereof such Grantor did not have such identification number, (D) give the Collateral Agent written notice within fifteen (15) Business Days of the opening of any new Deposit Account, Securities Account, or Commodity Account, and (E) keep adequate records concerning the Collateral and permit representatives of the Collateral Agent during normal business hours on reasonable notice to such Grantor, to inspect and make abstracts from such records.
(ii) Each Grantor will (except as otherwise provided in this subsection (f)), continue to collect, at its own expense, all amounts due or to become due under the Accounts. In connection with such collections, any Grantor may (and, at the Collateral Agent’s direction, will) take such action as any Grantor or the Collateral Agent may deem necessary or advisable to enforce collection or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time following the occurrence and during the continuance of an Event of Default to notify the Account Debtors or obligors under any Accounts of the assignment of such Accounts to the Collateral Agent and to direct such Account Debtors or obligors to make payment of all amounts due or to become due to any Grantor thereunder directly to the Collateral Agent or its designated agent and, upon such notification and at the expense of any Grantor and to the extent permitted by applicable law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as any Grantor might have done. After receipt by any Grantor of a notice from the Collateral Agent that the Collateral Agent has notified, intends to notify, or has enforced or intends to enforce any Grantor’s rights against the Account Debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including, without limitation, Instruments) received by any Grantor in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder (for the ratable benefit of the Collateral Agent and the Noteholders), shall be segregated from other funds of any Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary endorsement) to be applied as specified in Section 8(b) hereof, and (B) no Grantor will adjust, settle or compromise the amount or payment of any Account or release wholly or partly any Account Debtor or obligor thereof or allow any credit or discount thereon. In addition, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may (in its sole and absolute discretion) direct any or all of the banks and financial institutions with which any Grantor either maintains a Deposit Account or a lockbox (including, without limitation, any Controlled Account) or deposits the proceeds of any Accounts to send immediately to the Collateral Agent by wire transfer (to such deposit account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all or a portion of such Securities, cash, investments and other items held by such institution. Any such Securities, cash, investments and other items so received by the Collateral Agent shall be applied as specified in accordance with Section 8(b) hereof.
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(iii) Upon the occurrence and during the continuance of any breach or default under any material License referred to in Schedule II hereto by any party thereto other than any Grantor, each Grantor party thereto will, promptly after obtaining knowledge thereof, give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such breach or default, or will obtain or acquire an appropriate substitute License.
(iv) Each Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights or affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.
(v) Each Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than any right of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take all action necessary or reasonable to maintain such Licenses in full force and effect. No Grantor will, without the prior written consent of the Collateral Agent (in its sole and absolute discretion), cancel, terminate, amend or otherwise modify in any material respect, or waive any material provision of, any material License referred to in Schedule II hereto.
(g) Transfers and Other Liens.
(i) Except as otherwise expressly permitted in the other Transaction Documents, no Grantor shall, directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any Collateral whether in a single transaction or a series of related transactions, other than (A) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by such Grantor for fair value in the ordinary course of business consistent with past practices and (B) sales of Inventory and product in the ordinary course of business.
(ii) Except as expressly provided in the Notes, no Grantor shall, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its Capital Stock.
(iii) No Grantor shall, directly or indirectly, without the prior written consent of the Required Holders, (A) issue any Notes (other than as contemplated by the Securities Purchase Agreement and the Notes) or (B) issue any other Securities that would cause a breach or default under the Notes.
(iv) No Grantor shall enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof.
(v) No Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.
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(h) Intellectual Property.
(i) If applicable, each Grantor shall duly execute and deliver the applicable Intellectual Property Security Agreement. Each Grantor (either itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual Property in full force and effect, including, without limitation, using the proper statutory notices, numbers and markings (relating to patent, trademark and copyright rights) and using the Trademarks on each applicable trademark class of goods in order to so maintain the Trademarks in full force and free from any claim of abandonment for non-use, and each Grantor will not (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Intellectual Property may become abandoned, cancelled or invalidated; provided, however, that so long as no Event of Default has occurred and is continuing, no Grantor shall have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that is no longer necessary or material and has been, or is in the process of being, discontinued, abandoned or terminated in the ordinary course of business and consistent with the exercise of reasonable business judgment, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement and does not have a material adverse effect on the business of any Grantor or (C) that is substantially the same as other Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement and does not have a material adverse effect on the business of any Grantor. Each Grantor will cause to be taken all necessary steps in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to maintain each registration of the Intellectual Property and application for registration of Intellectual Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing fees, taxes or other governmental charges or fees. If any Intellectual Property (other than Intellectual Property described in the proviso to the second sentence of subsection (i) of this clause (h)) is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, each Grantor shall (x) upon learning of such infringement, misappropriation, dilution or other violation, promptly notify the Collateral Agent and (y) promptly sue for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as such Grantor shall deem appropriate under the circumstances to protect such Intellectual Property. Each Grantor shall furnish to the Collateral Agent from time to time upon its request statements and schedules further identifying and describing the Intellectual Property and Licenses and such other reports in connection with the Intellectual Property and Licenses as the Collateral Agent may reasonably request, all in reasonable detail and promptly upon request of the Collateral Agent, following receipt by the Collateral Agent of any such statements, schedules or reports, each Grantor shall modify this Agreement by amending Schedule II hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which is or hereafter becomes part of the Collateral under this Agreement and shall execute and authenticate such documents and do such acts as shall be necessary or, in the reasonable judgment of the Collateral Agent, desirable to subject such Intellectual Property and Licenses to the Lien and security interest created by this Agreement. Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, no Grantor may abandon, surrender or cancel or otherwise permit any Intellectual Property to become abandoned, surrendered, cancelled or invalid without the prior written consent of the Collateral Agent (in its sole and absolute discretion), and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, each Grantor will take such reasonable action as the Collateral Agent shall deem appropriate under the circumstances to protect such Intellectual Property.
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(ii) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Copyright Office or the United States Patent and Trademark Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Collateral Agent prompt written notice thereof (which notice may be given after filing). Upon request of the Collateral Agent, any Grantor shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral Agent’s security interest hereunder in such Intellectual Property and the General Intangibles of any Grantor relating thereto or represented thereby, and each Grantor hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until all Obligations are fully performed and Paid in Full.
(i) Pledged Accounts. Subject to the deadlines set forth in Section 6(n)(i) below, each Grantor shall cause each bank and other financial institution which maintains a Controlled Account (each a “Controlled Account Bank”) to execute and deliver to the Collateral Agent, in form and substance reasonably satisfactory to the Collateral Agent, a Controlled Account Agreement with respect to such Controlled Account, duly executed by each Grantor and such Controlled Account Bank, pursuant to which such Controlled Account Bank among other things shall irrevocably agree, with respect to such Controlled Account, that (i) at any time after any Grantor, the Collateral Agent or any Noteholder shall have notified such Controlled Account Bank that an Event of Default has occurred or is continuing, such Controlled Account Bank will comply with any and all instructions originated by the Collateral Agent directing the disposition of the funds in such Controlled Account without further consent by such Grantor, (ii) such Controlled Account Bank shall waive, subordinate or agree not to exercise any rights of setoff or recoupment or any other claim against the applicable Controlled Account other than for payment of its service fees and other charges directly related to the administration of such Controlled Account and for returned checks or other items of payment, (iii) at any time after any Grantor, the Collateral Agent or any Noteholder shall have notified such Controlled Account Bank that an Event of Default has occurred or is continuing, with respect to each such Controlled Account, such Controlled Account Bank shall not comply with any instructions, directions or orders of any form with respect to such Controlled Accounts other than instructions, directions or orders originated by the Collateral Agent, (iv) all funds deposited by any Grantor with such Controlled Account Bank shall be subject to a perfected, first priority security interest in favor of the Collateral Agent, and (v) upon receipt of written notice from the Collateral Agent during the continuance of an Event of Default such Controlled Account Bank shall immediately send to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all such funds and other items held by it. No Grantor shall create or maintain any Pledged Account without the prior written consent of the Collateral Agent (in its sole and absolute discretion) and complying with the terms of this Agreement.
(j) Reserved.
(k) Control. Each Grantor hereby agrees to take any or all action that may be necessary or that the Collateral Agent may reasonably request in order for the Collateral Agent to obtain “control” in accordance with Sections 9-105 through 9-107 of the Code with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.
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(l) Inspection and Reporting. Each Grantor shall permit the Collateral Agent, or any agent or representatives thereof or such attorneys, accountant or other professionals or other Persons as the Collateral Agent may designate (at Grantors’ sole cost and expense; provided that, Grantors’ shall not be responsible for the costs of more than two (2) inspections in any calendar year unless an Event of Default has occurred and is continuing) (i) to examine and make copies of and abstracts from any Grantor’s Records and books of account, (ii) to visit and inspect its properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory and other assets of any Grantor from time to time, and (iv) to conduct audits, physical counts, appraisals, valuations and/or examinations at the locations of any Grantor. Each Grantor shall also permit the Collateral Agent, or any agent or representatives thereof or such attorneys, accountants or other professionals or other Persons as the Collateral Agent may designate to discuss such Grantor’s affairs, finances and accounts with any of its directors, officers, managerial employees, attorneys, independent accountants or any of its other representatives. Without limiting the foregoing, the Collateral Agent may, at any time, in the Collateral Agent’s own name, in the name of a nominee of the Collateral Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of such Grantor, parties to contracts with such Grantor and/or obligors in respect of Instruments or Pledged Debt of such Grantor to verify with such Persons, to the Collateral Agent’s satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Pledged Debt, Chattel Paper, payment intangibles and/or other receivables.
(m) Future Subsidiaries. If any Grantor hereafter creates or acquires any Subsidiary, simultaneously with the creation or acquisition of such Subsidiary, such Grantor shall (i) if such Subsidiary is a Domestic Subsidiary, cause such Subsidiary to become a party to this Agreement as an additional “Grantor” hereunder, (ii) deliver to the Collateral Agent updated Schedules to this Agreement, as appropriate (including, without limitation, an updated Schedule IV to reflect the grant by such Grantor of a Lien on and security interest in all Pledged Debt and Pledged Equity now or hereafter owned by such Grantor), (iii) if such Subsidiary is a Domestic Subsidiary, cause such Subsidiary to duly execute and deliver a guaranty of the Obligations in favor of the Collateral Agent, substantially in the form of the Guaranty attached as Exhibit D to the Securities Purchase Agreement, in form and substance acceptable to the Collateral Agent, (iv) deliver to the Collateral Agent the stock certificates representing all of the Capital Stock of such Subsidiary required to be pledged hereunder, along with undated stock powers for each such certificate, executed in blank (or, in either case, if any such shares of Capital Stock are uncertificated, confirmation and evidence reasonably satisfactory to the Collateral Agent that the security interest in such uncertificated securities has been transferred to and perfected by the Collateral Agent, in accordance with Sections 8-313, 8-321 and 9-115 of the Code or any other similar or local or foreign law that may be applicable), (v) if such Subsidiary is a Foreign Subsidiary, cause such Subsidiary to take such actions as may be reasonably required by the Collateral Agent (including executing and delivering guaranties, security agreements and other agreements or instruments reasonably required by the Collateral Agent) and (vi) duly execute and/or cause to be delivered to the Collateral Agent, in form and substance acceptable to the Collateral Agent, such opinions of counsel and other documents as the Collateral Agent shall request with respect thereto. Each Grantor hereby authorizes the Collateral Agent to attach such updated Schedules to this Agreement and agrees that all Pledged Equity and Pledged Debt listed on any updated Schedule delivered to the Collateral Agent shall for all purposes hereunder be considered Collateral. The Grantors agree that the pledge of the shares of Capital Stock acquired by a Grantor of any Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges, or other similar agreements or instruments, executed and delivered by the relevant Grantor in favor of the Collateral Agent, which pledge agreements will provide for the pledge of such shares of Capital Stock in accordance with the laws of the applicable foreign jurisdiction to the extent required hereunder. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time, in its reasonable discretion, take actions in such foreign jurisdictions that will result in the perfection of the Lien created in such shares of Capital Stock.
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(n) Post Closing. Notwithstanding anything to the contrary contained herein or any other Transaction Document, each applicable Grantor shall:
(i) Controlled Account Agreements. Within thirty (30) calendar days following the Closing Date (or such later date as Collateral Agent may agree in its sole discretion), deliver to the Collateral Agent Controlled Account Agreements with respect to each Controlled Account; and
(ii) Insurance Endorsements. Within thirty (30) calendar days following the Closing Date (or such later date as Collateral Agent may agree in its sole discretion), deliver to the Collateral Agent, in form and substance satisfactory to the Collateral Agent, additional insured, lender loss payable, and notice of cancellation endorsements issued by each Grantor’s insurers with respect to such Grantor’s insurance policies (including, without limitation, policies related to comprehensive general liability, casualty and property, hazard, rent and business interruption insurance) as the Collateral Agent shall request naming the Collateral Agent as additional insured or lender loss payee, as applicable.
SECTION 7. Additional Provisions Concerning the Collateral.
(a) To the maximum extent permitted by applicable law, and for the purpose of taking any action that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes the Collateral Agent to execute any such agreements, instruments or other documents in such Grantor’s name and to file such agreements, instruments or other documents in such Grantor’s name and in any appropriate filing office, (ii) authorizes the Collateral Agent at any time and from time to time to file, one or more financing or continuation statements, and amendments thereto, relating to the Collateral (including, without limitation, any such financing statements that (A) describe the Collateral as “all assets” or “all personal property” (or words of similar effect) or that describe or identify the Collateral by type or in any other manner as the Collateral Agent may determine regardless of whether any particular asset of such Grantor falls within the scope of Article 9 of the Code or whether any particular asset of such Grantor constitutes part of the Collateral, and (B) contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including, without limitation, whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor) and (iii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s discretion following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 6(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any action, suit or proceedings which the Collateral Agent may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Collateral Agent and the Noteholders with respect to any Collateral, (v) to execute assignments, licenses and other documents to enforce the rights of the Collateral Agent and the Noteholders with respect to any Collateral, and (vi) to verify any and all information with respect to any and all Accounts. This power is coupled with an interest and is irrevocable until all of the Obligations are fully performed and Paid in Full.
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(c) For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, assign, license or sublicense any Intellectual Property in which such Grantor now or hereafter has any right, title or interest, wherever the same may be located, including, without limitation, in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof; provided, however, that notwithstanding the foregoing, such license shall not include the right to independently operate, deploy, execute, or run any proprietary source code, artificial intelligence or machine learning models, model weights, training data, training parameters, or other competitively sensitive technology of any Grantor (collectively, “Proprietary AI Technology”), it being understood and agreed that the Collateral Agent’s remedies with respect to Proprietary AI Technology shall be limited to the right to sell, assign, transfer, or license such Proprietary AI Technology (including as part of a sale of all or substantially all of the assets or business of a Grantor as a going concern) to a third-party purchaser, but shall not include the right to independently use or deploy such Proprietary AI Technology in competition with any Grantor or its business. Notwithstanding anything contained herein to the contrary, but subject to the provisions of the Securities Purchase Agreement that limit the right of any Grantor to dispose of its property, and Section 6(g) and Section 6(h) hereof, so long as no Event of Default shall have occurred and be continuing, any Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business and as otherwise expressly permitted by any of the other Transaction Documents. In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of any Grantor, execute and deliver any instruments, certificates or other documents, in the form so requested, which such Grantor shall have certified are appropriate (in such Grantor’s judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property). Further, upon the full performance and Payment in Full of all of the Obligations, the Collateral Agent (subject to Section 11(e) hereof) shall release and reassign to any Grantor all of the Collateral Agent’s right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever. The exercise of rights and remedies hereunder by the Collateral Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by each Grantor in accordance with the second sentence of this clause (c). Each Grantor hereby releases the Collateral Agent from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Collateral Agent’s gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal.
(d) If any Grantor fails to perform any agreement or obligation contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement or obligation, in the name of such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 9 hereof and such obligation shall be secured by the Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
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(f) Anything herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise with respect to any of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Collateral Agent of any of its rights or remedies hereunder shall not release any Grantor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not have any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the other Collateral, nor shall the Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
(g) As long as no Event of Default shall have occurred and be continuing and, other than in the case of a Bankruptcy Event of Default, until written notice shall be given to the applicable Grantor:
(i) Each Grantor shall have the right, from time to time, to vote and give consents with respect to the Pledged Equity, or any part thereof for all purposes not inconsistent with the provisions of this Agreement, the Securities Purchase Agreement or any other Transaction Document; provided, however, that no vote shall be cast, and no consent shall be given or action taken, which would have the effect of impairing the position or interest of the Collateral Agent in respect of the Pledged Equity or which would authorize, effect or consent to (unless and to the extent expressly permitted by the Securities Purchase Agreement):
A. the dissolution or liquidation, in whole or in part, of a Pledged Entity;
B. the consolidation or merger of a Pledged Entity with any other Person;
C. the sale, disposition or encumbrance of all or substantially all of the assets of a Pledged Entity, except for Liens in favor of the Collateral Agent;
D. any change in the authorized number of shares, the stated capital or the authorized share capital of a Pledged Entity or the issuance of any additional shares of its Capital Stock; or
E. the alteration of the voting rights with respect to the Capital Stock of a Pledged Entity.
(h) (i) Each Grantor shall be entitled, from time to time, to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged Equity to the extent not in violation of the Securities Purchase Agreement or any other Transaction Document other than any and all: (A) dividends and interest paid or payable other than in cash in respect of any Pledged Equity, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Equity; (B) dividends and other distributions paid or payable in cash in respect of any Pledged Equity in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in capital of a Pledged Entity; and (C) cash paid, payable or otherwise distributed, in respect of principal of, or in redemption of, or in exchange for, any Pledged Equity; provided, however, that until actually paid all rights to such distributions shall remain subject to the Lien created by this Agreement; and
(ii) all dividends and interest (other than such cash dividends and interest as are permitted to be paid to any Grantor in accordance with clause (i) above) and all other distributions in respect of any of the Pledged Equity, whenever paid or made, shall be delivered to the Collateral Agent to hold as Pledged Equity and shall, if received by any Grantor, be received in trust for the benefit of the Collateral Agent (for the ratable benefit of the Collateral Agent and the Noteholders), be segregated from the other property or funds of such Grantor, and be forthwith delivered to the Collateral Agent as Pledged Equity in the same form as so received (with any necessary endorsement).
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SECTION 8. Remedies Upon Event of Default; Application of Proceeds. If any Event of Default shall have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein, in any other Transaction Document or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent the Collateral Agent has not theretofore done so) and thereafter receive, for the ratable benefit of itself and the Noteholders, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient to both parties, and the Collateral Agent may enter into and occupy any premises owned or leased by any Grantor where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Collateral Agent’s rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale (including, without limitation, by credit bid), at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days’ notice to any Grantor of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and the Noteholders arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that any Grantor may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof. Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty, (ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral. In addition to the foregoing, (1) upon written notice to any Grantor from the Collateral Agent after and during the continuance of an Event of Default, such Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time after and during the continuance of an Event of Default, upon 10 days’ prior notice to such Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its reasonable discretion determine; and (3) the Collateral Agent may, at any time, pursuant to the authority granted in Section 7 hereof or otherwise (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.
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(b) Any cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale or disposition of or collection from, or other realization upon, all or any part of the Collateral shall be applied as follows (subject to the provisions of the Securities Purchase Agreement): first, to pay any fees, indemnities or expense reimbursements then due to the Collateral Agent (including, without limitation, those described in Section 9 hereof); second, to pay any fees, indemnities or expense reimbursements then due to the Noteholders, on a pro rata basis; third to pay interest due under the Notes owing to the Noteholders, on a pro rata basis; fourth, to pay or prepay principal in respect of the Notes, whether or not then due, owing to the Noteholders, on a pro rata basis; fifth, to pay or prepay any other Obligations, whether or not then due, in such order and manner as the Collateral Agent shall elect, consistent with the provisions of the Securities Purchase Agreement. Any surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining after the full performance and Payment in Full of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, disposition, collection or realization are insufficient to pay all amounts to which the Collateral Agent and the Noteholders are legally entitled, each Grantor shall be, jointly and severally, liable for the deficiency, together with interest thereon at the rate specified in the Notes for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other charges of any attorneys employed by the Collateral Agent to collect such deficiency.
(d) To the extent that applicable law imposes duties on the Collateral Agent to exercise rights and remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Collateral Agent (i) to fail to incur expenses deemed significant by the Collateral Agent to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Collateral Agent against risks of loss, collection or disposition of Collateral or to provide to the Collateral Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Collateral Agent, to obtain the services of brokers, investment bankers, consultants, attorneys and other professionals to assist the Collateral Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this section is to provide non-exhaustive indications of what actions or omissions by the Collateral Agent would be commercially reasonable in the Collateral Agent’s exercise of rights and remedies against the Collateral and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this section. Without limitation of the foregoing, nothing contained in this section shall be construed to grant any rights to any Grantor or to impose any duties on the Collateral Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this section.
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(e) The Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising; provided that the Collateral Agent shall conduct any sale of Collateral in a commercially reasonable manner. To the extent that any Grantor lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
SECTION 9. Indemnity and Expenses.
(a) Each Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral Agent and each of the Noteholders harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation, reasonable and actual legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent resulting from such Person’s gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal.
(b) Each Grantor agrees, jointly and severally, to pay to the Collateral Agent upon demand the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without limitation, any collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights or remedies of the Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof.
SECTION 10. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail, first-class postage prepaid and return receipt requested), telecopied, e-mailed or delivered, (a) if to any Grantor, to the Company’s address, email address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement, (b) if to any Buyer, to it at its respective address, email address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement or (c) if to Collateral Agent, to it at its respective address, email address and/or facsimile number as set forth on its signature page hereto; or as to any such Person, at such other address as shall be designated by such Person in a written notice to all other parties hereto complying as to delivery with the terms of this Section 10. All such notices and other communications shall be effective (a) if sent by certified mail, return receipt requested, when received or five Business Days after deposited in the mails, whichever occurs first, (b) if telecopied or e-mailed, when transmitted (during normal business hours) and confirmation is received, and otherwise, the day after the notice or communication was transmitted and confirmation is received, or (c) if delivered in person, upon delivery. For the avoidance of doubt, all Foreign Subsidiaries, as Grantors, hereby appoint the Company as its agent for receipt of service of process and all notices and other communications in the United States at the address specified below.
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SECTION 11. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent (and approved by the Required Holders), and no waiver of any provision of this Agreement, and no consent to any departure by each Grantor therefrom, shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent (and approved by the Required Holders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, modification or waiver of this Agreement shall be effective to the extent that it (1) applies to fewer than all of the holders of Notes or (2) imposes any obligation or liability on any holder of Notes without such holder’s prior written consent (which may be granted or withheld in such holder’s sole and absolute discretion).
(b) No failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right or remedy hereunder or under any of the other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Collateral Agent or any Noteholder provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights and remedies of the Collateral Agent or any Noteholder under any of the other Transaction Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights or remedies under any of the other Transaction Documents against such party or against any other Person, including but not limited to, any Grantor.
(c) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing Lien on and security interest in the Collateral and shall (i) remain in full force and effect until the full performance and Payment in Full of the Obligations, and (ii) be binding on each Grantor and all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of the Collateral Agent and the Noteholders hereunder, to the ratable benefit of the Collateral Agent and the Noteholders and their respective permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, without notice to any Grantor, the Collateral Agent and the Noteholders may assign or otherwise transfer their rights and obligations under this Agreement and any of the other Transaction Documents, to any other Person and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Collateral Agent and the Noteholders herein or otherwise. Upon any such assignment or transfer, all references in this Agreement to the Collateral Agent or any such Noteholder shall mean the assignee of the Collateral Agent or such Noteholder. None of the rights or obligations of any Grantor hereunder may be assigned, delegated or otherwise transferred without the prior written consent of the Collateral Agent in its sole and absolute discretion, and any such assignment, delegation or transfer without such consent of the Collateral Agent shall be null and void.
(e) Upon the full performance and Payment in Full of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the respective Grantor that granted such security interests hereunder, and (ii) the Collateral Agent will, upon any Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.
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(f) Governing Law; Jurisdiction; Jury Trial.
(i) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any provision or rule of law (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
(ii) Each Grantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of Wilmington, New Castle County, Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim, defense or objection that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such notices to it under Section 9(f) of the Securities Purchase Agreement 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 manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Noteholders from bringing suit or taking other legal action against any Grantor in any other jurisdiction to collect on a Grantor’s obligations or to enforce a judgment or other court ruling in favor of the Collateral Agent or a Noteholder.
(iii) WAIVER OF JURY TRIAL, ETC. EACH PARTY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv) Each party irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred to in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
(g) Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
(h) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together constitute one and the same Agreement. Delivery of any executed counterpart of a signature page of this Agreement by pdf, facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
(i) This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Collateral Agent, any Noteholder or any other Person (upon (i) the occurrence of any Insolvency Proceeding of any of the Company or any Grantor or (ii) otherwise, in all cases as though such payment had not been made).
SECTION 12. Material Non-Public Information. Upon receipt or delivery by any Grantor of any notice in accordance with the terms of this Agreement, unless such Grantor has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Grantor or any of its Subsidiaries, such Grantor shall within three (3) Business Days after any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K (or, if the Grantor is at such time a “foreign private issuer” as defined in Rule 405 under the Securities Act of 1933, as amended, on a Report of Foreign Private Issuer on Form 6-K) or otherwise. In the event that such Grantor believes that a notice contains material, non-public information relating to such Grantor or any of its Subsidiaries, such Grantor so shall indicate to the Collateral Agent and any applicable Noteholder contemporaneously with delivery of such notice, and in the absence of any such indication, the Collateral Agent and each Noteholder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to such Grantor or its Subsidiaries. Nothing contained in this Section 12 shall limit any obligations of any Grantor, or any rights or remedies of the Collateral Agent or any Noteholder, under Section 4(l) of the Securities Purchase Agreement.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.
| GRANTORS: | ||
| [●] (f/k/a BLUEROCK ACQUISITION CORP.) | ||
| By: | ||
| Name: | ||
| Title: | ||
| BITONIC TECHNOLOGY LABS INC. D/B/A YELLOW.AI | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Security and Pledge Agreement]
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| ACCEPTED BY: | |||
| [●], | |||
| as Collateral Agent | |||
| By: | |||
| Name: | |||
| Title: | |||
| Address for notices: | |||
| [●] | |||
[Signature Page to Security and Pledge Agreement]
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EXHIBIT D
FORM OF GUARANTY
GUARANTY
This GUARANTY, dated as of [●], 2026 (this “Guaranty”), is made by each of the undersigned (each a “Guarantor”, and collectively, the “Guarantors”), in favor of [●], in its capacity as collateral agent (in such capacity, the “Collateral Agent” as hereinafter further defined) for the Noteholders (as defined in the Securities Purchase Agreement) party to the Securities Purchase Agreement (each as defined below).
W I T N E S S E T H:
WHEREAS, [●] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation with offices located at 919 Third Avenue, New York, NY 10022 (the “Company”), and each party listed as a “Buyer” on the Schedule of Buyers attached thereto (collectively, the “Buyers”) are parties to the Securities Purchase Agreement, dated as of July [●], 2026 (as amended, restated, extended, replaced or otherwise modified from time to time, the “Securities Purchase Agreement”), pursuant to which the Company shall be required or have the right to sell, and the Buyers shall purchase or have the right to purchase, the “Notes” and “Additional Notes”, in each case, issued pursuant thereto (as such Notes and Additional Notes may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, collectively, the “Notes”);
WHEREAS, the Securities Purchase Agreement requires that the Guarantors execute and deliver to the Collateral Agent, (i) a guaranty guaranteeing all of the Obligations (as defined below); and (ii) a Security and Pledge Agreement, dated as of the date hereof, granting the Collateral Agent a lien on and security interest in all of their assets and properties (the “Security Agreement”); and
WHEREAS, each Guarantor has determined that the execution, delivery and performance of this Guaranty directly benefits, and is in the best interest of, such Guarantor.
NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities Purchase Agreement, each Guarantor hereby agrees with the Collateral Agent, for the benefit of the Collateral Agent and each Buyer, as follows:
SECTION 1. Definitions. Reference is hereby made to the Securities Purchase Agreement, the Security Agreement and the Notes for a statement of the terms thereof. All terms used in this Guaranty and the recitals hereto which are defined in the Securities Purchase Agreement, the Security Agreement or the Notes, and which are not otherwise defined herein shall have the same meanings herein as set forth therein. In addition, the following terms when used in the Guaranty shall have the meanings set forth below:
“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy, insolvency or similar laws).
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City 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 generally are open for use by customers on such day.
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“Buyer” or “Buyers” shall have the meaning set forth in the recitals hereto.
“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is not an individual or a corporation, any and all partnership, membership, trust or other equity interests of such Person.
“Collateral” means all assets and properties of the Company and each Guarantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the collateral described in Section 3(a) of the Security Agreement.
“Collateral Agent” shall have the meaning set forth in the recitals hereto.
“Company” shall have the meaning set forth in the recitals hereto.
“Governmental Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political subdivision thereof or thereto and any department, commission, board, bureau, court, tribunal, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed Obligations” shall have the meaning set forth in Section 2 of this Guaranty.
“Guarantor” or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Indemnified Party” shall have the meaning set forth in Section 13(a) of this Guaranty.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law or law for the relief of debtors, any proceeding relating to assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or any proceeding seeking reorganization, arrangement, or other similar relief.
“Notes” shall have the meaning set forth in the recitals hereto.
“Obligations” shall have the meaning set forth in Section 4 of the Security Agreement.
“Other Taxes” shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.
“Paid in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Guaranteed Obligations.
“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.
“Securities Purchase Agreement” shall have the meaning set forth in the recitals hereto.
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“Security Agreement” shall have the meaning set forth in the recitals hereto.
“Subsidiary” means any Person in which a Guarantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Subsidiaries”.
“Taxes” shall have the meaning set forth in Section 12(a) of this Guaranty.
“Transaction Documents” shall have the meaning set forth in the Securities Purchase Agreement.
“Transaction Party” means the Company and each Guarantor, collectively, “Transaction Parties”.
SECTION 2. Guaranty.
(a) The Guarantors, jointly and severally, hereby unconditionally and irrevocably, guaranty to the Collateral Agent, for the benefit of the Collateral Agent and the Buyers, the punctual payment, as and when due and payable, by stated maturity or otherwise, of all Obligations, including, without limitation, all interest, make-whole and other amounts that accrue after the commencement of any Insolvency Proceeding of the Company or any Guarantor, whether or not the payment of such interest, make-whole and/or other amounts are enforceable or are allowable in such Insolvency Proceeding, and all fees, interest, premiums, penalties, causes of actions, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of the Transaction Documents (all of the foregoing collectively being the “Guaranteed Obligations”), and agrees to pay any and all fees, costs and expenses (including counsel fees, costs and expenses) incurred by the Collateral Agent in enforcing any rights under this Guaranty or any other Transaction Document. Without limiting the generality of the foregoing, each Guarantor’s liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company to the Collateral Agent or any Buyer under the Securities Purchase Agreement, the Notes and/or any other Transaction Document but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Transaction Party.
(b) Each Guarantor and by its acceptance of this Guaranty, the Collateral Agent, hereby confirms that it is the intention of all such Persons that this Guaranty and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and the Guaranteed Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Collateral Agent and the Guarantors hereby irrevocably agree that the Guaranteed Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
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SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments.
(a) The Guarantors, jointly and severally, guaranty that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Transaction Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Collateral Agent or any Buyer with respect thereto. The obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against any Guarantor to enforce such obligations, irrespective of whether any action is brought against any Transaction Party or whether any Transaction Party is joined in any such action or actions. The liability of any Guarantor under this Guaranty shall be as a primary obligor (and not merely as a surety) and shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives, to the extent permitted by law, any defenses it may now or hereafter have in any way relating to, any or all of the following:
(i) any lack of validity or enforceability of any Transaction Document;
(ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity of any Guaranteed Obligations or otherwise;
(iii) any taking, exchange, release or non-perfection of any Collateral;
(iv) any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(v) any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Transaction Party;
(vi) any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Transaction Party under the Transaction Documents or any other assets of any Transaction Party or any of its Subsidiaries;
(vii) any failure of the Collateral Agent or any Buyer to disclose to any Transaction Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter known to the Collateral Agent or any Buyer (each Guarantor waiving any duty on the part of the Collateral Agent or any Buyer to disclose such information);
(viii) taking any action in furtherance of the release of any Guarantor or any other Person that is liable for the Obligations from all or any part of any liability arising under or in connection with any Transaction Document without the prior written consent of the Collateral Agent; or
(ix) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Collateral Agent or any Buyer that might otherwise constitute a defense available to, or a discharge of, any Transaction Party or any other guarantor or surety.
(b) This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Collateral Agent, any Buyer, or any other Person upon the insolvency, bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made.
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(c) This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors and assigns. This Guaranty shall inure to the benefit of and be enforceable by the Collateral Agent, the Buyers, and their respective successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Collateral Agent or any Buyer may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject to the terms of any Transaction Document to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable) herein or otherwise, in each case as provided in the Securities Purchase Agreement or such Transaction Document.
SECTION 4. Waivers. To the extent permitted by applicable law, each Guarantor hereby waives promptness, diligence, protest, notice of acceptance and any other notice or formality of any kind with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Collateral Agent exhaust any right or take any action against any Transaction Party or any other Person or any Collateral. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated herein and in the other Transaction Documents and that the waiver set forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantors hereby waive any right to revoke this Guaranty, and acknowledge that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. Without limiting the foregoing, to the extent permitted by applicable law, each Guarantor hereby unconditionally and irrevocably waives (a) any defense arising by reason of any claim or defense based upon an election of remedies by the Collateral Agent or any Buyer that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Transaction Parties, any other guarantor or any other Person or any Collateral, and (b) any defense based on any right of set-off or counterclaim against or in respect of the Guaranteed Obligations of such Guarantor hereunder. Each Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Collateral Agent or any Buyer to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party or any of its Subsidiaries now or hereafter known by the Collateral Agent or a Buyer.
SECTION 5. Subrogation. No Guarantor may exercise any rights that it may now or hereafter acquire against any Transaction Party or any other guarantor that arise from the existence, payment, performance or enforcement of any Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Collateral Agent or any Buyer against any Transaction Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Transaction Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until there has been Payment in Full of the Guaranteed Obligations. If any amount shall be paid to a Guarantor in violation of the immediately preceding sentence at any time prior to Payment in Full of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit of the Collateral Agent and shall forthwith be paid to the Collateral Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Transaction Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (a) any Guarantor shall make payment to the Collateral Agent of all or any part of the Guaranteed Obligations, and (b) there has been Payment in Full of the Guaranteed Obligations, the Collateral Agent will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor.
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SECTION 6. Representations, Warranties and Covenants.
(a) Each Guarantor hereby represents and warrants as of the date first written above as follows:
(i) Such Guarantor (A) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization as set forth on the signature pages hereto, (B) has all requisite corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated and to execute, deliver and perform its obligations under this Guaranty and each other Transaction Document to which such Guarantor is a party, and to consummate the transactions contemplated hereby and thereby and (C) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary except where the failure to be so qualified (individually or in the aggregate) would not result in a Material Adverse Effect.
(ii) The execution, delivery and performance by such Guarantor of this Guaranty and each other Transaction Document to which such Guarantor is a party (A) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (B) do not and will not contravene its charter, articles, certificate of formation or by-laws, its limited liability company or operating agreement or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on such Guarantor or its properties do not and will not result in or require the creation of any lien, security interest or encumbrance (other than pursuant to any Transaction Document) upon or with respect to any of its properties, and (C) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to it or its operations or any of its properties.
(iii) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required in connection with the due execution, delivery and performance by such Guarantor of this Guaranty or any of the other Transaction Documents to which such Guarantor is a party (other than expressly provided for in any of the Transaction Documents).
(iv) This Guaranty has been duly executed and delivered by each Guarantor and is, and each of the other Transaction Documents to which such Guarantor is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
(v) There is no pending or, to the best knowledge of such Guarantor, threatened action, suit or proceeding against such Guarantor or to which any of the properties of such Guarantor is subject, before any court or other Governmental Authority or any arbitrator that (A) if adversely determined, could reasonably be expected to have a Material Adverse Effect or (B) relates to this Guaranty or any of the other Transaction Documents to which such Guarantor is a party or any transaction contemplated hereby or thereby.
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(vi) Such Guarantor (A) has read and understands the terms and conditions of the Securities Purchase Agreement and the other Transaction Documents, and (B) now has and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Company and the other Transaction Parties, and has no need of, or right to obtain from the Collateral Agent or any Buyer, any credit or other information concerning the affairs, financial condition or business of the Company or the other Transaction Parties.
(vii) There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.
(b) Each Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations, it will comply with each of the covenants (except to the extent applicable only to a public company) which are set forth in Section 4 of the Securities Purchase Agreement and Section 15 of the Notes as if such Guarantor were a party thereto.
SECTION 7. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent and any Buyer may, and is hereby authorized to, at any time and from time to time, without notice to the Guarantors (any such notice being expressly waived by each Guarantor) and to the fullest extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Collateral Agent or any Buyer to or for the credit or the account of any Guarantor against any and all obligations of the Guarantors now or hereafter existing under this Guaranty or any other Transaction Document, irrespective of whether or not the Collateral Agent or any Buyer shall have made any demand under this Guaranty or any other Transaction Document and although such obligations may be contingent or unmatured. The Collateral Agent and each Buyer agrees to notify the relevant Guarantor promptly after any such set-off and application made by the Collateral Agent or such Buyer, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Collateral Agent or any Buyer under this Section 7 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Collateral Agent or such Buyer may have under this Guaranty or any other Transaction Document in law or otherwise.
SECTION 8. Limitation on Guaranteed Obligations.
(a) Notwithstanding any provision herein contained to the contrary, each Guarantor’s liability hereunder shall be limited to an amount not to exceed as of any date of determination the greater of:
(i) the amount of all Guaranteed Obligations, plus interest thereon at the applicable Interest Rate as specified in the Note; and
(ii) the amount which could be claimed by the Collateral Agent from such Guarantor under this Guaranty without rendering such claim voidable or avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Guarantor’s right of contribution and indemnification.
(b) Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Collateral Agent or any Buyer hereunder or under applicable law.
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(c) No payment made by the Company, any Guarantor, any other guarantor or any other Person or received or collected by the Collateral Agent or any other Buyer from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Guaranteed Obligations or any payment received or collected from such Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability of such Guarantor hereunder until after all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been Paid in Full.
SECTION 9. Notices, Etc. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Guaranty must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) upon receipt, when sent by email (provided a “read receipt” is obtained and kept on file by the sending party) or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. All notices and other communications provided for hereunder shall be sent, (a) if to any Guarantor, to the Company’s address, email address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement, (b) if to any Buyer, to it at its respective address, email address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement or (c) if to Collateral Agent, to it at its respective address, email address and/or facsimile number as set forth on its signature page hereto.
SECTION 10. Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Guaranty shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of Wilmington, New Castle County, Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim, obligation or defense that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such notices to it under Section 9(f) of the Securities Purchase Agreement (or in the case of the Collateral Agent, on its signature page hereto) 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 manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Buyers from bringing suit or taking other legal action against any Guarantor in any other jurisdiction to collect on a Guarantor’s obligations or to enforce a judgment or other court ruling in favor of the Collateral Agent or a Buyer.
SECTION 11. WAIVER OF JURY TRIAL, ETC. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
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SECTION 12. Taxes.
(a) All payments made by any Guarantor hereunder or under any other Transaction Document shall be made in accordance with the terms of the respective Transaction Document and shall be made without set-off, counterclaim, withholding, deduction or other defense. Without limiting the foregoing, all such payments shall be made free and clear of and without deduction or withholding for any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of the Collateral Agent or any Buyer by the jurisdiction in which the Collateral Agent or such Buyer is organized or where it has its principal lending office (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, “Taxes”). If any Guarantor shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Transaction Document:
(i) the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings (including Taxes on amounts payable to the Collateral Agent or any Buyer pursuant to this sentence) the Collateral Agent or each Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made,
(ii) such Guarantor shall make such deduction or withholding,
(iii) such Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and
(iv) as promptly as possible thereafter, such Guarantor shall send the Collateral Agent or each Buyer an official receipt (or, if an official receipt is not available, such other documentation as shall be satisfactory to the Collateral Agent or each Buyer, as the case may be) showing payment. In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document (collectively, “Other Taxes”).
(b) Each Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12) paid by any Indemnified Party as a result of any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document, and any liability (including penalties, interest and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be paid within thirty (30) days from the date on which the Collateral Agent or such Buyer makes written demand therefor, which demand shall identify the nature and amount of such Taxes or Other Taxes.
(c) If any Guarantor fails to perform any of its obligations under this Section 12, such Guarantor shall indemnify the Collateral Agent and each Buyer for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations of the Guarantors under this Section 12 shall survive the termination of this Guaranty and the payment of the Obligations and all other amounts payable hereunder.
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SECTION 13. Indemnification.
(a) Without limitation of any other obligations of any Guarantor or remedies of the Collateral Agent or the Buyers under this Guaranty or applicable law, except to the extent resulting from such Indemnified Party’s (as defined below) gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Collateral Agent and each Buyer and each of their affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Transaction Party enforceable against such Transaction Party in accordance with their terms.
(b) Each Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort or otherwise) or any fiduciary duty or obligation to any of the Guarantors or any of their respective affiliates or any of their respective officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential, incidental or punitive damages arising out of or otherwise relating to the facilities, the actual or proposed use of the proceeds of the advances, the Transaction Documents or any of the transactions contemplated by the Transaction Documents.
SECTION 14. Miscellaneous.
(a) Each Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds to the Collateral Agent or each Buyer, at such address specified by the Collateral Agent or such Buyer from time to time by notice to the Guarantors.
(b) No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by each Guarantor and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
(c) No failure on the part of the Collateral Agent or any Buyer to exercise, and no delay in exercising, any right or remedy hereunder or under any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under any Transaction Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Collateral Agent and the Buyers provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by any applicable law. The rights and remedies of the Collateral Agent and the Buyers under any Transaction Document against any party thereto are not conditional or contingent on any attempt by the Collateral Agent or any Buyer to exercise any of their respective rights or remedies under any other Transaction Document against such party or against any other Person.
(d) Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.
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(e) This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors and assigns. This Guaranty shall inure, together with all rights and remedies of the Collateral Agent and each Buyer hereunder, to the benefit of and be enforceable by the Collateral Agent, the Buyers, and their respective successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Collateral Agent or any Buyer may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject to the terms of the Securities Purchase Agreement or any other Transaction Document to any other Person in accordance with the terms thereof, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable) herein or otherwise, in each case as provided in the Securities Purchase Agreement or such Transaction Document. None of the rights or obligations of any Guarantor hereunder may be assigned or otherwise transferred without the prior written consent of the Collateral Agent.
(f) This Guaranty and the other Transaction Documents reflect the entire understanding of the transaction contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.
(g) Section headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.
SECTION 15. Currency Indemnity.
If, for the purpose of obtaining or enforcing judgment against Guarantor in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 15 referred to as the “Judgment Currency”) an amount due under this Guaranty in any currency (the “Obligation Currency”) other than the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding (a) the date of actual payment of the amount due, in the case of any proceeding in the courts of courts of the jurisdiction that will give effect to such conversion being made on such date, or (b) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section 15 being hereinafter in this Section 15 referred to as the “Judgment Conversion Date”).
If, in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately available funds, the Guarantors shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from the Guarantors under this Section 15 shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Guaranty.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by its respective duly authorized officer, as of the date first above written.
| GUARANTOR(S): | ||
| BITONIC TECHNOLOGY LABS INC. d/b/a YELLOW.AI | ||
| By: | ||
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | CEO | |
| Address for notices: | ||
| Bitonic Technology Labs, Inc. | ||
| 400 Concar Drive | ||
| San Mateo, CA 94402 | ||
| Attn: Raghavendra Kumar Ravinutala | ||
| E-mail: [email protected]; [email protected]; [email protected] | ||
| with a copy (which shall not constitute notice) to: | ||
| Fox Rothschild LLP | ||
| 101 Park Avenue, Suite 1700 | ||
| New York, NY 10178 | ||
| Attn: Loren D. Danzis, Esq., Lauren W. Taylor, Esq. | ||
| E-mail: [email protected]; [email protected] | ||
[Signature Page to Guaranty]
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| ACCEPTED BY: | ||
| [●], | ||
| as Collateral Agent | ||
| By: | ||
| Name: | ||
| Title: | ||
| Address for notices: | ||
| [●] | ||
[Signature Page to Guaranty]
D-13
EXHIBIT E
FORM OF TARGET NOTE
NEITHER, THE ISSUANCE AND SALE OF THE SECURITIES, REPRESENTED BY THIS CERTIFICATE, NOR, THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (i) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM GENERALLY ACCEPTABLE TO THE COMPANY’S LEGAL COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (ii) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1).
PROMISSORY NOTE
| Principal Amount | $100,000 |
| Purchase Price | $90,000 |
| Issue Date | July 31, 2026 |
| Maturity Date | January 31, 2027 |
| $100,000 | New York, New York |
| July 31, 2026 |
FOR VALUE RECEIVED, Bitonic Technology Labs Inc. d/b/a Yellow.ai, with principal offices at 400 Concar Drive San Mateo, CA 94402 (“Maker”), hereby promises to pay to [PAYEE] (“Payee”) on the date set forth below, the aggregate principal sum of One Hundred Thousand Dollars ($100,000) as consideration for the payment by Payee to Maker on the Issue Date (as defined in the table above) of the Purchase Price (as defined in the table above).
1. Payment of Principal. The principal amount of this Note, together with all unpaid interest accrued thereon and any other amounts payable hereunder, shall be due and payable in full upon January 31, 2027 (or such later date as Payee may elect in writing to Maker) (the “Maturity Date”).
2. Payment of Interest. There shall be no periodic payments of interest on this Note.
3. Prepayment. This Note may not be prepaid prior to the Maturity Date.
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4. Defaults. If any of the following shall occur (each a “Default”): (a) Maker fails to pay, when due, all or any part of any principal or other payment required to be made hereunder; or (b) any representation or warranty made by Maker in this Note shall have been incorrect in any material respect when made; or (c) Maker shall fail to perform or observe any term, covenant or agreement contained herein to be performed or observed by it; or (d) Maker shall be generally not paying its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any such person or entity seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for such person or entity or for any substantial part of its property; or Maker shall take any action to authorize or effect any of the actions set forth above in this clause (d); or (e) any provision of this Note shall at any time for any reason be declared to be null and void by a court of competent jurisdiction, or the validity or enforceability thereof shall be contested by Maker, or a proceeding shall be commenced by Maker or any person seeking to establish the invalidity or unenforceability thereof, or Maker shall deny that Maker has any liability or obligation hereunder; then, Payee may (i) declare the unpaid principal balance hereof and all other sums payable hereunder to be immediately due and payable, whereupon the sum of (x) the outstanding principal amount of this Note and (y) any other amounts outstanding hereunder shall become and shall be forthwith due and payable, without diligence, presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and (ii) exercise any and all of its other rights under applicable law and/or hereunder.
5. Representations and Warranties of Maker. Maker represents and warrants as follows as of the date hereof and on each date that it requests a Loan hereunder: (a) it is duly organized, validly existing and in good standing under the laws of its state of organization; (b) the execution, delivery and performance by Maker of this Note and any documents entered into in connection herewith, each individually, as a “Loan Document” and, collectively, as the “Loan Documents”) are within Maker’s powers, have been duly authorized by all necessary actions, and do not contravene its governing agreements, certificates or other organization documents, and do not contravene any law or any contractual restriction binding on or affecting Maker; (c) no authorization or approval or other action by, and no notice to or filing with, except as contemplated by the Loan Documents, any governmental authority or regulatory body is required for the due execution, delivery and performance by Maker of any Loan Document; (d) each Loan Document constitutes the legal, valid and binding obligation of Maker party thereto, enforceable against Maker in accordance with its terms, except to the extent enforceability is limited by bankruptcy, insolvency, fraudulent conveyance, moratorium and other laws for the protection of creditors generally and by general equitable principles; and (e) there is no pending or, to Maker’s knowledge, threatened action or proceeding affecting Maker before any governmental agency or arbitrator with respect to the transactions contemplated by the Loan Documents or which may materially adversely affect the property, assets or condition (financial or otherwise) of Maker.
6. Late Charges. Any amount of principal or other amounts due under the Loan Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of fifteen percent (15%) per annum from the date such amount was due until the same is paid in full.
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7. Use of Proceeds. Maker shall use the Purchase Price for general corporate purposes.
8. Incurrence of Indebtedness. Maker shall not, and Maker shall cause each of its subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer to exist any indebtedness (other than this Note).
9. Restricted Payments. Maker shall not, and Maker shall cause each of its subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting a Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute an Default has occurred and is continuing.
10. Indemnification. Maker hereby indemnifies and holds harmless Payee, each of its affiliates and correspondents and each of their respective directors, officers, employees, agents and advisors (each an “Indemnified Party”) from and against any and all actions, claims, damages, losses, liabilities, fines, penalties, costs and expenses of any kind (including, without limitation, counsel fees and disbursements in connection with any subpoena, investigative, administrative or judicial proceeding, whether or not the Indemnified Party shall be designated a party thereto) which may be incurred by the Indemnified Party or which may be claimed against the Indemnified Party by any person by reason of or in connection with the execution, delivery or performance of this Note, or action taken or omitted to be taken by Payee under, this Note. Nothing in this paragraph is intended to limit Maker’s obligations contained elsewhere in this Note. Without prejudice to the survival of any other obligation of Maker hereunder, the indemnities and obligations of Maker contained in this paragraph shall survive the payment in full of all obligations hereunder.
11. Bluerock Business Combination. Immediately prior to the effective time (the “Effective Time”) of the merger (the “Merger”) between Maker and BLRK Merger Sub Inc. (“Merger Sub”) as contemplated by that certain business combination agreement, dated as of the date hereof, by and among Bluerock Acquisition Corp. (“Pubco”), Maker and Merger Sub (the “Business Combination Agreement,” and the transactions contemplated thereby, the “Business Combination”), this Note shall automatically be exchanged into (x) an aggregate of 750,000 shares of common stock of Maker (the “Maker Shares”) and (y) warrants of Maker exercisable into an aggregate of 2,000,000 shares of Maker Shares at an exercise price of $11.50, per share, with the same terms as class of warrants originally created pursuant to (A) that certain Registration Statement of Pubco (No. 333-291337)(the “Pubco Warrants”) and (B) that certain warrant agreement (the “Pubco Warrant Agreement”) by and between the Company and Continental Stock Transfer & Trust Company with respect thereto as Post-IPO Warrants (as defined in the Warrant Agreement) thereunder (the “Maker Warrants” and, together with the Maker Shares, the “Maker Securities”) (each of the foregoing subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations and similar events). At the Effective Time, by virtue of the Merger and without any action on the part of Maker or Payee, (x) each Maker Share will be converted into one share of common stock of Pubco (the “Pubco Shares”) and (y) each Maker Warrant will be converted into one warrant to purchase one Pubco Share on terms identical to the Pubco Warrants, issued under the same CUSIP number as the Pubco Warrants and pursuant to the Pubco Warrant Agreement (collectively, the “BC Securities”), which BC Securities shall be issued pursuant to the Registration Statement on Form S-4 for the Business Combination. Maker shall not enter into any agreement for a forward purchase financing with a third party in connection with the Business Combination without providing the Payee ten (10) days prior written notice and the opportunity to serve as the purchaser under such forward purchase agreement (the “FP ROFR”); provided, however, that the automatic exchange of this Note into the Maker Securities in accordance with this Section 11 shall constitute Payee’s irrevocable waiver of the FP ROFR.
E-3
12. Miscellaneous.
(a) All amounts to be paid by hereunder shall be paid when due by wire transfer in United States dollars and immediately available funds in accordance with the wire instructions delivered to such party entitled to receive such payment prior to such date; provided, that the Purchase Price shall be paid by Payee directly to the Existing Lender on the Issue Date.
(b) If any payment on this Note shall become due on a Saturday, Sunday or a bank or legal holiday, such payment shall be made on the next succeeding business day.
(c) No delay or omission on the part of Payee in the exercise of any right or remedy hereunder shall operate as a waiver thereof, and no partial exercise of any right or remedy precludes other or further exercise thereof or the exercise of any other rights or remedy.
(d) If a Default shall occur under this Note, Maker shall pay on demand all reasonable costs and expenses of collection incurred by or on behalf of Payee, including, without limitation, reasonable attorneys’ fees.
(e) Maker hereby waives presentment, protest and demand, notice of protest, demand and dishonor and nonpayment of this Note.
(f) If interest or other amounts payable under this Note is in excess of the maximum permitted by law, the interest or other amounts chargeable hereunder shall be reduced to the maximum amount permitted by law and any excess over the maximum amount permitted by law shall be credited to the principal balance of this Note and applied to the same and not to the payment of interest or such other amounts, as applicable.
(g) The Borrower hereby (i) irrevocably submits to the jurisdiction of any Delaware State or Federal court sitting in Wilmington, Delaware in any action or proceeding arising out of or relating to this Note, (ii) waive any defense based on doctrines of venue or forum non conveniens, or similar rules or doctrines and (iii) irrevocably agree that all claims in respect of such an action or proceeding may be heard and determined in such Delaware State or Federal court. This Note shall be governed by, and construed in accordance with, the laws of the State of Delaware. Maker HEREBY waiveS any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Note.
E-4
(h) This Note shall be binding upon and inure to the benefit of Maker and Payee and their respective successors, assigns, heirs and legal representations, except that Maker may not assign any rights or obligations hereunder without the prior written consent of Payee. Payee may assign to other affiliated entities all or a portion of its rights under this Note.
(i) Maker acknowledges that the transaction of which this Note is a part is a commercial transaction and hereby waives its right to any notice and hearing as may be allowed by any state or federal law with respect to any prejudgment remedy which any Payee or its successors or assigns may use.
(j) Maker hereby agrees to pay on demand all reasonable costs and expenses (including, without limitation, all reasonable fees, expenses and other client charges of counsel to Payee) incurred by Payee in connection herewith and with the enforcement of Payee’s rights, and the collection of all amounts due, hereunder.
(k) If this Note is lost or destroyed, Maker shall, at Payee’s request, execute and return to Payee a replacement promissory note identical to this Note. No replacement of this Note shall result in a novation of Maker’s obligations under this Note. Maker acknowledges the need to act promptly upon its receipt of the documentation evidencing any request by Payee that the Note be replaced pursuant to this paragraph and agrees that Maker will meet the reasonable deadlines of Payee provided that Maker has received the applicable documents at least ten (10) business days prior to such deadline. Furthermore, Maker agrees to reasonably cooperate with Payee to effectuate the obtainment of such title policy endorsements, or new title evidence and other assurances and documents as Payee shall reasonably require.
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IN WITNESS WHEREOF, this Note has been executed as of the date first written above.
| MAKER: | BITONIC TECHNOLOGY LABS INC. D/B/A YELLOW.AI | |
| By: | ||
| Name: | Raghavendra Kumar Ravinutala | |
| Title: | CEO | |
Agreed and accepted by:
| PAYEE: | [PAYEE] | |
| By: | ||
| Name: | ||
| Title: | ||
E-6
EXHIBIT F
FORM OF EQUITY PIPE SUBSCRIPTION AGREEMENT
[Filed Separately.]
F-1
EXHIBIT G
FORM OF ACCREDITED INVESTOR STATUS CERTIFICATE
[Omitted.]
G-1
EXHIBIT H
FORM OF LEAK-OUT AGREEMENT
[INSERT COMPANY LETTERHEAD]
[HOLDER]
[ADDRESS]
[DATE]
Dear Sirs:
This agreement (this “Agreement”) is being delivered to you in connection with that certain understanding by and between [__] (f/k/a Bluerock Acquisition Corp.), a Delaware corporation with offices located at 400 Concar Drive San Mateo, CA 94402 (the “Company”), and the undersigned (the “Holder”).
The Company and certain investors (including the Holder) have entered into that certain Securities Purchase Agreement, dated as of July 31, 2026 (the “Securities Purchase Agreement”), pursuant to which, among other things, the Company has agreed to issue and sell to the Holder and the Holder has agreed to purchase certain Notes (as defined in the Securities Purchase Agreement), which will be convertible (such shares as converted, the “Conversion Shares”) into the Company’s common stock, $[0.00001] par value per share (the “Common Stock”), in accordance with the terms of the Notes. Capitalized terms not defined herein shall have the meaning as set forth in the Securities Purchase Agreement.
During the period commencing on the Initial Closing Date and ending on the earlier to occur of (i) such date upon which there are no Notes outstanding and (ii) such date upon which any breach or default by the Company of this Agreement occurs (such period, the “Restricted Period”), neither the Holder, nor any of its Affiliates, collectively, shall sell any Conversion Shares or BC Underlying Shares (the “Restricted Securities”) during the period commencing on the hour starting at 9:30:00 a.m., New York time, through and ending on the hour ending 4:00:00 p.m., New York time, on any given day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, during such Restricted Period (each, an “Applicable Trading Day”), in an aggregate amount representing more than the greater of (x) $500,000 in aggregate sale price of Restricted Securities and (y) 20% of the daily composite trading volume of Common Stock as reported by Bloomberg, LP on such Applicable Trading Day (the “Trading Limit”). Notwithstanding anything herein to the contrary, (a) nothing herein shall prohibit the Holder from tendering any Restricted Securities or other securities to any Person in a tender offer or other Fundamental Transaction and (b) no Restricted Period or Trading Limit shall be deemed to exist at any time during any Event of Default Redemption Right Period (as defined in the Notes) (regardless of whether any Notes are then outstanding).
H-1
Notwithstanding anything herein to the contrary, on or after the date hereof, the Holder may, directly or indirectly, sell or transfer all, or any part, of the Restricted Securities (or any securities convertible or exercisable into Restricted Securities, as applicable) to any Person (an “Assignee”) (other than through the open market) without complying with (or otherwise limited by) the restrictions set forth in this Agreement; provided, that as a condition to any such sale or transfer an authorized signatory of the Company and such Assignee duly execute and deliver a leak-out agreement in the form of this Agreement with respect to such transferred Restricted Securities (or such securities convertible or exercisable into Restricted Securities, as applicable) (an “Assignee Agreement”) and sales of the Holder and its Affiliates and all Assignees shall be aggregated for all purposes of this Agreement and all Assignee Agreements.
In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer of Common Stock if such transfer would constitute a violation or breach of this Agreement.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and shall be given in accordance with the terms of the Securities Purchase Agreement.
The Company and the Holder each hereby represents and warrants that it has full power and authority to enter into this Agreement and that upon request of the other party, such party, will execute any additional documents necessary to ensure the validity or enforcement of this Agreement.
This Agreement, together with the Transaction Documents, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, letters and understandings relating to the subject matter hereof and are fully binding on the parties hereto.
This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. This Agreement may be executed and accepted by facsimile or PDF signature and any such signature shall be of the same force and effect as an original signature.
The terms of this Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective successors and assigns.
This Agreement may not be amended or modified except in writing signed by each of the parties hereto.
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All questions concerning the construction, validity, enforcement and interpretation of this letter agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any provision of law or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, 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 any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
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 to such party at the address for such notices to it under this letter agreement 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 manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereby irrevocably waives any right it may have, and agrees not to request, a jury trial for the adjudication of any dispute hereunder or in connection with or arising out of this letter agreement or any transaction contemplated hereby.
Each party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this letter agreement, the other parties hereto would not have an adequate remedy at law for money damages in the event that this Agreement has not been performed in accordance with its terms, and therefore agrees that such other parties shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which it may be entitled, at law or in equity.
The Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other holder of securities of the Company to be joined as an additional party in any proceeding for such purpose.
[Remainder of page intentionally left blank; signature page follows]
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Agreed to and Acknowledged:
| [__] (F/K/A BLUEROCK ACQUISITION CORP.) | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Leak-Out Agreement]
H-4
Agreed to and Acknowledged:
| [HOLDER] | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Leak-Out Agreement]
H-5
EXHIBIT I
FORM OF LOCK-UP AGREEMENT
[Filed Separately.]
I-1
Exhibit 10.6
FORM OF AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), amends and restates in its entirety that certain Registration Rights Agreement dated December 10, 2025, by and among Yellow.ai, Inc., a Delaware corporation (formerly known as Bluerock Acquisition Corp., a Cayman Islands exempted company, prior to the Domestication (as defined herein)) (the “Company”), Cantor Fitzgerald & Co. (“Cantor”), Bluerock Acquisition Holdings, LLC, a Delaware limited liability company (the “Sponsor”) and the other holders of the Company’s Class B ordinary shares, par value $0.0001 per share (together with the Sponsor, the “SPAC Initial Shareholders”) (the “Original RRA”), and is made and entered into as of _________, 2026, by and among the Company, the Sponsor and each of the undersigned parties that were former stockholders of Bitonic Technology Labs Inc. d/b/a Yellow.ai, a Delaware corporation (“Legacy Yellow”), listed under “Holder” on the signature page (the “Legacy Yellow Holders”) (each such party to this Agreement and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2, a “Holder” and collectively the “Holders”).
RECITALS
WHEREAS, the Company, Sponsor, Cantor and the other holders of Purchaser Class B Ordinary Shares (as defined in the Business Combination Agreement (as defined below)) party thereto are party to the Original RRA and entered into the Original RRA on December 10, 2025;
WHEREAS, the Original RRA may be amended upon written consent of the Company and the holders of at least a majority in interest of the Registrable Securities as such term is defined in the Original RRA;
WHEREAS, the Sponsor is the holder of the majority in interest of the Registrable Securities as such term is defined in the Original RRA, and it and the Company desires to amend and restate in its entirety the Original RRA and to do so in a manner that does not amend or modify in any way the rights of Cantor under the Original RRA or otherwise adversely affect any one holder in a manner that is materially different from the other holders;
WHEREAS, on July 31, 2026, the Company, BLRK Merger Sub Inc., a Delaware corporation and a wholly-owned direct subsidiary of the Company (“Merger Sub”), and Legacy Yellow, entered into that certain Business Combination Agreement (the “Business Combination Agreement”, and the contemplated transactions, the “Business Combination”), pursuant to which, among other things, the Company transferred by way of continuation from the Cayman Islands to Delaware and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and Part XII of the Companies Act (as revised) of the Cayman Islands (the “Domestication”) and, thereafter, Merger Sub will merge with and into Legacy Yellow, with Legacy Yellow surviving the Merger as a wholly-owned subsidiary of the Company (the “Merger”);
WHEREAS, before the date of this Agreement and subject to the conditions of the Business Combination Agreement, the Company completed the Domestication, (x) immediately prior to the Domestication, each then issued and outstanding Purchaser Class B Ordinary Shares (as defined in the Business Combination Agreement) shall convert automatically, on a one-for-one basis, into one (1) Purchaser Class A Ordinary Share (the “Sponsor Share Conversion”); and (y) and as part of the Domestication, (i) each then issued and outstanding Class A Share (other than any Class A Share included in the Cayman Purchaser Units) converted automatically, on a one-for-one basis, into shares of common stock of the Company (“Common Stock”), (ii) each then issued and outstanding warrant of the Company (other than any warrants included in the Cayman Purchaser Units) (each a “Cayman Purchaser Warrant”) converted automatically into a warrant to acquire one share of Common Stock (each a “Domesticated Purchaser Warrant”) and (iii) to the extent not separated before Domestication, each then issued and outstanding unit of the Purchaser (the “Cayman Purchaser Units”) converted automatically, on a one-for-one basis, into a Domesticated Purchaser Unit (as such term is defined in the Business Combination Agreement;
WHEREAS, pursuant to the Business Combination Agreement, the Company issued shares of the Common Stock and Domesticated Purchaser Warrants to the Holders hereto; and
WHEREAS, the Company desires to set forth certain matters regarding the ownership of the Registrable Securities by the Holders.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The terms defined in this ARTICLE 1 shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Additional Holder” shall have the meaning given in Section 5.11.
“Additional Holder Common Stock” shall have the meaning given in Section 5.11.
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or Chief Financial Officer of the Company or the Board, in each case, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble hereto.
“Board” shall mean the board of directors of the Company.
“Business Combination Agreement” shall have the meaning given in the Recitals hereto.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.
“Cantor” shall have the meaning given in the Preamble hereto.
“Closing” shall have the meaning given in the Business Combination Agreement.
“Closing Date” shall have the meaning given in the Business Combination Agreement.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Stock” shall have the meaning given in the Recitals hereto.
“Company” shall have the meaning given in the Preamble hereto and includes the Company’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
“Competing Registration Rights” shall have the meaning given in Section 5.8.
“Demanding Holder” shall have the meaning given in Section 2.1.4.
“Domesticated Purchaser Warrant” shall have the meaning given in the Recitals hereto.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form S-1 Shelf” shall have the meaning given in Section 2.1.1.
2
“Form S-3 Shelf” shall have the meaning given in Section 2.1.1.
“Governmental Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
“Holder Information” shall have the meaning given in Section 4.1.2.
“Holders” shall have the meaning given in the Preamble.
“Joinder” shall have the meaning given in Section 5.10.
“Law” shall mean any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, order or consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Legacy Yellow” shall have the meaning given in the Preamble hereto.
“Legacy Yellow Holders” shall have the meaning given in the Preamble hereto.
“Legal Proceeding” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Lock-Up Agreement” means the Lock-Up Agreement, dated as of July 31, 2026, by and among the Company, Legacy Yellow, the SPAC Initial Shareholders and the Legacy Yellow Holders.
“Lock-Up Period” shall mean (i) with respect to the shares of Common Stock held by the Holders, the lock-up periods specified with respect to a party in the Lock-Up Agreement and their respective Permitted Transferees and (ii) with respect to the Domesticated Purchaser Warrants, the Private Placement Warrant Lockup Period.
“Maximum Number of Securities” shall have the meaning given in Section 2.1.5.
“Minimum Takedown Threshold” shall have the meaning given in Section 2.1.4.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading.
“Original RRA” shall have the meaning given in the Recitals hereto.
“Permitted Transferees” means persons to whom a holder of Registrable Securities is permitted to transfer such Registrable Securities prior to the expiration of the applicable Lock-Up Period pursuant to (i) the Lock-Up Agreement or (ii) the Private Placement Warrants Purchase Agreement, dated December 10, 2025, by and between the Company and the SPAC Warrantholders, as applicable.
“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Piggyback Registration” shall have the meaning given in Section 2.2.1.
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“Private Placement Warrants Lockup Period” means, with respect to the Domesticated Purchaser Warrants held by the Holders and the shares of Common Stock issued or issuable upon exercise of the Domesticated Purchaser Warrants held by such Holders, the period ending 30 days after the Closing.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean: (i) any outstanding shares of Common Stock or Domesticated Purchaser Warrants held by a Holder following the Closing that are issued in connection with the transactions contemplated by the Business Combination Agreement; (ii) any shares of Common Stock that may be acquired by Holders upon the exercise, conversion or redemption of any other security of the Company or other right to acquire Common Stock held by a Holder following the Closing that are issued in connection with the transactions contemplated by the Business Combination Agreement; (iii) any other equity security of the Company issued or issuable with respect to any securities referenced in clause (i) or (ii) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; and (iv) any shares of Common Stock that may be acquired by a Holder upon exercise of a Domesticated Purchaser Warrant; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of the following events: (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder to a Person that is not an “affiliate” (as defined in Rule 144) of the Company and new certificates for such securities not bearing (or book-entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (ii) such securities shall have been otherwise transferred (or moved to a brokerage account), new certificates for such securities not bearing (or book-entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (iii) such securities shall have ceased to be outstanding; (iv) such securities may be sold without registration pursuant to Rule 144 (but with no volume or other restrictions or limitations including as to manner or timing of sale or current public information requirements); (v) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction; and (vi) after such time as the Holder of such securities holds less than 10% of the Registrable Securities issued to such Holder in connection with Closing, unless the Company consents otherwise.
“Registration” shall mean a registration, including related Shelf Takedowns, effected by preparing and filing a Registration Statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the documented, out-of-pocket expenses of a Registration, including, without limitation, the following:
| (A) | all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc. and any national securities exchange on which the Common Stock are then listed); |
| (B) | fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities); |
| (C) | printing, messenger, telephone and delivery expenses; |
| (D) | reasonable fees and disbursements of counsel for the Company; |
| (E) | reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and |
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| (F) | reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders in an Underwritten Offering. |
“Registration Statement” shall mean any registration statement that covers Registrable Securities pursuant to the provisions of this Agreement, including any Shelf, and in each case, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holders” shall have the meaning given in Section 2.1.5.
“Rule 144” shall mean Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
“Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf, or any Subsequent Shelf Registration, as the case may be.
“Shelf Registration” shall mean a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.
“Shelf Takedown” shall mean an Underwritten Shelf Takedown or any proposed transfer or sale using a Registration Statement, including a Piggyback Registration.
“SPAC Initial Shareholders” shall have the meaning given in the Preamble hereto.
“SPAC Warrantholders” shall mean the holders of the Company’s private placement warrants.
“Sponsor” shall have the meaning given in the Preamble hereto.
“Subsequent Shelf Registration” shall have the meaning given in Section 2.1.2.
“Total Limit” shall have the meaning given in Section 2.1.6.
“Transactions” shall have the meaning given in the Recitals hereto.
“Transfer” shall mean the (i) sale or assignment of, offer to sell, contract or agreement to sell, hypothecation, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (ii) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) public announcement of any intention to effect any transaction specified in clause (i) or (ii).
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Lock-Up Period” shall have the meaning given in Section 2.3.
“Underwritten Registration” or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Underwritten Shelf Takedown” shall have the meaning given in subsection 2.1.4.
“Withdrawal Notice” shall have the meaning given in Section 2.1.6.
“Yearly Limit” shall have the meaning given in Section 2.1.4.
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ARTICLE 2
REGISTRATIONS
2.1 Shelf Registration.
2.1.1 Filing. Following the Closing, the Company shall, subject to Section 3.4, submit or file a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) or, if the Company is eligible to use a Registration Statement on Form S-3, a Shelf Registration on Form S-3 (the “Form S-3 Shelf”), in each case, covering the resale of all Registrable Securities (determined as of two (2) Business Days prior to such submission or filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective no later than the expiration of the Lock-Up Period. If the Shelf is not effective as of the expiration of the Lock-up Period, the Company shall use commercially reasonable efforts to cause such Shelf to become effective as soon as practicable thereafter. Such Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. Subject to Sections 2.1.3 and 3.4, the Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) to a Form S-3 Shelf as soon as reasonably practicable after the Company is eligible to use Form S-3.
2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially reasonable efforts to, as promptly as is reasonably practicable, cause such Shelf to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to, as promptly as is reasonably practicable, amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration”) registering the resale of all Registrable Securities under such Shelf (determined as of two (2) business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form.
2.1.3 New Registrable Securities. Subject to Section 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company shall, upon the written request of such Holder, promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, any then-available Shelf (including by means of a post-effective amendment) or a Subsequent Shelf Registration and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration shall be subject to the terms hereof; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered twice per calendar year for each of (i) the SPAC Initial Shareholders and (ii) the Legacy Yellow Holders, collectively.
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2.1.4 Requests for Underwritten Shelf Takedowns. Subject to Section 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, any Holder (a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering or other coordinated offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder, either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $25 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. The Company shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which approval shall not be unreasonably withheld, conditioned or delayed). Each of (i) the SPAC Initial Shareholders and (ii) the Legacy Yellow Holders, collectively, may demand Underwritten Shelf Takedowns pursuant to this Section 2.1.4 (x) not more than two (2) times in any 12-month period (the “Yearly Limit”). Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Offering pursuant to any then-effective Registration Statement, including a Form S-3, that is then available for such offering. Furthermore, notwithstanding the foregoing, Cantor may not exercise its demand registration rights after five (5) years from the commencement of sales in the Company’s initial public offering, and may not exercise its demand rights on more than one occasion.
2.1.5 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Holders requesting piggy back rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other shares of Common Stock or other equity securities that the Company desires to sell and all other shares of Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, before including any shares of Common Stock or other equity securities proposed to be sold by the Company or by other holders of Common Stock or other equity securities, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata, as nearly as possible, based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders (if any) have requested be included in such Underwritten Shelf Takedown) that can be sold without exceeding the Maximum Number of Securities. To facilitate the allocation of Registrable Securities in accordance with the above provisions, the Company or the Underwriters may round the number of shares allocated to any Holder to the nearest 10 Registrable Securities.
2.1.6 Underwritten Shelf Takedown Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority in interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown; provided that any other Demanding Holder(s) may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Demanding Holder(s). If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown by the withdrawing Demanding Holder for purposes of Section 2.1.4 and shall count toward the Yearly Limit and the Total Limit, unless either (i) the Demanding Holder(s) making the withdrawal has not previously withdrawn any Underwritten Shelf Takedown or (ii) the Demanding Holder(s) making the withdrawal reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown); provided that, if any other Demanding Holder(s) elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by such Demanding Holder(s) for purposes of Section 2.1.4 and shall count toward the Yearly Limit and the Total Limit. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Requesting Holders. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf Takedown prior to its withdrawal under this Section 2.1.6, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Section 2.1.6.
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2.2 Piggyback Registration.
2.2.1 Piggyback Rights. Following the expiration of the Lock-Up Period, if the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2.2.1), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iv) for an offering of debt that is convertible into equity securities of the Company, or (v) for a dividend reinvestment plan, then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than seven days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within two (2) business days after transmission of such written notice (such Registration, a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities of the Company included in such registered offering and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company or the Demanding Holders desire to sell, taken together with (i) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with Persons other than the Holders of Registrable Securities hereunder (ii) the Registrable Securities as to which Registration has been requested pursuant to this Section 2.2, and (iii) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of Persons other than the Holders of Registrable Securities hereunder, exceeds the Maximum Number of Securities, then:
(a) If the Registration or registered offering is undertaken for the Company’s account, the Company shall include in any such Registration or registered offering (A) first, the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof (pro rata, as nearly as practicable, based on the respective number of Registrable Securities that such Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering), which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of Persons other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities;
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(b) If the Registration or registered offering is pursuant to a request by Persons other than the Holders of Registrable Securities, then the Company shall include in any such Registration or registered offering (A) first, the shares of Common Stock or other equity securities, if any, of such requesting Persons, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata, as nearly as practicable, based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of such Persons other than the Holder of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; and
(c) If the Registration or registered offering is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1, then the Company shall include in any such Registration or registered offering securities in the priority set forth in Section 2.1.5.
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdraw from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.6) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.6), the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.6, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as an Underwritten Shelf Takedown under Section 2.1.4 and shall not count toward the Yearly Limit or the Total Limit. Notwithstanding the foregoing, Cantor may not exercise its “piggyback” registration rights after seven (7) years from the effective date of the Company’s initial public offering.
2.3 Market Stand-off. In connection with any Underwritten Offering of equity securities of the Company, if requested by the managing Underwriter, each Holder that is an executive officer or director of the Company or a Holder in excess of 5.0% of the then-outstanding Common Stock agrees that it shall not Transfer any shares of Common Stock or other equity securities of the Company (other than those included in such offering pursuant to this Agreement), without the prior written consent of the Company, during the 90-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering (the “Underwritten Lock-Up Period”), except (i) to Permitted Transferees, (ii) as expressly permitted in writing by the Company or (iii) in the event the Underwriters managing the offering otherwise consent in writing. Each such Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect (in each case on substantially the same terms and conditions as all other Holders). The Company will not be obligated to undertake an Underwritten Shelf Takedown during any Underwritten Lock-Up Period binding on the Holders, nor will the Company be obligated to include in any Piggyback Registration any Registrable Securities that are then subject to a “lock-up” agreement.
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2.4 Legends. In connection with any sale or other disposition of the Registrable Securities by a Holder pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) and upon compliance by the Holder with the requirements of this Section 2.4, if requested by the Holder, the Company shall use its commercially reasonable efforts to cause the transfer agent or warrant agent for the Registrable Securities, as applicable (the “Transfer Agent”), to remove any restrictive legends related to the book entry account holding such Registrable Securities (if the requirements of Rule 144 have been met) and make a new, unlegended entry for such book entry shares sold or disposed of without restrictive legends promptly after any such request therefor from the Holder; provided that the Company and the Transfer Agent have timely received from the Holder customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith. Subject to receipt from the Holder by the Company and the Transfer Agent of customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith, the Holder may request that the Company remove any legend from the book entry position evidencing its Registrable Securities and the Company will, if required by the Transfer Agent, use its commercially reasonable efforts cause an opinion of the Company’s counsel be provided, in a form reasonably acceptable to the Transfer Agent, to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, following the earliest of such time as such Registrable Securities (i) are subject to or have been or are about to be sold pursuant to an effective registration statement or (ii) have been or are about to be sold pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission). If restrictive legends are no longer required for such Registrable Securities pursuant to the foregoing, the Company shall, in accordance with the provisions of this section promptly after any request therefor from the Holder accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such book entry shares. The Company shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such issuance.
ARTICLE 3
COMPANY PROCEDURES
3.1 General Procedures. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof (and including all manners of distribution in such Registration Statement as Holders may reasonably request in connection with the filing of such Registration Statement and as permitted by law, including distribution of Registrable Securities to a Holder’s members, securityholders or partners), and pursuant thereto the Company shall, as expeditiously as possible:
3.1.1 prepare and file with the Commission, as soon as reasonably practicable, a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration have ceased to be Registrable Securities;
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder that holds at least five percent (5%) of the Registrable Securities registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
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3.1.3 prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
3.1.4 prior to any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence reasonably satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 use commercially reasonable efforts to cause all such Registrable Securities to be listed on each national securities exchange or automated quotation system on which similar securities issued by the Company are then listed;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus as may be (a) necessary in order to comply with the Securities Act, the Exchange Act and the rules and regulations promulgated under the Securities Act or Exchange Act, as applicable or (b) advisable in order to reduce the number of days that sales are suspended pursuant to Section 3.4, furnish a copy thereof to each seller of such Registrable Securities and by means of one counsel on behalf of all such sellers (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein);
3.1.9 notify the selling Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 in the event of an Underwritten Offering, or sale by a broker, placement agent or sales agent that is registered pursuant to a Registration Statement, permit a representative of the Holders (such representative to be selected by a majority of the participating Holders), the Underwriters or other financial institutions facilitating such Underwritten Offering, or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders collectively, Underwriters or other financial institutions to participate, at each such Person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection with the Registration; provided, however, that such representative, Underwriters or financial institutions agree to confidentiality arrangements, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
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3.1.11 use commercially reasonable efforts to obtain a “comfort” letter (including a bring-down letter dated as of the date the Registrable Securities are delivered for sale pursuant to such Registration) from the Company’s independent registered public accountants in the event of an Underwritten Offering, or a sale by a broker, placement agent or sales agent pursuant to a Registration Statement (subject to such Underwriter or other financial institution facilitating such offering providing such certification or representation as reasonably requested by the Company’s independent registered public accountings and the Company’s counsel), to the extent customary, in customary form and covering such matters of the type customarily covered by “comfort” letters as the managing Underwriter or other similar type of sales agent or placement agent may reasonably request;
3.1.12 use commercially reasonable efforts to obtain, in the event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to a Registration Statement, to the extent customary, on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion and negative assurance letter, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the participating Holders, the broker, the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the participating Holders, broker, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, provided, in each case, that such participating Holders provide such information to such counsel as is customarily required for, or is reasonably requested by such counsel for purposes of, such opinion or negative assurance letter;
3.1.13 in the event of any Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to a Registration Statement, enter into and perform its obligations under an underwriting agreement, purchase agreement, sales agreement or placement agreement in usual and customary form, with the managing Underwriter or broker, sales agent or placement agent of such offering or sale;
3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission);
3.1.15 with respect to an Underwritten Offering pursuant to Section 2.1.4, use its commercially reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested (in light of the circumstances of the Company at the time) by the Underwriter in such Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders participating in such Registration, consistent with the terms of this Agreement, in connection with such Registration.
Notwithstanding the foregoing, the Company shall not be required to provide any documents or information to an Underwriter or other sales agent or placement agent if such Underwriter or other sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or other offering involving a registration as an Underwriter or broker, sales agent or placement agent, as applicable.
3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ or agents’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
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3.3 Requirements for Participation in Underwritten Offerings. The Holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter or placement agent or sales agent, if any, in connection with the preparation of any Registration Statement or Prospectus, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to ARTICLE 2 and in connection with the Company’s obligation to comply with federal and applicable state securities Laws. Notwithstanding anything in this Agreement to the contrary, if any Holder does not timely provide the Company with its requested Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect the registration and such Holder continues thereafter to withhold such information. No Person may participate in any Underwritten Offering or other coordinated offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any arrangements approved by the Company and (ii) timely completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.
3.4 Suspension of Sales; Adverse Disclosure; Restrictions on Registration Rights.
3.4.1 Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until he, she or it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until he, she or it is advised in writing by the Company that the use of the Prospectus may be resumed.
3.4.2 If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (i) require the Company to make an Adverse Disclosure, (ii) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control or (iii) in the good faith judgment of the majority of the Board, be seriously detrimental to the Company, and the majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt written notice of such action to the Holders (which notice shall not specify the nature of the event giving rise to such delay or suspension), delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from the Company that such sales or offers of Registrable Securities may be resumed, and in each case maintain the confidentiality of such notice and its contents.
3.4.3 Subject to Section 3.4.4, if (i) during the period starting with the date 60 days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date 120 days after the effective date of, a Company-initiated Registration, and provided that the Company continues to actively employ, in good faith, all commercially reasonable efforts to maintain the effectiveness of the applicable Shelf Registration, or (ii) if, pursuant to Section 2.1.4, Holders have requested an Underwritten Shelf Takedown and the Company and such Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, then, in each case, the Company may, upon giving prompt written notice of such action to the Holders, delay any other registered offering pursuant to Section 2.1.4.
3.4.4 The right to delay or suspend any filing, initial effectiveness or continued use of a Registration Statement pursuant to Section 3.4.2 or a registered offering pursuant to Section 3.4.3 shall be exercised by the Company, in the aggregate, for not more than 90 consecutive calendar days or more 120 total calendar days in each case, during any 12-month period.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to use commercially reasonable efforts to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether is has complied with such requirements.
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ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each Person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable and documented out-of-pocket expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto filed pursuant to this Agreement or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each Person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2 In connection with any Registration Statement filed pursuant to this Agreement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers and agents and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable and documented out-of-pocket expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement is contained in (or not contained in, in the case of an omission) any information or affidavit so furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
4.1.3 Any Person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
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4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.
4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Section 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 4.1.5 from any Person who was not guilty of such fraudulent misrepresentation.
4.2 Waiver of Medallion Guaranty. The Company agrees to use commercially reasonable efforts to enter into an indemnification agreement in customary form, in favor of Continental Stock Transfer & Trust Company (or any successor transfer agent or warrant agent of the Company) in connection with the waiver of any requirement to provide a medallion guarantee in connection with any Transfer of any equity securities of the Company by the SPAC Initial Shareholders, Cantor or any of their Permitted Transferees; provided, that, in each case, as a prerequisite to the Company’s entry into such indemnification agreement, such SPAC Initial Shareholder, Cantor or their Permitted Transferees enter into an indemnification agreement in customary form in favor of the Company indemnifying the Company against all losses, liability or costs that may ensue as a result of its processing such transaction.
ARTICLE 5
MISCELLANEOUS
5.1 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by email or other electronic means (including email), (iii) one (1) Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable party at the following addresses (or at such other address for a party as shall be specified by like notice). Any notice or communication under this Agreement must be addressed, if to the Company, to: [●], Attention: [●], with a copy (which shall not constitute notice) to [●], Attention: [●], Email: [●]; and if to any Holder, at such Holder’s address or contact information as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment; No Third Party Beneficiaries.
5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
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5.2.2 This Agreement and the rights, duties and obligations of the Holders hereunder may not be assigned or delegated by the Holders in whole or in part; provided, however, that, subject to Section 5.2.5, a Holder may assign the rights and obligations of such Holder hereunder relating to particular Registrable Securities in connection with the transfer of such Registrable Securities to a Permitted Transferee of such Holder (it being understood that no such Transfer shall reduce any rights of the Holder with respect to Registrable Securities still held by such Holder).
5.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This Agreement shall not confer any rights or benefits on any Persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.
5.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless such assignment is permitted under Section 5.2.2 unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.
5.3 Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
5.4 Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
5.5 Jurisdiction. Any Legal Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have jurisdiction, in the United States District Court for the District of Delaware and to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such Legal Proceeding, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the Legal Proceeding shall be heard and determined only in any such court, and (iv) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding, suit or proceeding brought pursuant to this Section 5.5.
5.6 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
5.7 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her or its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
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5.8 Other Registration Rights. The Company represents and warrants that no Person, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for the sale of securities for its own account or for the account of any other Person. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions, and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
5.9 Term. This Agreement shall terminate upon the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) with respect to any Holder, the date that such Holder no longer holds any Registrable Securities. The provisions of ARTICLE 4 shall survive any termination.
5.10 Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder.
5.11 Additional Holders; Joinder. In addition to Persons who may become Holders pursuant to Section 5.2, subject to the prior written consent of at least a majority in interest of the aggregate Registrable Securities at the time in question, the Company may make any Person who acquires Common Stock or rights to acquire Common Stock after the date hereof a party to this Agreement (each such Person, an “Additional Holder”) by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”). Such Joinder shall specify the rights and obligations of the applicable Additional Holder under this Agreement. Upon the execution and delivery and subject to the terms of a Joinder by such Additional Holder, the Common Stock of the Company then owned, or underlying any rights then owned, by such Additional Holder (the “Additional Holder Common Stock”) shall be Registrable Securities to the extent provided herein and therein, and such Additional Holder shall be a Holder under this Agreement with respect to such Additional Holder Common Stock.
5.12 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
5.13 Entire Agreement; Restatement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the parties with respect to the subject matter contained herein. Upon the Closing, the Original RRA shall no longer be of any force or effect.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
| COMPANY: | ||
| Yellow.ai, Inc., a Delaware corporation | ||
| By: | ||
| Name: | ||
| Title: | ||
| LEGACY YELLOW HOLDERS: | |
| [●] | |
| [●] | |
| [●] |
| SPONSOR: | ||
| BLUEROCK ACQUISITION HOLDINGS, LLC, a Delaware limited liability company | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit A
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
JOINDER
The undersigned is executing and delivering this joinder (this “Joinder”) pursuant to the Amended and Restated Registration Rights Agreement, dated as of [____], 2026 (as the same may hereafter be amended, the “Registration Rights Agreement”), among [●], a Delaware corporation (the “Company”), and the other Persons named as parties therein. Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Registration Rights Agreement.
By executing and delivering this Joinder to the Company, and upon acceptance hereof by the Company upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by and to comply with the Registration Rights Agreement as a Holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Rights Agreement as a Holder, and the undersigned’s [shares of Common Stock] shall be included as Registrable Securities under the Registration Rights Agreement to the extent provided therein; provided, however, that the undersigned and its permitted assigns (if any) shall not have any rights as Holders, and the undersigned’s (and its transferees’) [shares of Common Stock] shall not be included as Registrable Securities, for purposes of the Excluded Sections.
For purposes of this Joinder, “Excluded Sections” shall mean [___].
Accordingly, the undersigned has executed and delivered this Joinder as of the __________ day of __________, 20__.
| Signature of Stockholder | ||
| Print Name of Stockholder | ||
| Its: | ||
| Address: | ||
| Agreed and Accepted as of | ||
| ____________, 20__ | ||
| [●] | ||
| By: | ||
| Name: | ||
| Its: | ||
Exhibit 99.1
Yellow.ai, a Global Leader in Enterprise Agentic AI, to Go Public via $550 Million Merger with Bluerock Acquisition Corp. (Nasdaq: BLRK)
Transaction expected to create a U.S. publicly listed pure-play enterprise agentic AI platform
| ● | Category leader, deployed at scale today: Global enterprise agentic AI platform — 16 billion conversations annually, 650+ enterprise clients, $34M+ unaudited revenue last fiscal year. | |
| ● | Technology: Nexus runs on multiple AI models — not locked to one provider — and improves with every conversation. 135+ languages, 85+ countries, 100+ enterprise integrations. | |
| ● | Blue-chip backing: $100M+ raised from Lightspeed, Salesforce Ventures, Sapphire Ventures and WestBridge Capital. | |
| ● | Valuation: Transaction metrics imply a pro forma equity value of ~$550 million, assuming no redemptions by BLRK public shareholders. Includes $30 million of committed PIPE financing from institutional investors. | |
| ● | Long-term alignment: The founders and key management are investing their own capital in the PIPE, side by side with institutional investors. |
SAN MATEO, Calif. and NEW YORK, N.Y. — August 3, 2026 — Yellow.ai, a global leader in enterprise agentic AI for service automation, and Bluerock Acquisition Corp. (Nasdaq: BLRK) (“Bluerock”), a publicly traded special purpose acquisition company, today announced a definitive Business Combination Agreement expected to take Yellow.ai public. At closing, the combined company will operate as Yellow.ai and trade on The Nasdaq Capital Market under the ticker “YAI.”
Delivering Enterprise Agentic AI at Scale Today
Yellow.ai was founded in 2016 by Raghu Ravinutala, Rashid Khan and Jaya Kishore Reddy on a single conviction — that enterprise software would evolve from tools that assist people to agents that do the work. A decade later, Yellow.ai has that thesis in production.
The founding partnership has since grown from three to five. The partners — an engineering-led group with roots at IIT and MIT — combine technical depth with operating and capital-markets experience. The original founders lead product and platform, Kaushik Bhaskar brings business process outsourcing(“BPO”) operating leadership, and Nand Sharma brings private-equity roll-up execution. Together, they supply the three capabilities a consolidation strategy requires.
Yellow.ai captures the hard-won expertise of an enterprise’s best people and turns it into AI agents that plan, act and resolve autonomously — across systems, channels and languages. Adoption validates the technology: enterprise accounts now make up over 70% of recurring revenue, reflecting the result of a deliberate shift toward large, durable contracts.
Voice is the fastest-growing frontier in enterprise contact centers. Nexus Vox delivers low-latency, human-like voice agents in 135+ languages and is Yellow.ai’s fastest-growing, most widely adopted product.
Why Yellow.ai Wins
A compounding data advantage: Every interaction improves the platform. Yellow.ai’s proprietary harness, context engine and multi-LLM orchestration sit above a commoditizing model layer — where the durable value accrues.
A truly global platform: 85+ countries, with enterprise deployments across North America, Europe, Asia-Pacific and the Middle East.
Industry recognition: Named a Strong Performer in The Forrester Wave™: Conversational AI Platforms for Customer Service, Q2 2026.
Positioned to Capitalize on a Significant Market Reallocation
Management believes the shift from human-delivered to AI-delivered customer experience will be one of the largest enterprise reallocations of the coming decade. This shift is centered on the BPO market, in which enterprises outsource customer-facing and back-office functions, such as customer support, technical support, finance and accounting and human resources, to specialized third-party providers in order to improve efficiency, reduce costs, and scale their operations.
Today the BPO market is a $384 billion, labor-intensive category where roughly 85% of customer-service calls are still answered by humans. By 2035 it is projected to reach $906 billion — with the AI agent sub-segment compounding from $12 billion to $295 billion, a ~43% CAGR.
Yellow.ai is built to capture that shift: organic growth, BPO roll-ups, and proprietary industry-specific AI models.
Founders’ Commentary
Raghu Ravinutala, CEO, named to the Top 50 SaaS CEOs (2023)
“Ten years ago we bet that enterprises would stop buying software that assists people and start deploying agents that do the work. That’s no longer a thesis — it’s in production: 16 billion conversations a year, across 135+ languages, inside some of the largest companies on earth. BPOs, with a large US market, mainly driven by humans, will move to agents that plan, act and resolve — and the platform enterprises trust to run it will define the category.”
Jaya Kishore Reddy, CPO, named to BW Businessworld’s 40 Under 40 (2022)
“The industry is moving to specialized models. Yellow.ai is positioned to build industry-leading IP trained on domain expertise, vertical by vertical.”
Rashid Khan, CMO & Head of IR, named to Forbes’ 30 Under 30 for Enterprise Technology (2022)
“Enterprise demand for AI is accelerating. This combination positions us to meet it.”
Kaushik Bhaskar, CEO – AI Services
“The CX industry is at an inflection point, and Yellow.ai has the technology, data and platform to lead it — a chance to build a category-defining company.”
Nand Sharma, President and Group CFO
“We pair enterprise AI software with proven operating expertise, so enterprises transform faster with better efficiency, quality and outcomes.”
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Sponsor Commentary
Ramin Kamfar, Chairman and CEO of Bluerock Acquisition Corp.
“As some investors seek exposure to AI roll-up strategies, Yellow.ai is executing a consolidation strategy in a market we believe is ripe for operational optimization, growth trajectory, and margin expansion. Yellow.ai has built an enterprise-grade platform already operating at production scale across some of the world’s most demanding organizations. We’re excited to back the Yellow.ai team as they aim to consolidate this attractive and fragmented market and scale their agentic AI platform.”
Business Combination Structure to Accelerate Growth
The BCA has received unanimous approval from the Boards of Directors of both Bluerock and Yellow.ai. Completion of the Business Combination remains subject to customary closing conditions, including the requisite approval from Bluerock’s shareholders.
Under the terms of the BCA, the Business Combination values Yellow.ai at a pre-money valuation of approximately $300 million.
The Business Combination ascribes a pro forma equity value of approximately $550 million to the combined company. The Business Combination is expected to generate more than $200 million in gross proceeds, including:
| · | Approximately $175 million of cash held in Bluerock’s trust account at closing (assuming no redemptions of Bluerock’s public shares); and | |
| · | Approximately $30 million of committed PIPE financing from institutional investors. |
Yellow.ai intends to use the proceeds from the transaction to accelerate investment in its agentic AI platform, expand enterprise sales across North America and Europe, and scale its global operations. The combined company also plans to deploy capital toward a disciplined M&A strategy focused on acquiring complementary BPO operators. Yellow.ai plans to transform acquired BPOs into AI-native operations powered by its AI platform.
In addition to the $30 million of committed PIPE financing, Yellow.ai may raise additional PIPE financing as part of this Business Combination. The Business Combination is expected to close in the second half of 2026, subject to customary closing conditions.
Advisors
Cantor Fitzgerald & Co. (“Cantor”) is acting as exclusive financial advisor to Yellow.ai. King & Spalding LLP is representing Cantor as legal counsel. Fox Rothschild LLP is representing Yellow.ai as legal counsel, and AUM Advisors is serving as communications counsel to Yellow.ai.
Bluerock Capital Markets, LLC and Brookline Capital Markets, A Division of Arcadia Securities, LLC are acting as capital markets advisors to Bluerock Acquisition Corp. Ashurst Perkins Coie US LLP is representing Bluerock Acquisition Corp. as legal counsel.
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Important Information About the Proposed Business Combination and Where to Find It
In connection with the Business Combination, Bluerock intends to file with the SEC a registration statement on Form S-4 (the “Registration Statement”), which will include a proxy statement/prospectus and certain other related documents, which will serve as both the proxy statement to be distributed to Bluerock’s shareholders in connection with Bluerock’s solicitation for proxies for the vote by Bluerock’s shareholders in connection with the Business Combination and other matters to be described in the Registration Statement, as well as the prospectus relating to the offer and sale of the securities to be issued (or deemed issued) to Bluerock’s securityholders and Yellow.ai equity holders in connection with the completion of the Business Combination. After the Registration Statement is declared effective, Bluerock will mail a definitive proxy statement and other relevant documents to its shareholders as of the record date established for voting on the Business Combination. Bluerock’s shareholders and other interested persons are advised to read, once available, the Registration Statement, the preliminary proxy statement/prospectus included in the Registration Statement and any amendments thereto and, once available, the definitive proxy statement/prospectus and documents incorporated by reference therein filed in connection with the Business Combination, in connection with Bluerock’s solicitation of proxies for its extraordinary general meeting to be held to approve, among other things, the Business Combination, as well as other documents filed with the SEC in connection with the Business Combination, as these documents will contain important information about Bluerock, Yellow.ai, and the Business Combination. Securityholders of Bluerock and equityholders of Yellow.ai may obtain a copy of the preliminary or definitive proxy statement/prospectus, once available, as well as other documents filed by Bluerock with the SEC that will or may be incorporated by reference in the proxy statement/prospectus, without charge, at the SEC’s website located at www.sec.gov or by directing a written request to Bluerock at Bluerock Acquisition Corp., 919 Third Avenue, New York, New York 10022. Additional information about the Business Combination, including a copy of the BCA, will be provided in Bluerock’s Current Report on Form 8-K. An investor deck will be filed together with Yellow.ai’s registration statement on Form S-4, which will include a document that serves as a proxy statement of Bluerock, referred to as a proxy statement / prospectus, each of which will be filed with the Securities and Exchange Commission (“SEC”) and available at www.sec.gov.
INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY AUTHORITY, NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE PROPOSED TRANSACTION PURSUANT TO WHICH ANY SECURITIES ARE TO BE OFFERED OR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
About Yellow.ai
Yellow.ai is a global leader in agentic AI for enterprise service automation. Built on a multi-LLM architecture and continuously trained on 16 billion+ conversations annually, the Yellow.ai platform helps enterprises unlock unparalleled efficiency across customer service and operations while significantly reducing operating costs. With a customer-centric approach and a team of experts focused on actionable outcomes for enterprises, their customers, and their employees, Yellow.ai continues to push the boundaries of what autonomous enterprise work can achieve.
For more information, visit www.yellow.ai.
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About Bluerock Acquisition Corp.
Bluerock Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Bluerock may pursue an initial business combination in any business or industry. Bluerock’s units, Class A ordinary shares and warrants are currently trading on The Nasdaq Global Market under the symbols BLRKU, BLRK and BLRKW, respectively. Bluerock closed its initial public offering on December 12, 2025, and is headquartered in New York City.
For more information, visit https://bluerock.com/bluerock-acquisition-corp/. The content of Bluerock’s website is not incorporated into this press release.
Forward-Looking Statements
This communication includes “forward-looking statements” within the meaning of the U.S. federal securities laws and “forward-looking information” within the meaning of applicable non-U.S. securities laws (collectively, “forward-looking statements”). Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements are based upon current estimates and assumptions that, while considered reasonable by Yellow.ai and its management, and Bluerock and its management, as the case may be, are inherently uncertain.
These statements include: projections of market opportunity and market share; estimates of customer adoption rates and usage patterns; projections regarding Yellow.ai’s ability to commercialize new products and technologies; projections of development and commercialization costs and timelines; expectations regarding Yellow.ai’s ability to execute its business model and the expected financial benefits of such model; expectations regarding Yellow.ai’s ability to attract, retain and expand its customer base; Yellow.ai’s deployment of proceeds from capital raising business combinations; Yellow.ai’s expectations concerning relationships with strategic partners, suppliers, governments, state-funded entities, regulatory bodies and other third parties; Yellow.ai’s ability to maintain, protect and enhance its intellectual property; future ventures or investments in companies, products, services or technologies; development of favorable regulations affecting Yellow.ai’s markets; the successful consummation and potential benefits of the Business Combination and expectations related to its terms and timing; the stock exchanges on which the securities of the combined company are expected to trade; proceeds from the business combination; funds received by the combined company from Bluerock’s trust account and redemptions by Bluerock’s public shareholders; the expectation that Yellow.ai can and will maintain the compatibility of its platform with third-party applications that its customers use in their businesses; and the potential for Yellow.ai to increase in value.
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These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions, many of which are beyond the control of Yellow.ai and Bluerock. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause the actual results of the combined company following the Business Combination, 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 statements. Such risks and uncertainties include: Yellow.ai’s expectations regarding future financial performance, capital requirements and economics; Yellow.ai’s use and reporting of business and operational metrics; Yellow.ai’s competitive landscape; Yellow.ai’s dependence on members of its senior management and its ability to attract and retain qualified personnel; the potential need for additional future financing; Yellow.ai’s ability to manage growth and expand its operations; potential future acquisitions or investments in companies, products, services or technologies; Yellow.ai’s reliance on strategic partners and other third parties; Yellow.ai’s ability to maintain, protect and defend its intellectual property rights; risks associated with privacy, data protection or cybersecurity incidents and related regulations; the use, rate of adoption and regulation of artificial intelligence and machine learning; uncertainty or changes with respect to laws and regulations; uncertainty or changes with respect to taxes, trade conditions and the macroeconomic environment; the combined company’s ability to maintain internal control over financial reporting and operate a public company; the possibility that required shareholder and regulatory approvals for the Business Combination are delayed or are not obtained, which could adversely affect the combined company or the expected benefits of the Business Combination; the risk that shareholders of Bluerock could elect to have their shares redeemed, leaving the combined company with insufficient cash to execute its business plans; the risk that the PIPE financings may not close or may close in an amount less than anticipated, which could adversely affect the combined company’s available capital and ability to execute its business plans; the occurrence of any event, change or other circumstance that could give rise to the termination of the business combination agreement; the outcome of any legal proceedings or government investigations that may be commenced against Yellow.ai or Bluerock; failure to realize the anticipated benefits of the Business Combination; the ability of Yellow.ai or the combined company to issue equity or equity-linked securities in connection with the Business Combination or in the future; and other factors described in Bluerock’s filings with the SEC. These forward-looking statements are based on certain assumptions, including that none of the risks identified above materialize; that there are no unforeseen changes to economic and market conditions, and that no significant events occur outside the ordinary course of business. Additional information concerning these and other factors that may impact such forward-looking statements can be found in filings and potential filings by Bluerock or the combined company resulting from the Business Combination with the SEC, including under the heading “Risk Factors.” If any of these risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that neither Yellow.ai nor Bluerock presently knows or that Yellow.ai and Bluerock currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Yellow.ai’s and Bluerock’s expectations, plans, or forecasts of future events and views as of the date of this press release. Yellow.ai and Bluerock anticipate that subsequent events and developments will cause Yellow.ai’s and Bluerock’s assessments to change. However, while Yellow.ai and Bluerock may elect to update these forward-looking statements at some point in the future, Yellow.ai and Bluerock specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing Yellow.ai’s and Bluerock’s assessments as of any date after the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this communication, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements. An investment in Bluerock is not an investment in any of Bluerock’s founders or sponsors past investments, companies, or affiliated funds. The historical results of those investments are not indicative of future performance of Bluerock, which may differ materially from the performance of Bluerock’s founders or sponsors past investments.
No Offer or Solicitation
This press release does not constitute an offer to sell or exchange, or a solicitation of an offer to buy or exchange, or a recommendation to purchase, any securities in any jurisdiction, or the solicitation of any proxy, vote, consent, or approval in any jurisdiction with respect to any securities or in connection with the Business Combination. There shall not be any offer, sale, or exchange of any securities of Yellow.ai or Bluerock in any jurisdiction where, or to any person to whom, such offer, sale, or exchange may be unlawful under the laws of such jurisdiction prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act or an exemption therefrom.
Participants in Solicitation
Bluerock, Yellow.ai, and certain of their respective directors, executive officers, and other members of management and employees may be deemed to be participants in the solicitations of proxies from Bluerock’s shareholders in connection with the Business Combination. More detailed information regarding those directors and executive officers and a description of their interests in Bluerock is contained in Bluerock’s filings with the SEC, including the registration statement on Form S-1 (File No. 333-291337), which was declared effective by the SEC on December 10, 2025, and which is available free of charge at the SEC’s website at www.sec.gov. Additional information regarding the interests of such participants will be contained in the Registration Statement when available.
Yellow.ai’s directors and executive officers may also be deemed to be participants in the solicitation of proxies from Bluerock’s shareholders in connection with the Business Combination. A list of the names of such directors and executive officers, and information regarding their interests in the Business Combination, will be included in the Registration Statement when available.
Contacts
Media Contact:
Crocker Coulson, AUM Advisors
+1 (646) 652-7185
Investor Contact:
Harrison Seideman
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Exhibit 99.2
Private and Confidential AI Agents that Think, Act, and Resolve EVERYDAY MOMENTS, POWERED BY YELLOW.AI Investor Presentation August 2026
Disclaimer IMPORTANT INFORMATION 2 Disclaimer This presentation is provided for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a business combination between Bitonic Technology Labs Inc. d/b/a Yellow.ai ("Yellow.ai") and Bluerock Acquisition Corp. ("Bluerock") and related transactions (the "proposed transaction") and for no other purpose. The information contained herein does not purport to be all inclusive and none of Yellow.ai, Bluerock nor any of their respective affiliates, directors, officers, employees or advisers or any other person has independently verified the information in this presentation and no representation or warranty, express or implied, is or will be given by any such person as to the accuracy or completeness of the information in this presentation. To the fullest extent permitted by law, in no circumstances will Yellow.ai, Bluerock or any of their respective subsidiaries, interest holders, affiliates, representatives, partners, directors, officers, employees, advisers or agents be responsible or liable for any direct, indirect or consequential loss or loss of profit arising from the use of this presentation, its contents, its omissions, reliance on the information contained within it, or on opinions communicated in relation thereto or otherwise arising in connection therewith. Recipients of this presentation are not to construe its contents, or any prior or subsequent communications from or with Yellow.ai, Bluerock or their respective representatives, as investment, legal or tax advice. In addition, this presentation does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of Yellow.ai, Bluerock or the proposed transaction. Recipients of this presentation should each make their own evaluation of Yellow.ai, Bluerock and the proposed transaction and of the relevance and adequacy of the information and should make such other investigations as they deem necessary. This Presentation shall be construed and governed by the substantive laws of the State of Delaware, without regard to its conflicts of laws rules and principles. Forward-Looking Statements This communication includes "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements may be identified by the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "expect," "anticipate," "believe," "seek," "target," "continue," "could," "may," "might," "possible," "potential," "predict" or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. We have based these forward- looking statements on current expectations and projections about future events. These statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions, plans or prospects regarding Yellow.ai, Bluerock, the proposed transaction and the future held by the respective management teams of Yellow.ai or Bluerock, the anticipated benefits and the anticipated timing of the proposed transaction, and the expected future performance and market opportunities of Yellow.ai and the expected financial impacts of the proposed transaction (including future revenue, pro forma enterprise value and cash balance). These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions, many of which are beyond the control of Yellow.ai and Bluerock. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied. Additional information concerning these and other factors may be found in filings with the U.S. Securities and Exchange Commission. Undue reliance should not be placed upon these statements. Additional Information About the Proposed Transaction and Where to Find It The proposed transaction will be submitted to shareholders of Bluerock for their consideration. Bluerock intends to file a registration statement on Form S-4 (the "Registration Statement") with the U.S. Securities and Exchange Commission ("SEC"), which will include a proxy statement/consent solicitation statement to be distributed to Bluerock's shareholders in connection with Bluerock's solicitation for proxies for the vote by Bluerock's shareholders in connection with the proposed transaction and other matters to be described in the Registration Statement, as well as the prospectus relating to the offer of the securities to be issued in connection with the completion of the proposed transaction. After the Registration Statement has been filed and declared effective, a definitive proxy statement/prospectus/consent solicitation statement and other relevant documents will be mailed to Bluerock and Yellow.ai shareholders as of the record date established for voting on the proposed transaction. Before making any voting or investment decision, Bluerock's shareholders and other interested persons are advised to read, once available, the definitive proxy statement/prospectus/consent solicitation statement and other documents filed with the SEC, as they will contain important information. Participants in the Solicitation Bluerock, Yellow.ai and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information regarding such participants and their interests will be included in the Registration Statement, including the definitive proxy statement/prospectus when available. No Offer or Solicitation This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Investment in any securities described herein has not been approved by the SEC or any other regulatory authority and any representation to the contrary is a criminal offense. Non-GAAP Financial Measures In addition to financial information presented in accordance with the Generally Accepted Accounting Principles established by the Financial Accounting Standards Board ("GAAP"), this presentation includes certain non-GAAP financial measures. These non-GAAP measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP measures have limitations as analytical tools, and they should be considered in addition to, and not in isolation from or as a substitute for, analysis of other GAAP financial measures. No Incorporation by Reference The information contained in the third-party citations and websites referenced in this communication is not incorporated by reference into this communication. Trademarks This presentation contains trademarks, service marks, trade names and copyrights of Yellow.ai, Bluerock, and other companies, each of which are the property of their respective owners. All third-party brand names and logos appearing in this presentation are trademarks or registered trademarks of their respective holders. Any such appearance does not necessarily imply any endorsement of Bluerock, Yellow.ai or the proposed transaction. Risk Factors For a description of certain risks relating to Bluerock, Yellow.ai, including its business and operations, and to the proposed transaction, we refer you to "Risk Factors" at the end of this presentation. Use of Data Information in this presentation is based on data and analyses from various sources as of August 2026, unless otherwise indicated. References in this presentation to "$" are to the lawful currency of the United States. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other industry data. These estimates and other statistical data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates and other statistical data. We have not independently verified the statistical and other industry data generated by independent parties and contained in this presentation and, accordingly, we cannot guarantee their accuracy or completeness. In addition, expectations, assumptions, estimates and projections of the future performance of relevant markets in which Yellow.ai operates are necessarily subject to a high degree of uncertainty and risk.
Yellow.ai is Focused on Transforming the Customer Service Industry through an AI Platform-led Roll-up of the Sector 3
4 Only 14% of Customer Service Issues are Fully Resolved in Self-Service1 Agentic AI is expected to Autonomously Resolve 80% of Common Customer Service Issues without Human Intervention by 20292 1. Market data sourced from Gartner Research (https://www.gartner.com/en/newsroom/press-releases/2024-08-19-gartner-survey-finds-only-14-percent-of-customer-service-issues-are-fully-resolved-in-self-service, August 2024). 2. Market data sourced from Gartner Research (https://www.gartner.com/en/newsroom/press-releases/2025-03-05-gartner-predicts-agentic-ai-will-autonomously-resolve-80-percent-of-common-customer-service-issues-without- human-intervention-by-20290, March 2025). 3. Market data sourced from Precedence Research (https://www.precedenceresearch.com/business-process-outsourcing-market, January 2026). Business Process Outsourcing (BPO) is a $384B Market3
AI Agents are Disrupting the $384B BPO Market 1 MARKET OPPORTUNITY 5 1. Projected market data sourced from Precedence research (https://www.precedenceresearch.com/business-process-outsourcing-market, January 2026; https://www.precedenceresearch.com/ai-agents-market, July 2026). Robust Expected Market Growth 2026 – 20351 Global Business Process Outsourcing (BPO) Market $384B Global BPO 2026 ~10% CAGR $906B Global BPO 2035 $12B AI Agents ~43% CAGR $295B AI Agents 2035 2026 Global BPO ~10% CAGR AI Agents ~43% CAGR ~4x faster growth Yellow.ai is purpose-built for this disruption
AI is Driving the Autonomous Work Revolution MARKET OPPORTUNITY 6 Tailwinds Driving Customer service leads all deployment categories for AI agents right now2 Customer service is second most AI- exposed occupation economy-wide, as per Anthropic's 2026 study4 Current cost gap between human agents and agentic AI per call1 Customer service projected to be handled by agentic AI in 20283 ~7x #1 70%+ Second Most 1. Gartner, Benchmarks to Assess Your Customer Service Costs (gartner.com/en/documents/5164231, February 2024): $13.50 assisted vs. $1.84 self-service cost per contact. 2. Market data sourced from Precedence Research (https://www.precedenceresearch.com/business-process-outsourcing-market, January 2026). 3. Market data sourced from Cisco projections (https://www.apizee.com/customer-service-trends.php, August 2025). 4. Market data sourced from Anthropic (https://www.anthropic.com/research/labor-market-impacts, March 2026).
The Window is Open: Three Forces Aligning WHY NOW 7 Acquisitions via the Yellow.ai Platform Leading AI Technology Strong Enterprise Customer Demand Acquisition Opportunity BPOs under pressure: Replace legacy human- based offerings / products Leading AI Technology Nexus multi-LLM architecture eliminates provider lock-in. 35+ channels, 135+ languages Strong Enterprise Demand Adoption among 650+ clients across 85+ countries
8 You May Have Already Talked To Us Across telecom, retail, healthcare, and beyond – Yellow.ai powers the AI agents that millions interact with every day 16B Conversations a Year on the Yellow.ai Platform Source: Company website (https://yellow.ai/about-us/).
Robust Scale and Traction, by the Numbers WHY YELLOW.AI WINS 9 650+ Global Customers 16B+ Annual Conversations 135+ Languages 85+ Countries 100+ Integrations 150+ Pre-built Templates 9+ Industries Served 35+ Channels Source: Company website (https://yellow.ai/blog/why-yellow-ai/).
*A halo indicates above-average customer feedback. A double halo indicates that the vendor is a Customer Favorite. Source: The Forrester Wave : Conversational AI Platforms for Customer Service, Q2 2026 (Forrester Research, Inc.) from https://reprint.forrester.com/reports/the-forrester-wavetm-conversational-ai-platforms-for-customer-service-92699048/index.html. Note: Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. This report is part of a broader collection of Forrester resources, including interactive models, frameworks, tools, data, and access to analyst guidance. For more information, read about Forrester's objectivity here. Yellow.ai Recognized as a Strong Performer in the Forrester Wave PEER LANDSCAPE 10 Reading the chart: Conversational AI Platforms for Customer Service, Q2 2026 Received 4th Highest Score in the Current Offering Category. According to Forrester Wave: • Yellow.ai provides above-par support for a range of developers with a mix of low-code/no-code and pro-code tools that enable teams to collaboratively build customer-facing bots • Yellow.ai's Nexus AI assistant supports application creation and testing and can identify applications to build based on usage and generate synthetic data for testing purposes • Customers laud Yellow.ai's deployment services and how quickly they generate value • Yellow.ai is a good fit for organizations that are looking for fast time to value and want to empower noncoders to build out customer self- service applications
11 Everyday Moments, Powered for Enterprises by Yellow.ai AI for Everyday Commerce AI for Everyday Services AI for Work Retail Grocery Online shopping Tech support Banking Municipal services Human Resources Procurement Operations Source: Company website (https://yellow.ai/about-us/).
Backed By Blue Chip Strategics & Marquee Investors INSTITUTIONAL SUPPORT 12 $103M Capital raised to date Key Investors
Source: Company website (https://yellow.ai/blog/why-yellow-ai/). Yellow.ai's Evolution with Agentic AI: Listen, Reason, Act & Respond OUR EVOLUTION 2016-18 Chatbots (NLP/ML Rule- Based) Businesses needed basic automation to handle FAQs and reduce agent workload 2018-20 Wide Channel Reach (WA, Social Media) Customers demanded multi- channel support, driving chatbot expansion beyond websites 2020-22 Voice Channel, Proactive Engagements, No-Code Rising adoption of voice interactions required smarter, proactive, and easy-to-deploy AI solutions 2022-26 Generative AI, Agent Assists, Agentic RAG, VoiceX Businesses needed more intelligent, adaptive AI to improve customer experience and agent efficiency 2026+ Nexus Agentic AI Platform, Nexus VOX Platform for Voice CoPilot, Explainable AI The future demands autonomous AI that can think, learn, and act 13
OUR STORY We are Engineers, Technologists & Business Builders ENGINEERS FROM TECHNOLOGISTS FROM BUSINESS BUILDERS & INVESTORS FROM One Winning Management Team Built to disrupt customer service with AI 14
Engineer-Led. Technology Driven. AI Native. KEY MANAGEMENT Michael Flodin CX Advisor Daniel Akre CX Advisor Varun Vijayagha CRO – APAC Vasudev Chatti CCO Raghu Ravinutala CEO Jaya Kishore Reddy CPO Rashid Khan CMO & Head of IR Institutional Pedigree Madhav Chinta CTO Kaushik Bhaskar CEO – AI Services Nand Sharma President & Group CFO Michael Shulman North America – GTM 15 Vel Kaniappan CFO – Yellow.ai Platform
Source: Company website (https://yellow.ai/platform/enterprise-grade-security/). The AI Engine: Autonomous Business & Services BUSINESS MODEL 16 Security & Guardrails Enterprise Security Data Privacy Compliance Content Moderation Context Aware Multilingual Multimodal Multi-Agent Healthcare Retail Media Real Estate Banking HR & ITMS Enterprise Grade Agents Integrations 100+ Integrations Channels Hyper-Personalized Campaigns AI Agents AI Co-Pilot For debugging AI Agent Builder Dynamic conversations Agentic RAG Multi-model Agent Marketplace Templates Agentic CRM User 360 Agent Assist AI powered Human Helpdesk Escalation Assist Analyze Quantitative Analytics Qualitative Insights Self-Learning KB / Flow Custom Dashboards Voice AI Features Emotion AI Intelligent Interruption Human-Like Conversation Email Facebook Instagram Mobile App SMS Teams Voice Web Chat WhatsApp Multi-LLM Agentic AI Architecture
Source: Company website (https://yellow.ai/blog/why-yellow-ai/). Global Customers Validate Enterprise AI Platform TRUSTED BY GLOBAL ENTERPRISES 17 Select Customers Select Partners Embedded with the world's leading platforms & integrators Serving top brands globally (Through HCL) Manufacturing, Energy & Utility Retail and E- Commerce ICT Services Healthcare Comms, Media & Telecom FMCG, CPG & QSR Banking & Insurance Automobile & Aviation
Trusted By Enterprises. Recognized By Analysts. EXTERNAL VALIDATION " The experience with Yellow.ai has been very positive. From the start the team worked hard to understand our needs and continue to iterate to ensure that we're able to deliver a solid experience to our customers. The application is straightforward to use. It is constantly being updated which has given us additional features we didn't expect. Director, Healthcare & Biotech Firm " Yellow.ai has helped us accelerate our AI automation journey for some of the most important use cases. Our After-Hours voicebot deployment with Yellow.ai has been very successful. Offering reliable customer support, the voice AI agent answers customers succinctly. Automation of routine queries has helped us save millions of dollars over the past year with high customer satisfaction. Doug Mooneyham, Director of Operations Applications at Waste Connections Yellow.ai recognized as a Strong Performer in the Forrester Wave (2026) With Yellow.ai, we moved from endless delays to delivering real results. In just six weeks, we launched a fully functioning AI-powered chat that now automates more than 70% of customer interactions. Our clients are thrilled, our costs are down, and our agents get to focus on the conversations that matter most. It's truly transformed how we deliver customer service. Jeff Kramp, Chief AI Officer at VIPDesk " Industry Analyst Coverage Other Analyst Coverage 18 Source: The Forrester Wave : Conversational AI Platforms for Customer Service, Q2 2026 (Forrester Research, Inc.) from https://reprint.forrester.com/reports/the-forrester-wavetm-conversational-ai-platforms-for- customer-service-92699048/index.html. Vendor positions are approximate.
19 3 Growth Pillars Business Process Outsourcing (BPO) Roll-Up Acquiring and AI-transforming contact centers Product & Revenue Expansion Enhancing value within existing customer base Enterprise Logo Growth Winning new large accounts ORGAN I C INORG A N I C BPOs are under pressure to deploy AI — we plan to acquire them and transform them using our platform
Source: Company website (https://yellow.ai/case-study/waste-connections-voice-ai-transforms-customer-support/ https://yellow.ai/case-study/, https://yellow.ai/case-study/inteletravel-chat-voice-support-scaling-with- yellow-ai/, https://yellow.ai/case-study/lion-parcel/, https://yellow.ai/case-study/how-vipdesk-achieved-more-than-70-automation-while-preserving-human-touch). Sticky by Nature. Scalable by Design. COMPETITIVE MOAT & CUSTOMER ECONOMICS ROI for Customers Significant "Land & Expand" Leads to Revenue Growth 75%+ Avg Deflection Rate 40%+ CX Cost Reduction 40%+ CSAT Improvement 3× Customer ACV growth $474K $3,467K Starting ARR Current ARR Customer 3 (Retailer) ~7x Expansion $96K $1,307K Starting ARR Current ARR Customer 1 (Insurance) $30K $812K Starting ARR Current ARR Customer 2 ~27x Expansion ~14x Expansion 20
Acquisition Flywheel for AI Integration GROWTH LEVER · BPO ROLL-UP OPPORTUNITY 21 Acquire contact centers (BPOs) Deploy Yellow.ai platform & technology stack Value Creation Acquisition Deployment Integration Expand Margins & Growth 1 2 3 4 An illustrative playbook to acquire, deploy technology, integrate, and drive potential margin expansion Transition from human agent to outcome- based model; AI-native operations Drive margin expansion & accelerate revenue growth
Value Creation During a BPO Transformation GROWTH LEVER · BPO ROLL-UP OPPORTUNITY 22 Valuation Creation via Margin Expansion What We Buy Low Gross Margin Low EBITDA Margin What They Could Become High Gross Margin High EBITDA Margin Per-FTE labor Recurring per- resolution SaaS Strategic Moat: Platform Lock-in via Integrations and Data ILLUSTRATIVE VALUE TRANSFORMATION POWERED BY THE YELLOW.AI PLATFORM
1. Estimated revenue per target company management materials. 2. Market data sourced from 451 Research as of 7/28/26. Select transactions include $5-$200M acquisitions in the BPO segment since January 2017, with disclosed revenue multiples. An Active Pipeline. Selective Execution. GROWTH LEVER · BPO ROLL-UP OPPORTUNITY INITIAL TARGET PROFILE (ILLUSTRATIVE) Est. Revenue Band $10M – $100M Est. EBITDA Margin 5% – 15% CUSTOMERS Fortune 500 VERTICALS Healthcare, BFSI, Retail, Telecom GEOGRAPHIES US, India, APAC, Middle East TECH POSTURE Cloud-ready ACTIVE TARGET PIPELINE TARGET COUNTRY FOCUS AREAS REVENUE1 Target 1 US BPO, CX, EX $85M Target 2 US BPO, CX, EX $75M Target 3 US AI Platform $10M Target 4 UK BPO, CX $25M Target 5 US BPO, CX $30M Target 6 India CX $5M Target 7 India BPO, CX $20M Target 8 India BPO $20M Target 9 India BPO $25M Target 10 India BPO $20M 23 Yellow.ai is well positioned to roll-up call centers given local expertise and boots on the ground in traditional contact center regions Est. Market Valuation2 0.3x – 1.3x
Note: Fiscal year ends January 31. Revenue figures are shown in U.S. dollars in millions. "A" denotes historical actual results and does not indicate that such results have been audited. FY22 and FY23 financial information is unaudited and was not subject to a PCAOB audit. FY24, FY25 and FY26 financial information is unaudited, remains subject to completion of the Company's PCAOB audit, and may change as audit procedures are completed. 1. FY27E represents management's projection as of June 2026, based on assumptions that management believes to be reasonable, including contracted backlog and probability-weighted sales pipeline; actual results may differ materially. EBITDA is a non-GAAP financial measure. EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization. These measures should not be considered in isolation or as substitutes for net income (loss) or other measures prepared in accordance with GAAP. Scaling Revenue, Path to Expected EBITDA Positive FINANCIAL HIGHLIGHTS $11.6 $21.7 $27.8 $34.4 $34.8 $37.3 FY22A FY23A FY24A FY25A FY26A FY27E Key Highlights 3.0x Strong historical revenue growth FY22A →FY26A Expected to be EBITDA positive in FY27E1 24 Product & revenue expansion via growth within existing customer base ✓ Driving new enterprise clients onto Yellow.ai platform through targeted sales & marketing investment ✓ Key Management Assumptions & Drivers Management Forecast Margin improvement driven by AI efficiencies streamlining operating expenses ✓ Fiscal Year ends Jan 31st (i.e., FY26A = Feb-25 to Jan-26)
Opportunity to Unlock AI-First Enterprise Value KEY INVESTMENT HIGHLIGHTS Agentic AI Leader at Production Scale 8+ years deployed. 16B+ conversations annually across 650+ enterprise clients, 85+ countries, 135+ languages Platform for Strategic Acquisitions Acquisitions powered by the Yellow.ai platform Defensible Product Moats Multi-LLM architecture, 100+ enterprise integrations and 113% net retention ratio on agentic AI revenue2 Proven, Measurable Customer Outcomes Trusted by top global brands; 75% automation; 40%+ CSAT improvement; 40%+ CX cost reduction Massive, Fast-Forming Market $906B BPO market by 2035E, with the AI Agent market projected to reach ~$295B, growing at a ~43% CAGR from 2026-2035E1 Inflecting Financial Profile Strong historical revenue growth with $35M for last fiscal year and management estimates projected positive EBITDA at end of fiscal year3 25 1. Projected market data sourced from Precedence Research (https://www.precedenceresearch.com/business-process-outsourcing-market, January 2026; https://www.precedenceresearch.com/ai-agents-market, July 2026). 2. Agentic AI NRR measures net ARR growth from the cohort of customers onboarded on or after November 30, 2022 (the launch of ChatGPT), through January 31, 2026. It is calculated by dividing the cohort's aggregate ARR at the end of the measurement period, including expansion and net of contraction and churn, by the cohort's initial ARR at onboarding. 3. The Company's fiscal year ends January 31.The financial information is unaudited, remains subject to completion of the Company's PCAOB audit, and may change as audit procedures are completed. EBITDA is a non- GAAP financial measure. EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization. These measures should not be considered in isolation or as substitutes for net income (loss), or other measures prepared in accordance with GAAP. FY27E represents management's projection as of July 2026, based on assumptions that management believes to be reasonable, including contracted backlog and probability-weighted sales pipeline; actual results may differ materially.
26 Transaction Overview
24-year investment track record $20B in total transactions 2 publicly listed vehicles currently with $4B+ in assets 3 5 successful public listings 2 BLUEROCK PLATFORM EXPERTISE1 ✓ ✓ ✓ ✓ Bluerock offers value creation capabilities: o Successful track record of accessing the public and private markets o Significant experience managing and growing publicly traded companies o Deep Public M&A and roll-up strategy experience Bluerock Capital Markets acting as a Capital Markets Advisor 1. Representing experience of Bluerock and members of Bluerock Acquisition Corp. management team. 2. Represents the initial public offerings of New World Coffee (NWCI, 1996), Bluerock Residential Growth REIT (BRG, 2014), and Bluerock Acquisition Corp. (Bluerock, 2025); and the listings of Bluerock Private Real Estate Fund (BPRE, 2025) via a direct listing, and Bluerock Homes Trust (BHM, 2022), via a spin-off from Bluerock Residential Growth REIT. 3. Represents the combined net assets of Bluerock Homes Trust (BHM) and Bluerock Private Real Estate Fund (BPRE) as of 3/31/26. BLUEROCK & YELLOW.AI PARTNERSHIP 27 Yellow.ai to Go Public in Partnership with Bluerock Acquisition Corp. (NASDAQ: BLRK) PARTNERSHIP OVERVIEW
10.5x 8.3x 15.5x 21.9x Discounted Entry Point, Robust Capital Activity VALUATION IPO / DeSPAC (T + 1) Market Cap Current Market Cap Total Capital Raised Since IPO: ~$850M Total Capital Raised Since IPO: ~$810M Total Capital Raised Since IPO: ~$620M ($ in millions) Note: Yellow.ai fiscal year ends on January 31st. Public company multiples are based on CY25 Revenue. Yellow.ai's multiple is based on EV of $365.3M and FY26A revenue of $34.8M ("A" denotes historical actual results and does not indicate that such results have been audited). 1. AlphaSense, FactSet, and S&P Capital IQ as of 7/30/26. PEER MARKET CAPITALIZATIONS1 PEER EV/REVENUE MULTIPLES1 28 Peer Comps Mean: 15.2x $1,012 $2,840 FD Market Cap at IPO Current FD Market Cap $1,095 $1,397 FD Market Cap at IPO Current FD Market Cap $1,412 $980 FD Market Cap at IPO Current FD Market Cap
Key Transaction Metrics TRANSACTION SUMMARY Transaction Highlights Total Sources ($M) $300.0 Yellow.ai Rollover Equity 175.0 SPAC Trust (4) 28.8 PIPE Proceeds (1) $503.8 Total Sources Sources & Uses (2) Total Uses ($M) $300.0 Equity to Yellow.ai 196.3 Cash to Balance Sheet 7.5 Est. Transaction Expenses $503.8 Total Uses $10.00 Share Price 55.4M Pro forma share count (3) $553.5 Implied pro forma Equity Value ($188.2) ( - ) Pro forma Cash on Balance Sheet (5) $365.3 Implied Pro Forma Enterprise Value • Yellow.ai is valued at $300M pre - money equity value • The combined company has secured ~$30M of committed PIPE financing (1) • SPAC Trust + PIPE proceeds provide estimated dry powder of $195M+, net of transaction expenses, to invest in organic and inorganic growth strategies • 17.5M Yellow.ai management milestone incentive plan shares: 10.0M tied to Year 1 - 3 revenue milestones ($45M/$55M/$65M) and 7.5M tied to a $12.00 share price milestone (20/30 trading days within 5 years) Illustrative Ownership at Close ($M, except per share values) (2) 1 Note: Excludes the impact of public and private warrants. Assumes no SPAC public shareholder elect to redeem their shares. 1. Includes $25M convertible note financing (gross of 5% OID) and $5M unit PIPE financing (consists of 1 common share and 1 warr ant , with a strike price of $11.50) . 2. Does not include the Yellow.ai management milestone incentive plan shares (subject to performance and stock price metrics) an d 0 .75M SPAC sponsor shares subject to additional unit PIPE financing. 3. Includes 17.25M SPAC public shares, 30.0M Yellow.ai shares, 4.0M sponsor & director shares, 4.1M PIPE shares (2.5M shares und erl ying the convertible note converted at a $10.00 conversion price + 0.75M commitment shares issued to the convertible note shareholders + 0.75M shares issued to Unit PIPE financing shareholders + 0.1M advisory sha res issued to Bluerock Capital Markets, LLC). 4. Reflects $172.5M IPO proceeds plus estimated interest earned on SPAC trust account. 5. Reflects $28.8M PIPE proceeds (net of 5% OID), $175.0M SPAC trust proceeds, payment of $7.5M of estimated transaction expense s, and includes provision for $8.0M paydown of Yellow.ai’s estimated net debt at closing. 54.2% 31.2% 7.4% 7.2% Yellow.ai Shareholders BLRK Shareholders PIPE Shareholders SPAC Sponsor Shareholders
30 Additional Information
Source: Company website (https://yellow.ai/blog/why-yellow-ai/). 31 CPU Multi-LLM architecture 15+ models – including OpenAI GPT, T5, Anthropic, and proprietary in-house models – dynamically selected per task for optimal output MSG Omnichannel AI Voice, chat, email, IM, and social unified in a single AI-native layer – with context that follows conversations AGT Agentic platform Multi-LLM agents with Co-Pilot-led testing. Agentic discovery eliminates cold-start by mining historical conversations Nexus VOX Low-latency, LLM-native voice stack built for natural, context-rich enterprise calls Analysis LLM-powered analysis of AI-human conversations that surfaces quality gaps, containment failures, and coaching opportunities Enterprise security & global reach SOC 2, HIPAA, GDPR compliant. AI-driven data redaction. 135+ languages for global deployment PLATFORM VALUE Built Different: The Yellow.ai Product Edge
Source: Amazon Marketplace (https://aws.amazon.com/marketplace/pp/prodview-vjr7ivjk3kwfw). Typical enterprise deployment in under ~60 days. Roughly ~90% automation within ~90 days EASY CLIENT ONBOARDING DEPLOYMENT OPTIONS CAPABILITY MULTI-TENANT SINGLE-TENANT ON-PREM Hosting Yellow.ai cloud Yellow.ai cloud Customer DC / private cloud Infra ownership Yellow.ai Yellow.ai Customer High availability ✓ ✓ Customer Observability ✓ ✓ Customer + Yellow.ai Security & compliance ✓ ✓ Customer + Yellow.ai Latest features ✓ ✓ SaaS + 6mo Gen-AI ✓ ✓ ✓ Synthetic monitoring ✓ ✓ ✓ Time to deploy FASTEST Multi-tenant + SLOWEST Pricing LOWEST Multi-tenant + HIGHEST KEY ENABLERS 100+ pre-built integrations Realize value faster, at scale Builds on existing stack Augments — never replaces — current tools to minimize disruption Custom integration framework Bridges gaps with seamless, supported connectors Clean, synchronized data flow Eliminates manual entry and reconciliation across systems 32 Enterprise Flexibility. Rapid Time-to-Value
Source: Company website (https://yellow.ai/, https://yellow.ai/agentic-ai-platform/, https://yellow.ai/nexus-vox/, https://yellow.ai/blog/why-yellow-ai/). Source: Company website (https://yellow.ai/, https://yellow.ai/agentic-ai- platform/, https://yellow.ai/nexus-vox/, https://yellow.ai/blog/why-yellow-ai/). AI-Native Agility, Enterprise-Grade Robustness COMPETITIVE POSITIONING Multi-LLM Orchestration Insulates against single-provider lock-in across OpenAI, Anthropic, and proprietary models. Big Tech can be constrained to its own LLMs Omnichannel Enterprise Coverage One platform across chat, voice, messaging, web, mobile — 35+ channels. Peers can lack omnichannel reach Native Gen-AI Architecture Purpose-built for agentic AI, not bolted on. 135+ languages, enterprise-grade deployment. CPaaS / CCaaS / WEM lack native Gen-AI combines all three — multi-LLM, omnichannel, native Gen-AI — at enterprise scale. WHAT EACH PEER GROUP LACKS CPaaS / CCaaS Missing native Gen-AI WEM / CRM Missing native Gen-AI Big Tech (hyperscalers) Constrained to own LLMs Chat & Voice Automation Missing omnichannel reach 33
IMPORTANT INFORMATION Yellow.ai is subject to numerous risks factors, including but not limited to the following: • Yellow.ai is an early-stage company with a history of financial losses and expects to incur significant expenses and continuing losses for the foreseeable future. • The impact of worldwide economic conditions, including the resulting effect on spending by businesses and spending on technology, may adversely affect Yellow.ai's business, operating results and financial condition. • Yellow.ai's limited operating history in a new and developing market makes it difficult to evaluate its current business and future prospects and may increase the risk that it will not be successful. • The markets for Yellow.ai's offerings are new and evolving and may develop more slowly or differently than expected. Yellow.ai's future success is dependent on the growth and expansion of these markets, its ability to adapt and respond effectively to evolving market conditions and its relationship with its business partners. • Non-performance under, termination, non-renewal or material modification of agreements with Yellow.ai's business partners could have a material adverse effect on Yellow.ai's business, financial condition and/or results of operations. • Yellow.ai's business could be harmed if it fails to manage its growth effectively. • Yellow.ai's operating and financial results forecast relies in large part upon assumptions and analyses developed by Yellow.ai. If these assumptions or analyses prove to be incorrect, Yellow.ai's actual operating results may be materially different from its forecasted results. • As a result of Yellow.ai's business model, it may not be able to accurately assess its financial position and results of operations. • As Yellow.ai and its channels and customers adopt its proprietary machine learning systems, it may be exposed to risks related to systems efficiency and disclosure and changes to the political and regulatory framework for AI technology, which can adversely affect Yellow.ai's business, financial condition and results of operations. • If Yellow.ai fails to improve and enhance the functionality, performance, reliability, design, security and scalability of its platform in a manner that responds to customers' evolving needs, its business may be adversely affected. • Yellow.ai may not be able to compete successfully against current and future competitors. • Yellow.ai may need to raise additional funds to pursue its growth strategy or continue its operations, and Yellow.ai may be unable to raise capital when needed or on acceptable terms. • Failure to effectively develop and expand Yellow.ai's marketing, sales, customer service, and content management capabilities could harm its ability to increase Yellow.ai's customer base and achieve broader market acceptance of Yellow.ai's platform. • If the availability of Yellow.ai's platform does not meet its service-level commitments to customers, Yellow.ai's current and future revenues may be negatively impacted. • Yellow.ai will have broad discretion in the use of proceeds from this offering and may invest or spend the proceeds in ways with which you do not agree and in ways that may not yield a return. • Yellow.ai is dependent on the continued services and performance of its senior management and other key employees, the loss of any of whom could adversely affect Yellow.ai's business, operating results and financial condition. • If Yellow.ai's software or platform contains serious errors or defects, Yellow.ai may lose revenues and market acceptance and may incur costs to defend or settle claims with its customers. • If Yellow.ai does not or cannot maintain the compatibility of its platform with third-party applications that its customers use in their businesses, Yellow.ai's revenues will decline. 34 Bluerock is subject to numerous risks factors, including but not limited to the following: • Bluerock may not be able to obtain the required shareholder approval to consummate the proposed transaction. • Bluerock Acquisition Holdings, LLC, Bluerock's sponsor (the "Sponsor"), and certain other shareholders of Bluerock have agreed to vote in favor of the proposed transaction, which may increase the likelihood that Bluerock will receive the requisite shareholder approval for the proposed transaction. • Bluerock cannot assure you that its due diligence review of Yellow.ai's business has identified all material issues or risks associated with Yellow.ai, its business, or the industry in which it operates. Additional information may later arise in connection with the preparation of the registration statement and proxy materials or after completion of the proposed transaction. If Bluerock's due diligence investigation of Yellow.ai's business was inadequate, then shareholders of the combined company following the proposed transaction could lose some or all of their investment. • The Sponsor and certain directors and officers of Bluerock have interests in the proposed transaction that are different from or are in addition to public shareholders, which may include direct or indirect ownership of Bluerock's founder shares and/or private placement warrants, each of which will lose their value if an initial business combination is not consummated. • The Sponsor and Bluerock's directors, executive officers and affiliates of Bluerock's management team may receive a positive return on their founder shares even if Bluerock's public shareholders experience a negative return on their investment after consummation of the proposed transaction. • Bluerock may be a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors. • Bluerock is an "emerging growth company" within the meaning of the Securities Act of 1933, as amended, and we believe that the combined company will qualify as an emerging growth company following the proposed Bluerock and the combined company intend to take advantage of certain exemptions from disclosure requirements available to emerging growth companies, which could make their securities laws attractive to investors and may make it more difficult to compare performance with other public companies. • If Bluerock is deemed to be an investment company under the Investment Company Act of 1940, as amended, it may be required to institute burdensome compliance requirements and its activities may be restricted, which may make it difficult to complete the proposed transaction or cause the parties to abandon their efforts to complete the proposed transaction. • In connection with the proposed transaction, the Sponsor and Bluerock's officers and directors and/or their respective affiliates may elect to purchase Class A ordinary shares from Bluerock's public shareholders, which may reduce the public float of the combined company's shares. Risk Factors