CDIO 8-K
Cardio Diagnostics Holdings, Inc. (CDIO)
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
Date of Report (Date of earliest event reported)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area
code:
MANA CAPITAL ACQUISITION CORP.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
INTRODUCTORY NOTE
Unless the context otherwise requires, “we,” “us,” “our,” “Cardio” and the “Company” refer to Cardio Diagnostics Holdings, Inc., a Delaware corporation (f/k/a Mana Capital Acquisition Corp., a Delaware corporation), and its consolidated subsidiaries following the closing of the Business Combination (as defined below). Unless the context otherwise requires, references to “Mana” refer to Mana Capital Acquisition Corp., a Delaware corporation, prior to the closing of the Business Combination (the “Closing”). All references herein to the “Board” refer to the board of directors of the Company.
Terms used in this Current Report on Form 8-K (this “Report”) but not defined herein, or for which definitions are not otherwise incorporated by reference herein, shall have the meaning given to such terms in the Proxy Statement/Prospectus (as defined below), and such definitions are incorporated herein by reference.
Closing of the Business Combination
On May 27, 2022, Mana Capital Acquisition Corp., a Delaware corporation (“Mana”), and Mana Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Mana (“Merger Sub”), entered into an Agreement and Plan of Merger, as amended by Amendment No. 1 to the Agreement, dated September 15, 2022 (the “Business Combination Agreement”), with Cardio Diagnostics, Inc., a Delaware corporation (“Legacy Cardio”), and Meeshanthini Dogan, PhD, as the “Shareholders’ Representative.”
On October 25, 2022, Mana held a special meeting of its stockholders at which Mana’s stockholders voted to approve the proposals outlined in the final prospectus and definitive proxy statement, filed with the Securities and Exchange Commission (the “SEC”) on October 7, 2022 (the “Proxy Statement/Prospectus”), including, among other things, the adoption of the Business Combination Agreement. On October 25, 2022 (the “Closing Date”), as contemplated by the Business Combination Agreement and described in the section of the Proxy Statement/Prospectus entitled “Proposal No. 1 – The Business Combination Proposal” beginning on the page 70 of the Proxy Statement/Prospectus, Mana consummated the transactions contemplated by the Business Combination Agreement, whereby Merger Sub merged with and into Legacy Cardio, with Legacy Cardio continuing as the surviving corporation, resulting in Legacy Cardio becoming a wholly-owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”).
Pursuant to the Business Combination Agreement the Company issued the following securities, all of which were registered on the Form S-4 registration statement that was declared effective by the SEC on October 6, 2022:
| • | holders of conversion rights issued as a component of units in Mana’s initial public offering (the “Public Rights”) were issued an aggregate of 928,571 shares of the Company’s common stock, $0.00001 par value (“Common Stock”); | ||
| • | holders of existing shares of common stock of Legacy Cardio and the holder of equity rights of Legacy Cardio (together, the “Legacy Cardio Stockholders”) received an aggregate of 6,883,306 shares of the Company’s Common Stock, calculated based on the exchange ratio of 3.427259 pursuant to the Merger Agreement (the “Exchange Ratio”) for each share of Legacy Cardio Common Stock held or, in the case of the equity rights holder, that number of shares of the Company’s Common Stock equal to 1% of the Aggregate Closing Merger Consideration, as defined in the Merger Agreement; |
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| • | the Legacy Cardio Stockholders received, in addition, an aggregate of 43,334 shares of the Company’s Common Stock (“Conversion Shares”) upon conversion of an aggregate of $433,334 in principal amount of promissory notes issued by Mana to Legacy Cardio in connection with its loan of such amount in order to extend Mana’s duration through October 26, 2022 (the “Extension Notes”), which Conversion Shares were distributed to the Legacy Cardio Stockholders in proportion to their respective interest in Legacy Cardio; | ||
| • | each Legacy Cardio option that was outstanding immediately prior to the effective time of the Merger (the “Effective Time”), each of which was unvested prior to the Closing (the “Legacy Cardio Stock Options”), was assumed by the Company and converted into an option to purchase that number of shares of the Company’s Common Stock calculated based on the Exchange Ratio; accordingly, holders of Legacy Cardio Options received options to acquire 1,759,600 shares of the Company’s Common Stock, all of which vested and became immediately exercisable upon Closing; and | ||
| • | each Legacy Cardio warrant that was outstanding immediately prior to the Effective Time (the “Legacy Cardio Warrants”) was assumed by the Company and converted into a warrant to purchase that number of shares of the Company’s Common Stock calculated based on the Exchange Ratio; accordingly, holders of Legacy Cardio Warrants received warrants to acquire 2,204,627 shares of the Company’s Common Stock pursuant to the Exchange Ratio. |
In connection with the Special Meeting and the Business Combination, the holders of 6,465,452 shares of Mana Common Stock exercised their right to redeem their shares for cash at a redemption price of approximately $10.10 per share, for an aggregate redemption amount of $65,310,892.
Immediately after giving effect to the Business Combination, there were 9,514,743 issued and outstanding shares of the Company’s Common Stock. Following the Closing, the Legacy Cardio Stockholders hold approximately 72.80% of the outstanding shares of the Company (excluding the contingent right to acquire “Earnout Shares,” as described below), and Legacy Cardio became a wholly-owned subsidiary of the Company. Ownership of the Company’s Common Stock by various constituents immediately after giving effect to the Business Combination is as follows:
| • | Mana public stockholders (excluding Mana Capital, LLC, the SPAC sponsor (the “Sponsor”), and Mana’s former officers and directors) own 34,548 shares of the Company’s Common Stock, which represents approximately 0.36% of the outstanding shares; | ||
| • | the Sponsor, Mana’s former officers and directors and certain permitted transferees own 1,625,000 shares of the Company’s Common Stock, which represents approximately 17.08% of the outstanding shares; | ||
| • | holders of Mana public rights own 928,571 shares of the Company’s Common Stock, which represents approximately 9.76% of the outstanding shares; and | ||
| • | Legacy Cardio Stockholders own 6,926,624 shares of the Company’s Common Stock (excluding the contingent right to acquire Earnout Shares), which represents approximately 72.80% of the outstanding shares. |
The units Mana sold in its initial public offering (the “IPO”) in November 2021 (the “Units”) (MAAQU) separated into their component securities upon consummation of the Business Combination and, as a result, no longer trade as a separate security and were delisted from the Nasdaq Stock Market LLC (“Nasdaq”). In addition, in connection with the Business Combination, Mana’s Public Rights to receive 1/7th of one share of the Company’s Common Stock (MAAQR), issued as a component of its Units, were converted into 928,571 shares of the Company’s Common Stock, and the Public Rights were delisted from Nasdaq on October 26, 2022. On October 26, 2022, the Company’s Common Stock and the Company’s public warrants that were a component of the Units sold in the IPO (the “Public Warrants”) began trading on the Nasdaq Capital Market under the symbols “CDIO” and “CDIOW,” respectively. The information about Nasdaq trading is set forth in Item 3.01 and is incorporated herein by this reference.
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Earnout Shares
A portion of the total merger consideration is subject to an earnout over a four-year period following the Closing (the “Earnout Period”). Upon certain triggering events that occur during the Earnout Period, Legacy Cardio Stockholders (referred to below as the “Stockholder Earnout Group”) are entitled to receive up to an additional 1,000,000 shares of the Company’s Common Stock (the “Earnout Shares”). The Earnout Shares were reserved at the Closing and will be issued upon the following triggering events after the Closing of the Business Combination. The triggering events that will result in the issuance of the Earnout Shares during the Earnout Period are the following:
| • | one-quarter of the Earnout Shares will be issued to each member of the Stockholder Earnout Group, as defined in the Merger Agreement (“Stockholder Earnout Group”) on a pro rata basis if, on or prior to the fourth anniversary of the Closing, the VWAP (as defined in the Merger Agreement) of the Company’s Common Stock equals or exceeds $12.50 per share (subject to adjustment for stock splits, reverse stock splits and other similar events of recapitalization) for 30 of any 40 consecutive trading days commencing after the Closing on the Nasdaq; | ||
| • | in addition to the issuance of Earnout Shares contemplated by the immediately preceding clause bullet, an additional one-quarter of the Earnout Shares will be issued to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth anniversary of the Closing the VWAP of the Company’s Common Stock equals or $15.00 per share (subject to adjustment) for 30 of any 40 consecutive trading days commencing after the Closing on the Nasdaq; | ||
| • | in addition to the issuance of Earnout Shares contemplated by the immediately preceding bullets, an additional one-quarter of the Earnout Shares will be issued to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth anniversary of the Closing the VWAP of the Company’s Common Stock equals or $17.50 per share (subject to adjustment) for 30 of any 40 consecutive trading days commencing after the Closing on the Nasdaq; and | ||
| • | in addition to the issuance of Earnout Shares contemplated by the immediately preceding bullets, an additional one-quarter of the Earnout Shares will be issued to each member of the Stockholder Earnout Group on a pro rata basis if, on or prior to the fourth anniversary of the Closing the VWAP of the Company’s Common Stock equals or $20.00 per share (subject to adjustment) for 30 of any 40 consecutive trading days commencing after the Closing on the Nasdaq. |
Each Triggering Event described above will only occur once, if at all, and in no event will the Stockholder Earnout Group be entitled to receive more than an aggregate of 1,000,000 Earnout Shares.
Mana Redemptions and Conversion of Rights
In connection with the Mana stockholder vote on the Business Combination, Mana stockholders redeemed an aggregate of 6,465,452 shares of Common Stock for total redemption consideration of $65,310,892 which amount was paid out of the Investment Management Trust established in connection with Mana’s initial public offering in November 2021 (the “Trust Account”). At the Closing of the Business Combination, all outstanding Public Rights automatically converted into one-seventh of a share of Common Stock, or 928,571 shares of Common Stock. The separate trading of Units and Public Rights of Mana was terminated upon the closing of the Business Combination. The information set forth under the heading “Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters – Market Information and Holders” and under Item 3.01 (Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing) of this Current Report on Form 8-K are incorporated herein by reference.
A more detailed description of the Business Combination and the terms of the Merger Agreement are included in the final Proxy Statement/Prospectus filed by the Company with the SEC on October 7, 2022, in the section titled “Proposal No. 1 –The Business Combination Proposal” beginning on page 70 thereof. The foregoing description of the Merger Agreement is a summary only and is qualified in its entirety by the full text of the Merger Agreement, as amended, a copy of which is filed as Exhibits 2.1 (the Merger Agreement dated as of May 27, 2022) and 2.2 (the First Amendment to the Merger Agreement, dated September 15, 2022) to this Current Report on Form 8-K and incorporated herein by reference.
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| Item 1.01. | Entry into a Material Definitive Agreement |
The following material agreements were entered into by the Company at the Closing of the Business Combination:
Non-Competition and Non-Solicitation Agreements
On October 25, 2022, in connection with the Business Combination, certain Legacy executives and the Chairman of the Board, all of whom are executive officers and/or directors of the Company, entered into a non-competition and non-solicitation agreement, pursuant to which they each agreed to non-solicitation and non-compete covenants for a period of the lesser of three years from the Closing or one year following the termination of such person’s employment or consulting services, as the case may be, with the Company or any of its subsidiaries. A copy of the form of Non-Competition and Non-Solicitation Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Non-Competition and Non-Solicitation Agreement is qualified in its entirety by reference thereto.
Lock-up Agreements
On October 25, 2022, in connection with the Business Combination, certain of the Company’s executives and their spouses and controlled entities, and the Chairman of the Board, agreed, subject to certain customary exceptions, not to (i) offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of the Lock-up Shares (as defined below) (including any securities convertible into, or exchangeable for, or representing the rights to receive, Lock-up Shares), enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such Lock-up Shares, whether any of these transactions are to be settled by delivery of any such Lock-up Shares, in cash or otherwise, (ii) publicly disclose the intention to make any offer, sale, pledge or disposition, or (iii) to enter into any transaction, swap, hedge or other arrangement, or engage in any short sales, as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to any security of the Company until the date that is six months after the Closing Date. A total of 5,240,563 shares of the Company’s Common Stock (the “Lockup Shares”) is subject to the Lockup Agreements.
The material terms of the Lock-Up Agreement are described in the section of the Proxy Statement/Prospectus beginning on page 94 titled “Proposal No. 1 – The Business Combination Proposal – The Merger Agreement – Lock-up Agreements.” A copy of the form of Lock-up Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Lock-up Agreement is qualified in its entirety by reference thereto.
Waiver Agreement
On October 25, 2022, Mana, Mana Merger Sub Inc., Legacy Cardio and Meeshanthini Dogan, as representative of the Legacy Cardio shareholders, entered into a waiver agreement (the “Waiver Agreement”). Under the terms of the Waiver Agreement, the parties agreed that the indemnification escrow contemplated by the Merger Agreement would not be required, and, as a result, the parties waived the conditions to closing that the parties enter into an indemnification escrow agreement and that Legacy Cardio stockholders deposit into an escrow account 800,000 shares of the Company’s Common Stock to satisfy future indemnification claims, if needed. The parties further agreed that the provision in the Merger Agreement providing that the sole remedy for indemnified losses would be the recovery of escrowed shares having a value equal to the losses as finally determined was also waived. The Waiver Agreement did not otherwise modify the specific provisions of indemnification set forth in the Merger Agreement.
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A copy of the form of Waiver Agreement is filed as Exhibit 2.3 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Waiver Agreement is qualified in its entirety by reference thereto.
| Item 2.01. | Completion of Acquisition or Disposition of Assets |
The disclosure set forth in the “Introductory Note” above is incorporated by reference into this Item 2.01. The material terms and conditions of the Merger Agreement are described in the Proxy Statement/Prospectus in the sections titled “Proposal No. 1 – The Business Combination Proposal,” and “The Business Combination Agreement” beginning on pages 70 and 89, respectively, and that information is incorporated herein by reference.
The Merger Agreement and the Business Combination were approved by the Company’s stockholders at the special meeting of the Company’s stockholders held on October 25, 2022 (the “Special Meeting”). On October 25, 2022, the parties to the Merger Agreement consummated the Business Combination.
Immediately after the Closing, the Company had the following outstanding securities:
| • | 9,514,743 shares of Common Stock; | ||
| • | 3,250,000 Public Warrants and 2,500,000 private warrants that were issued to the Sponsor in connection with Mana’s initial public offering, each exercisable for one share of Common Stock at an exercise price of $11.50 per share, subject to adjustment for stock splits, reverse stock splits and other similar events of recapitalization; | ||
| • | 2,204,627 privately-issued warrants, each exercisable for one share of Common Stock at exercise prices ranging from $3.90 to $6.21 per share, subject to adjustment (the “Private Warrants”); and | ||
| • | 1,759,600 options, each exercisable for one share of Common Stock at an exercise price of $3.90 per share, subject to adjustment (the “Options”). |
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K states that if the predecessor registrant was a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act), as the Company was immediately before the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. As a result of the consummation of the Business Combination, the Company has ceased to be a shell company. Accordingly, the Company is providing the information below that would be included in a Form 10 if the Company were to file a Form 10. Please note that the information provided below relates to the Company after the consummation of the Business Combination and the transactions contemplated by the Merger Agreement, unless otherwise specifically indicated or the context otherwise requires.
The following information is provided about the business of the Company following the consummation of the Business Combination, set forth below under the following captions:
| · | Cautionary Note Regarding Forward-Looking Statements; | |
| · | Business and Properties; | |
| · | Risk Factors; | |
| · | Management’s Discussion and Analysis of Financial Condition and Operations; | |
| · | Security Ownership of Certain Beneficial Owners and Management; |
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| · | Directors and Executive Officers; | |
| · | Director Independence; | |
| · | Committees of the Board of Directors; | |
| · | Executive Compensation; | |
| · | Director Compensation; | |
| · | Certain Relationships and Related Transactions; | |
| · | Legal Proceedings; | |
| · | Market Price of and Dividends on the Registrant’s Common Stock and Related Stockholder Matters; | |
| · | Description of Securities; | |
| · | Indemnification of Directors and Officers; and | |
| · | Financial Statements, Supplementary Data and Exhibits. |
Cautionary Note Regarding Forward-Looking Statements
The Company makes forward-looking statements in this Current Report on Form 8-K and in documents incorporated herein by reference. All statements, other than statements of present or historical fact included in or incorporated by reference in this Current Report on Form 8-K, regarding the Company’s future financial performance, as well as the Company’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Current Report on Form 8-K, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. The Company cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company, incident to its business.
These forward-looking statements are based on information available as of the date of this Current Report on Form 8-K, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements in this Current Report on Form 8-K and in any document incorporated herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
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| · | the Company’s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably following the Closing Date; | ||
| · | the anticipated costs associated with the Business Combination; | ||
| · | the Company’s financial and business performance following the Business Combination, including financial projections and business metrics; | ||
| · | the potential business or economic disruptions caused by current and future pandemics, such as the COVID-19 pandemic; | ||
| · | the ability to maintain the listing of the Company’s common stock and the warrants on a stock exchange, and the potential liquidity and trading of its securities; | ||
| · | the possible price volatility of the Company’s securities due to a variety of factors, including changes in the competitive and regulated industries in which the Company operates, variations in operating performance across competitors, changes in laws and regulations affecting the Company’s business, the Company’s inability to implement its business plan or meet or exceed its financial projections and changes in the combined capital structure; | ||
| · | the Company’s ability to raise financing in the future; | ||
| · | the Company's future capital requirements and sources and uses of cash; | ||
| · | the Company’s plans and ability to launch synergistic products and expand the channels in which its products are made available; | ||
| · | the Company’s ability to maintain and protect its brand and its intellectual property; | ||
| · | the Company’s ability to attract and retain talent and the effectiveness of its compensation strategies and leadership; | ||
| · | the projected financial information, growth rate, strategies and market opportunities for the Company; | ||
| · | the ability to implement business plans, forecasts, and other expectations after the completion of the transaction, and identify and realize additional opportunities; | ||
| · | the Company’s ability, assessment of and strategies to compete with its competitors; | ||
| · | the success of the Company’s marketing strategies; | ||
| · | the Company’s officers and directors allocating their time to other businesses and potentially having conflicts of interest with the Company’s business; | ||
| · | general economic conditions and their impact on demand for the Company’s products and services; | ||
| · | the Company’s ability to maintain its core technology and other licenses, refrain from infringing on the intellectual property rights of others and operate in regulated industries; | ||
| · | the Company’s ability to prevent and guard against cybersecurity attacks; | ||
| · | the Company’s reliance on third party service providers for processing payments, web and mobile operating systems, software, background checks and insurance policies; and | ||
| · | the outcome of any known and unknown litigation and regulatory proceedings, including the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against Mana and the Company following the Business Combination. | ||
Please see the other risks and uncertainties set forth in the Proxy Statement/Prospectus in the section titled “Risk Factors” beginning on page 21 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
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In addition, statements that “Cardio believes,” “the Company believes” or “Mana believes” and similar statements reflect Legacy Cardio’s or Mana’s beliefs and opinions on the relevant subject. These statements are based upon information available to Legacy Cardio or Mana, as the case may be, as of the date of the Proxy Statement/Prospectus, and while Legacy Cardio or Mana, as the case may be, believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has 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.
Business and Properties
The business and properties of Legacy Cardio and Mana prior to the Business Combination are described in the Proxy Statement/Prospectus in the sections titled “Information About Cardio” and “Mana’s Business” beginning on pages 108 and 163, respectively, of the Proxy Statement/Prospectus, and such descriptions are incorporated herein by reference.
Risk Factors
The risks associated with the Company’s business are described in the Proxy Statement/Prospectus in the section titled “Risk Factors” beginning on page 21of the Proxy Statement/Prospectus and are incorporated herein by reference.
Financial Information
Unaudited Condensed Consolidated Financial Statements
The unaudited pro forma condensed combined financial information of Legacy Cardio prior to the Business Combination as of June 30, 2022 and December 31, 2021 and for the six months ended June 30, 2022 have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the regulations of the SEC and are included in the Proxy Statement/Prospectus beginning on Page F-54 of the Proxy Statement, which information is incorporated herein by reference. The unaudited financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of Legacy Cardio’s financial position, results of operations and cash flows for the period indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year.
These unaudited condensed consolidated financial statements should be read in conjunction with the historical audited consolidated financial statements of Legacy Cardio as of and for the years ended December 31, 2021 and 2020 and the related notes included in the Proxy Statement/Prospectus beginning on page F-38 and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Cardio” beginning on page 139 of the Proxy Statement/Prospectus.
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information of Mana and Legacy Cardio as of and for the six months ended June 30, 2022 and the year ended December 31, 2021 is included in the Proxy Statement/Prospectus in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 148 of the Proxy Statement/Prospectus and is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Reference is made to the disclosure contained in the Proxy Statement/Prospectus in the sections titled “Mana’s Management’s Discussion and Analysis of Financial Condition and Results of Operations of Mana for the Six Months Ended June 30, 2022 and the Fiscal Year Ended December 31, 2021” beginning on page 158 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Cardio” beginning on page 139, which are incorporated herein by reference.
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Directors and Executive Officers
After the Closing Date, the Company’s directors and executive officers are as follows, with each person’s biography and familial relationship, if any, described in the Proxy Statement/Prospectus in the section titled “Management of the Company After the Business Combination” beginning on page 183 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
| Name | Age | Position | ||||
| Executive Officers | ||||||
| Meeshanthini (Meesha) Dogan, PhD | 33 | Chief Executive Officer and Director | ||||
| Robert (Rob) Philibert, MD PhD | 61 | Chief Medical Officer and Director | ||||
| Elisa Luqman, JD MBA | 57 | Chief Financial Officer | ||||
| Timur Dogan, PhD | 34 | Chief Technology Officer | ||||
| Khullani Abdullah, JD | 39 | Vice President of Revenue and Strategy | ||||
| Non-Employee Directors | ||||||
| Warren Hosseinion, MD | 50 | Non-Executive Chairman | ||||
| Brandon Sim | 29 | Director | ||||
| Stanley K. Lau, MD | 66 | Director | ||||
| Oded Levy | 61 | Director | ||||
| James Intrater | 58 | Director | ||||
Executive Compensation
Information with respect to the compensation of the Company’s Chief Executive Officer, who is the sole named executive officer (“NEO”) for the required reporting period, is described in the Proxy Statement/Prospectus in the section titled “Cardio’s Executive Compensation” beginning on page 135 of the Proxy Statement/Prospectus, which information is incorporated herein by reference.
At the Special Meeting, Mana stockholders approved the Cardio Diagnostics Holdings, Inc. 2022 Equity Incentive Plan (the “Omnibus Incentive Plan”). The description of the Omnibus Incentive Plan is set forth beginning on page 97 of the Proxy Statement/Prospectus section entitled “Equity Plan Adoption Proposal,” which is incorporated herein by reference. The description of the Omnibus Incentive Plan is not complete and is subject to and qualified in its entirety by reference to the Omnibus Incentive Plan, a copy of which is attached hereto as Exhibit 10.5 and the terms of which are incorporated by reference herein. The options previously granted to Legacy Cardio employees and directors, including the persons who became executive officers and directors of the Company, were assumed by the Company in connection with the Business Combination. All assumed options became immediately exercisable upon consummation of the Business Combination and are reflected in the beneficial ownership table below under the heading “Security Ownership of Certain Beneficial Owners and Management.”
Employment Agreements
A description of the employment agreements that a subsidiary of the Company has entered into with certain Company officers, including its non-executive chairman of the board, is set forth beginning on page 186 of the Proxy Statement/Prospectus in the section titled “Management of the Company After the Business Combination – Employment Arrangements with the Company’s Executive Officers,” and that information is incorporated herein by reference.
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Director Compensation
A description of the compensation of the directors of Legacy Cardio before the consummation of the Business Combination is set forth beginning on page 135 of the Proxy Statement/Prospectus in the section titled “Cardio’s Executive Compensation,” and that information is incorporated herein by reference. Information with respect to Mana’s director compensation prior to the Business Combination is set forth beginning on page 135 of the Proxy Statement/Prospectus in the section titled “Cardio’s Executive Compensation - Cardio’s Director Compensation,” and that information is incorporated herein by reference.
The Company’s Compensation Committee has not yet met to determine compensation of directors following the Business Combination.
Upon the Closing Date, each of the Company’s directors is eligible to participate in the Company’s Omnibus Incentive Plan filed as Exhibit 10.5 to this Current Report on Form 8-K, subject to the terms and conditions of the aforementioned plan.
Director Independence
Information with respect to the independence of the Company’s directors is set forth beginning on page 188 of the Proxy Statement/Prospectus in the section titled “Management of Company After the Business Combination – Information Regarding the Company’s Board of Directors and its Corporate Governance -- Director Independence” and that information is incorporated herein by reference.
Committees of the Board of Directors
Information with respect to the composition of the Board immediately after the Closing is set forth in the Proxy Statement/Prospectus in the section titled “Management of the Company After the Business Combination – Information Regarding the Company’s Board of Directors and its Corporate Governance – Committees of the Board of Directors,” beginning on page 188, and that information is incorporated herein by reference, subject to the updates set forth in Item 5.02 below, which is incorporated by reference into this Item 2.01.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of the Company’s Common Stock immediately after the consummation of the Business Combination by:
• each person known to the Company to be the beneficial owner of more than 5% of the Company’s Common Stock;
• each person who is an executive officer or director of the Company; and
• all of the Company’s executive officers and directors as a group.
Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, the Company believes, based on the information furnished to it as of the closing of the Business Combination, that the persons named in the table below have, sole voting and investment power with respect to all stock that they beneficially own, subject to applicable community property laws. All Company stock subject to options or warrants exercisable within 60 days of the closing of the Business Combination are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person.
Subject to the paragraph above, percentage ownership of outstanding shares is based on 9,514,743 shares of the Company’s Common Stock outstanding immediately following the closing of the Business Combination.
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The following table does not reflect beneficial ownership of any common stock issuable upon exercise of warrants, as the warrants are not exercisable within 60 days of the Closing of the Business Combination, but it does reflect those options to be held by the following persons, all of which become exercisable upon consummation of the Business Combination. The table also reflects the reallocation of the Aggregate Closing Merger Consideration to existing Legacy Cardio stockholders in light of the exercise of outstanding equity rights held by the University of Iowa Research Foundation, which has elected to exercise those rights in connection with the Business Combination. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, the Company deemed as outstanding shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the Closing of the Business Transaction. The Company did not deem these exercisable shares outstanding, however, for the purpose of computing the percentage ownership of any other person. The applicable footnotes are an integral part of the table and should be carefully read in order to understand the actual ownership of the Company’s securities.
| Name and Address of Beneficial Owner(1) | Amount
and Nature of Beneficial Ownership | Approximate Percentage of Outstanding Shares | ||||||
| Directors, Executive Officers and Greater than 5% Holders | ||||||||
| Meeshanthini Dogan(2) | 2,271,916 | 22.3 | % | |||||
| Robert Philibert(3) | 2,129,881 | 21.2 | % | |||||
| BD Holding, Inc.(4) | 2,100,553 | 22.1 | % | |||||
| Warren Hosseinion(5) | 458,779 | 4.7 | % | |||||
| Elisa Luqman(6) | 216,700 | 2.2 | % | |||||
| Timur Dogan(7) | 150,683 | 1.6 | % | |||||
| Khullani Abdullahi | 14,554 | * | ||||||
| James Intrater | — | — | ||||||
| Stanley K. Lau | — | — | ||||||
| Oded Levy | — | — | ||||||
| Brandon Sim | — | — | ||||||
| All Executive Officers and Directors as a Group (10 individuals)(8) | 5,242,513 | 44.5 | % | |||||
_______
*
| (1) | Unless otherwise noted, the address for the persons in the table is 400 N. Aberdeen St., Suite 900, Chicago IL 60642. |
| (2) | Includes 685,452 shares of Common Stock issuable upon exercise of options that are currently exercisable. Does not include the securities separately owned by Timur Dogan, Meeshanthini Dogan’s husband, which are separately presented in the above table. Meeshanthini Dogan may be deemed to be the indirect beneficial owner of the securities owned by Timur Dogan; however, she disclaims beneficial ownership of the shares held indirectly, except to the extent of her pecuniary interest. |
| (3) | Shares of common stock reflected in the table as beneficially owned by Dr. Philibert include: (i) 7,601 shares of Common Stock owned by Dr. Philibert’s wife, as to which he may be deemed to be the beneficial owner but as to which he disclaims beneficial ownership except to the extent of his pecuniary interest therein; (ii)(a) 1,586,464 shares of Common Stock owned by BD Holding, Inc. (see Note (4) below), and (b) 14,126 shares of Common Stock owned by Behavioral Diagnostics, Inc., a corporation controlled by Dr. Philibert and in which he serves as chief executive officer. Dr. Philibert disclaims beneficial ownership of all such indirectly-owned shares except to the extent of his pecuniary interest in such corporations. Also includes 514,089 shares of Common Stock issuable upon exercise of options that are currently exercisable. |
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| (4) | BD Holding, Inc. is an S Corporation owned by Robert Philibert and his wife, Ingrid Philibert. Robert Philibert is the sole officer and director and has voting and dispositive control over the securities of BD Holding, Inc. The address for BD Holding is 15 Prospect Place, Iowa City, IA 52246. |
| (5) | Includes 342,726 shares of the Common Stock issuable upon exercise of options that are currently exercisable. |
| (6) | Includes 171,363 shares of common stock issuable upon exercise of options that are currently exercisable. |
| (7) | Includes 40,589 shares of common stock issuable upon exercise of options that are currently exercisable. Does not include the securities separately owned by Meeshanthini Dogan, Timur Dogan’s wife, which are separately presented in the above table. Timur Dogan may be deemed to be the indirect beneficial owner of the securities owned by Meeshanthini Dogan; however, he disclaims beneficial ownership of the shares held indirectly, except to the extent of his pecuniary interest. |
| (8) | Includes 1,754,219 shares of common stock issuable upon exercise of options that are currently exercisable. |
Certain Relationships and Related Party Transactions
Certain relationships and related party transactions of Mana are described beginning on page 179 of the Proxy Statement/Prospectus in the section titled “Certain Relationships, and Related Transactions and Director Independence of Mana.” Certain relationships and related party transactions of Legacy Cardio are described beginning on page 135 of the Proxy Statement/Prospectus in the section titled “Certain Cardio Relationships and Related Person Transactions.” The information in these two sections is incorporated herein by reference.
Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against Mana or Legacy Cardio or any members of their respective management teams prior to the Business Combination in their capacity as such.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Market Information and Holders
Mana’s publicly-traded Common Stock, Units, Public Rights and Public Warrants were historically listed on the Nasdaq Global Market under the symbols “MAAQU, MAAQ, MAAQR and MAAQW,” respectively. The closing price of each of the Mana Units, Mana Common Stock, Public Rights and Public Warrants on October 25, 2022, the last trading day before the Closing of the Business Combination, was $8.01, $5.99, $0.56 and $0.1999, respectively. At the Closing, each of Mana’s Units separated into its components consisting of one share of Common Stock, one-seventh of one Public Right and one redeemable Public Warrant and, as a result, the Units no longer trade as a separate security. In addition, the Public Rights automatically converted into an aggregate of 928,571 shares of Common Stock in connection with the Closing and were distributed to the holders thereof as of the Record Date. As a result, the Public Rights are no longer outstanding. On October 26, 2022, Nasdaq filed Form 25 with the SEC to delist the Mana Units and Public Rights from the Nasdaq Stock Market.
On October 26, 2022, the Company’s Common Stock and Public Warrants outstanding upon the Closing began trading on the Nasdaq Capital Market under the symbols “CDIO” and “CDIOW,” respectively. The information set forth in Item 3.01 of this Current Report on Form 8-K is incorporated herein by reference.
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As of the Closing Date and following the completion of the Business Combination, the Company had 9,514,743 shares of the Common Stock issued and outstanding held of record by 104 holders, 3,250,000 Public Warrants outstanding held of record by three holders, 4,704,627 Private Warrants outstanding held of record by approximately 73 holders, including 2,500,000 Private Warrants that were issued to the Sponsor in connection with Mana’s initial public offering, and 1,759,600 Options outstanding held of record by seven Company officers, directors and employees.
Dividends
The Company currently intends to retain its future earnings, if any, to finance the further development and expansion of its business and does not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of the Board and will depend on the Company’s financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as its Board deems relevant. As a result, investors may not receive any return on an investment in the Common Stock unless the shares are sold for a price greater than the purchase price.
Description of Registrant’s Securities
The Company’s Second Amended and Restated Certificate of Incorporation currently authorizes the issuance of 300,000,000 shares of common stock, par value $0.00001 per share and 100,000,000 shares of preferred stock, par value $0.00001 per share. Immediately following the Closing of the Business Combination, the Company had 9,514,743 shares of Common Stock and no shares of preferred stock, $0.00001 par value (the “Preferred Stock”) issued and outstanding.
Common Stock
A description of the Company’s Common Stock is included in the Proxy Statement/Prospectus in the section titled “Description of Mana’s Securities – Common Stock” beginning on page 195 of the Proxy Statement/Prospectus, which description is incorporated herein by reference.
Preferred Stock
A description of the Company’s authorized Preferred Stock is included in the Proxy Statement/Prospectus in the section titled “Description of Mana’s Securities – Preferred Stock” beginning on page 197 of the Proxy Statement/Prospectus, which description is incorporated herein by reference.
Warrants
A description of Mana’s Public and Private Warrants is included in the Proxy Statement/Prospectus in the section titled “Description of Mana’s Securities – Warrants” beginning on page 198 of the Proxy Statement/Prospectus, which description is incorporated herein by reference.
In addition, prior to the Business Combination, Legacy Cardio had privately-issued warrants that were assumed by the Company, resulting in the assumption of an aggregate of 2,204,627 Private Warrants to purchase the Company’s Common Stock at exercise prices ranging from $3.90 to $6.21. These Private Warrants expire at various times between May and September 2027.
Indemnification of Directors and Officers
The information set forth in the section entitled “Management of the Company After the Business Combination – Limitation on Liability and Indemnification of Officers and Directors” beginning on page 192 of the Proxy Statement/Prospectus is incorporated herein by reference.
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The Company intends to enter into indemnification agreements with each of the newly elected directors and newly appointed executive officers, which agreements will provide that the Company will indemnify such directors and executive officers under the circumstances and to the extent provided for therein, from and against all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed claim, demand, action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, and including appeals, in which he or she may be involved, or is threatened to be involved, as a party or otherwise, to the fullest extent permitted under Delaware law and the Company’s by-laws.
Financial Statements and Supplementary Data
Reference is made to the disclosure set forth under Item 9.01 of this Current Report on Form 8-K concerning the Company’s financial statements and supplementary data.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Reference is made to the disclosure set forth under Item 4.01 of this Current Report on Form 8-K concerning the changes in certifying accountant.
Financial Statements and Exhibits
The information set forth in Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.01. | Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing |
On October 26, 2022, the Nasdaq Stock Market LLC filed Form 25 with the SEC in connection with the delisting of the Company’s previously issued Mana Units and Mana Rights from the Nasdaq Global Market. The Company’s Common Stock and redeemable Public Warrants began trading under the new symbols “CDIO” and CDIOW,” respectively, commencing on October 26, 2022. In connection with commencement of trading under the new symbols, the Company requested that trading be moved from the Nasdaq Global Market to the Nasdaq Capital Market, which platform the Company believes is more appropriate for a company of its size. Nasdaq concurred and the move to the Nasdaq Capital Market was effective on October 26, 2022.
| Item 3.03. | Material Modification of Rights of Security Holders |
On October 25, 2022, the Company filed its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The Company’s Second Amended and Restated Certificate of Incorporation includes the amendment proposed by the Charter Proposal.
The description of the Company’s Second Amended and Restated Certificate of Incorporation and the general effect of the Second Amended and Restated Certificate of Incorporation upon the rights of the holders of the Company’s Common Stock are included in the Proxy Statement/Prospectus under the sections titled “Proposal No. 2 – The Charter Amendment Proposal,” and “Description of Mana’s Securities” beginning on pages 96 and 195, respectively, are incorporated herein by reference.
The foregoing description of the Second Amended and Restated Certificate of Incorporation does not purport to be complete and is qualified in its entirety by the terms of the Second Amended and Restated Certificate of Incorporation, which is attached hereto as Exhibit 3.1 and are incorporated by reference.
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| Item 5.01. | Changes in Control of Registrant |
Reference is made to the disclosure beginning on page 89 of the Proxy Statement/Prospectus in the section titled “Proposal No. 1 — The Business Combination Proposal – The Merger Agreement,” which is incorporated herein by reference. Further reference is made to the information contained in the “Explanatory Note” above and Item 2.01 to this Current Report on Form 8-K, which is incorporated herein by reference.
As of the date of the Closing, the Legacy Cardio Stockholders own approximately 72.8%, which includes the Company’s post-Closing directors and executive officers and their respective affiliated entities beneficially owning approximately 36.8% of the outstanding shares of the Company’s Common Stock (excluding outstanding options and the contingent right to receive Earnout Shares). The stockholders who owned Mana shares immediately prior to the Closing beneficially own approximately 27.2% of the outstanding shares of Common Stock following the Closing, based on 9,514,743 total shares of Common Stock outstanding following the Closing.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
Departure of Directors and Officers
Effective as of the Closing of the Business Combination, Jonathan Intrater resigned as Chairman of the Board, Chief Executive Officer and Chief Financial Officer of the Company. Allan Liu and Loren Mortman also resigned as members of the Board of Directors, effective as of the Closing.
Election of Directors and Appointment of Officers
On the date of the Closing, and in accordance with the terms of the Merger Agreement, the Board became comprised of seven directors: Warren Hosseinion, MD, Meeshanthini (Meesha) Dogan, PhD, Robert Philibert, MD PhD, Brandon Sim, Stanley K. Lau, MD, Oded Levy and James Intrater. Immediately following the consummation of the Business Combination, the following individuals became the executive officers of the Company: Meeshanthini Dogan as Chief Executive Officer; Robert Philibert as Chief Medical Officer; Elisa Luqman as Chief Financial Officer; Timur Dogan as Chief Technology Officer and Khullani Abdullahi as Vice President of Revenue and Strategy. Concurrently with the consummation of the Business Combination, Mana’s officers and directors, resigned from their respective positions at the Company.
On the date of the Closing, the Company’s audit committee consisted of Oded Levy, James Intrater and Brandon Sim, with Mr. Levy serving as the chair of the committee. The Board determined that each of these individuals meets the independence requirements of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, Rule 10A-3 under the Exchange Act and the applicable listing standards of the Nasdaq Stock Market. The Board determined that Mr. Levy qualified as an audit committee financial expert within the meaning of SEC regulations and met the financial sophistication requirements of the rules.
On the date of the Closing, the Company’s compensation committee consisted of Stanley Lau, James Intrater and Oded Levy with Dr. Lau serving as chair of the committee. The Board determined that each of these individuals is “independent” as defined under the applicable listing standards of the Nasdaq Stock Market and SEC rules and regulations.
On the date of the Closing, the Company’s nominating and corporate governance committee consisted of Brandon Sim, James Intrater and Stanley Lau, with Mr. Sim serving as chair of the committee. The Board determined that each of these individuals is “independent” as defined under the applicable listing standards of the Nasdaq Stock Market and SEC rules and regulations.
The information set forth in Item 2.01 of this Current Report on Form 8-K in the sections titled “Directors and Executive Officers,” “Executive Compensation,” “Director Compensation” and “Certain Relationships and Related Transactions” are incorporated herein by reference.
2022 Equity Incentive Plan
At the Special Meeting, the Mana stockholders considered and approved the Omnibus Incentive Plan.
A summary of the terms of the Omnibus Incentive Plan is set forth in the Proxy Statement/Prospectus in the section entitled “Proposal No. 2 – The Equity Plan Adoption Proposal” beginning on page 96 and is incorporated herein by reference.
The foregoing description of the Omnibus Incentive Plan and the information incorporated by reference in the preceding sentence does not purport to be complete and is qualified in its entirety by reference to the text of the Omnibus Incentive Plan, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.
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| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
The disclosure set forth in Item 3.03 of this Current Report on Form 8-K is incorporated into this Item 5.03 by reference.
| Item 5.06. | Change in Shell Company Status |
As a result of the Business Combination, the Company ceased being a shell company. The material terms of the Business Combination are described in the section entitled “Proposal No. 1 – The Business Combination Proposal” beginning on page 70 of the Proxy Statement/Prospectus, which is incorporated herein by reference. In addition, the information set forth under “Introductory Note” and under Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 5.07. | Submission of Matters to a Vote of Security Holders |
On October 25, 2022, Mana held a special virtual meeting of its stockholders (the “Special Meeting”) at which the stockholders voted on the following proposals, as set forth below, each of which is described in detail in the Proxy Statement/Prospectus. Of the 8,125,000 shares of Mana’s common stock entitled to vote at the meeting, 6,429,216 shares were represented at the meeting in person or by proxy, which is 79.13% and constituted a quorum. Each of the proposals described below was approved by the Mana stockholders. The voting results are presented below.
Proposal No. 1:
To approve the transactions contemplated under the Merger Agreement, referred to in the Proxy Statement/Prospectus as the “Business Combination Proposal.”
| For | Against | Abstain | ||
| 6,051,629 | 377,587 | 0 |
Proposal No. 2:
To approve and adopt the proposed Second Amended and Restated Certificate of Incorporation, referred to in Proxy Statement/Prospectus as the “Charter Amendment Proposal.”
| For | Against | Abstain | ||
| 5,940,655 | 488,561 | 0 |
Proposal No. 3:
To approve and adopt the Cardio Diagnostics Holdings Inc. 2022 Equity Incentive Plan, referred to in the Proxy Statement/Prospectus as the “Equity Plan Adoption Proposal.”
| For | Against | Abstain | ||
| 5,940,115 | 488,561 | 540 |
Proposal No. 4:
To approve the issuance of the securities in the Business Combination, referred to in the Proxy Statement/Prospectus as the “Nasdaq 20% Share Issuance Proposal.”
| For | Against | Abstain | ||
| 5,940,655 | 488,561 | 0 |
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Proposal No.5:
To elect Warren Hosseinion, MD, Meeshanthini (Meesha) Dogan, PhD, Robert (Rob) Philibert, MD PhD, James Intrater, Stanley Lau, MD, Oded Levy and Brandon Sim to serve as directors on the Board, referred to in the Proxy Statement/Prospectus as the “Director Election Proposal.”
| For | Against | Abstain | ||
| 5,940,655 | 488,561 | 0 |
Proposal No. 6:
To approve the adjournment of the special meeting, if necessary or advisable, to permit further solicitation and vote of proxies in the event that there are insufficient votes, referred to in the Proxy Statement/Prospectus as the “Adjournment Proposal.”
| For | Against | Abstain | ||
| 5,765,721 | 663,495 | 0 |
Because Proposals No. 1 through No. 5 each received the required approval, Proposal No. 6 was rendered moot and was not voted on at the Special Meeting.
| Item 7.01. | Regulation FD Disclosure |
On October 26, 2022, the Company issued a press release announcing the completion of the Business Combination, a copy of which is furnished as Exhibit 99.2 hereto.
The information set forth in Item 7.01 (including Exhibit 99.2) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits |
(a) Financial Statements of Business Acquired
The audited consolidated financial statements of Legacy Cardio as of and for the years ended December 31, 2021 and 2020 are included in the Proxy Statement/Prospectus beginning on page F-38, which audited financial statements are incorporated herein by reference.
The unaudited consolidated financial statements of Legacy Cardio as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 are included in the Proxy Statement/Prospectus beginning on page F-54, which unaudited financial statements are incorporated herein by reference.
(b) Pro Forma Financial Information
The unaudited pro forma condensed combined financial information of the Company for the year ended December 31, 2021 and as of and for the six months ended June 30, 2022 is set forth in Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
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(c) Exhibits
| * | Filed herewith. |
| # | Indicates a management contract or compensatory plan, contract or arrangement. |
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: October 31, 2022 | CARDIO DIAGNOSTICS HOLDINGS INC. | |
| By: | /s/ Elisa Luqman | |
| Elisa Luqman Chief Financial Officer |
||
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Exhibit 2.3
WAIVER AGREEMENT
This WAIVER AGREEMENT (the “Waiver Agreement”), dated as of October 25, 2022, is entered into by and by and among Cardio Diagnostics, Inc., a Delaware corporation (the “Company” or “Cardio”), Meeshanthini (Meesha) Dogan, as representative of the shareholders of the Company (the “Shareholders’ Representative”), Mana Capital Acquisition Corp., a Delaware corporation (“Parent”) and Mana Merger Sub Inc., a Delaware corporation (“Merger Sub”). Capitalized terms used but not defined herein shall have such meanings ascribed to them in the Merger Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, on May 27, 2022 the Company, the Shareholders’ Representative, Parent and Merger Sub entered into that certain Merger Agreement and Plan of Reorganization, as amended subsequently on September 15, 2022 (the “Merger Agreement”); and
WHEREAS, the parties hereto have agreed to waive certain of the closing conditions set out in the Merger Agreement as set forth in this Waiver Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.Waiver. Immediately prior to, and conditioned upon, the Effective Time, each of the parties hereto irrevocably waives in all respects the applicability of the following terms of the Merger Agreement:
(a) the condition included in Section 9.2(g) of the Merger Agreement that all parties other than Parent have executed and delivered to Parent the Indemnification Escrow Agreement;
(b)the provisions of Section 3.2(j) of the Merger Agreement requiring (i) the withholding by Parent of the Indemnification Escrow Shares from the shares of Aggregate Closing Merger Consideration otherwise issuable to the Escrow Participants pursuant to Article III of the Merger Agreement and (ii) the delivery of the Indemnification Escrow Shares into escrow pursuant to the Indemnification Escrow Agreement;
(c)the provisions of Section 10.4 of the Merger Agreement requiring the delivery of the Indemnification Escrow Shares and the Supplemental Indemnification Escrow Shares into escrow pursuant to the Indemnification Escrow Agreement; and
(d)the provisions of Section 10.5 of the Merger Agreement setting forth the limitation that the Indemnified Parties’ sole and exclusive remedy for Losses is the recovery of such number of Indemnification Escrow Shares or Supplemental Indemnification Shares, as the case may be, with a value equal to the Losses that have been finally determined to be owing to the Parent in accordance with Article X of the Merger Agreement.
2.Successors and Assigns. The parties acknowledge and agree that the terms of this Waiver Agreement are binding on and shall inure to the benefit of their respective beneficiaries, heirs and other statutorily designated representatives.
3.Termination. This Waiver Agreement shall terminate, and have no further force and effect, upon the termination of the Merger Agreement. This Waiver Agreement may be executed in counterparts (including by electronic means), all of which shall be considered one and the same agreement and shall become effective when signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
4.Miscellaneous Provisions. The provisions of Article XII of the Merger Agreement are incorporated into this Waiver Agreement by reference, mutatis mutandis.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Waiver Agreement as of the date first written above.
| Purchaser: | ||||
| MANA CAPITAL ACQUISITION CORP. | ||||
| By: | /s/ Jonathan Intrater | |||
| Name: | Jonathan Intrater | |||
| Title: | Chief Executive Officer | |||
| Merger Sub: | ||||
| MANA MERGER SUB INC. | ||||
| By: | /s/ Jonathan Intrater | |||
| Name: | Jonathan Intrater | |||
| Title: | Chief Executive Officer | |||
| Company: | CARDIO DIAGNOSTICS, INC. | ||||||||
| By: | /s/ Meeshanthini Dogan | ||||||||
| Name: | Meeshanthini (Meesha) Dogan | ||||||||
| Title: | Chief Executive Officer | ||||||||
| Shareholders’ | Representative: | ||||||||
| By: | /s/ Meeshanthini Dogan | ||||||||
| Name: | Meeshanthini (Meesha) Dogan | ||||||||
Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MANA CAPITAL ACQUISITION CORP.
October 25, 2022
Mana Capital Acquisition Corp., a corporation existing under the laws of the State of Delaware (the “Corporation”), by its Chief Executive Officer, hereby certifies as follows:
| 1. | The name of the Corporation is “Mana Capital Acquisition Corp.” |
| 2. | The Corporation’s Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on May 19, 2021 (the “Original Certificate of Incorporation”) and the Corporation’s Amended and Restated Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on November 22, 2021 (the “Amended and Restated Certificate”). |
| 3. | This Second Amended and Restated Certificate of Incorporation restates, integrates and amends the Amended and Restated Certificate (the “Second Amended and Restated Certificate”). |
| 4. | This Second Amended and Restated Certificate of Incorporation was duly adopted by joint written consent of the directors and stockholders of the Corporation in accordance with the applicable provisions of Sections 141(f), 228, 242 and 245 of the General Corporation Law of the State of Delaware (“GCL”). |
| 5. | This Second Amended and Restated Certificate of Incorporation shall become effective on the date of filing with the Secretary of State of Delaware. |
| 6. | The text of the Amended and Restated Certificate is hereby amended and restated to read in full as follows: |
FIRST: The name of the corporation (hereinafter the “Corporation”) is: Cardio Diagnostics Holdings, Inc.
SECOND: The address of the initial registered office and registered agent in this state is c/o A Registered Agent, Inc., 8 The Green, STE A, Dover, the County of Kent, Delaware, Zip Code 19901, United States. The registered agent in charge thereof is A Registered Agent, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the corporation laws of the State of Delaware, now or hereafter in effect, or implied by the reasonable construction of the said laws.
FOURTH: Authorized Capital Stock. The total number of shares of all classes of stock which the Corporation shall have authority to issue is FOUR HUNDRED MILLION (400,000,000) shares, consisting of THREE HUNDRED MILLION (300,000,000) shares of Common Stock, $0.00001 par value per share (hereinafter, the “Common Stock”), and ONE HUNDRED MILLION (100,000,000) shares of Preferred Stock, $0.00001 par value per share (hereinafter, the “Preferred Stock”).
A. Preferred Stock. The Board of Directors is expressly granted authority to issue shares of the Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series (a “Preferred Stock Designation”) and as may be permitted by the GCL. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.
B. Common Stock. Except as otherwise required by law or as otherwise provided in any Preferred Stock Designation, the holders of the Common Stock shall exclusively possess all voting power and each share of Common Stock shall have one vote.
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FIFTH:
Section 5.1 General.
(a) The provisions of this Article FIFTH shall apply during the period commencing upon the effectiveness of this Amended and Restated Certificate and terminating upon the consummation of the Corporation’s initial Business Combination (as defined below) and no amendment to this Article FIFTH shall be effective prior to the consummation of the initial Business Combination unless approved by the affirmative vote of the holders of at least a majority of all then outstanding shares of the Common Stock. For the purposes of this Amended and Restated Certificate, a “Business Combination” shall mean any merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination involving the Corporation and one or more businesses or entities.
(b) Immediately after the consummation of the Corporation’s initial public offering (the “Offering”), a certain amount of the net offering proceeds received by the Corporation in the Offering and certain other amounts specified in the Corporation’s registration statement on Form S-1, as initially filed with the Securities and Exchange Commission (the “SEC”) on October 19, 2021, as amended (the “Registration Statement”), shall be deposited in a trust account (the “Trust Account”), established for the benefit of the Public Stockholders (as defined below) pursuant to a trust agreement described in the Registration Statement. Except for the withdrawal of interest income (if any) to pay the Corporation’s taxes, if any, none of the funds held in the Trust Account (including the interest earned on the funds held in the Trust Account) will be released from the Trust Account until the earliest to occur of (i) the completion of the initial Business Combination, (ii) the redemption of 100% of the Offering Shares (as defined below) if the Corporation does not complete its initial Business Combination within nine (9) months from the closing of the Offering (unless extended in accordance with the provisions of Section 5.9 below), subject to applicable law, and (iii) the redemption of Offering Shares in connection with a stockholder vote to approve an amendment to this Amended and Restated Certificate that (A) would affect the substance or timing of the Corporation’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the Offering Shares if the Corporation has not completed an initial Business Combination within nine (9) months from the closing of the Offering (unless extended in accordance with the provisions of Section 5.9 below), or (B) with respect to stockholders’ rights or pre-initial Business Combination activity (as described in Section 5.7). Holders of shares of the Common Stock included as part of the units sold in the Offering (the “Offering Shares”) (whether such Offering Shares were purchased in the Offering or in the secondary market following the Offering and whether or not such holders are the Sponsor or officers or directors of the Corporation, or any affiliates of any of the foregoing) are referred to herein as “Public Stockholders.”
Section 5.2 Redemption Rights.
(a) Prior to the consummation of the initial Business Combination, the Corporation shall provide all holders of Offering Shares with the opportunity to have their Offering Shares redeemed upon the consummation of the initial Business Combination pursuant to, and subject to the limitations of, Sections 5.2(b) and 5.2(c) (such rights of such holders to have their Offering Shares redeemed pursuant to such Sections, the “Redemption Rights”) hereof for cash equal to the applicable redemption price per share determined in accordance with Section 5.2(b) hereof (the “Redemption Price”); provided, however, that the Corporation shall not redeem Offering Shares to the extent that upon the consummation of the Business Combination such redemption would result in the Corporation’s failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or any successor rule)) of at least $5,000,001 (such limitation hereinafter called the “Redemption Limitation”). Notwithstanding anything to the contrary contained in this Amended and Restated Certificate, there shall be no Redemption Rights or liquidating distributions with respect to any warrant or rights issued pursuant to the Offering.
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(b) If the Corporation offers to redeem the Offering Shares other than in conjunction with a stockholder vote on an initial Business Combination with a proxy solicitation pursuant to Regulation 14A of the Exchange Act (or any successor rules or regulations) and filing proxy materials with the SEC, the Corporation shall offer to redeem the Offering Shares upon the consummation of the initial Business Combination, subject to lawfully available funds therefor, in accordance with the provisions of Section 5.2(a) hereof, pursuant to a tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter called the “Tender Offer Rules”) which it shall commence prior to the consummation of the initial Business Combination and shall file tender offer documents with the SEC prior to the consummation of the initial Business Combination that contain substantially the same financial and other information about the initial Business Combination and the Redemption Rights as is required under Regulation 14A of the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter called the “Proxy Solicitation Rules”), even if such information is not required under the Tender Offer Rules; provided, however, that if a stockholder vote is required by law to approve the proposed initial Business Combination, or the Corporation decides to submit the proposed initial Business Combination to the stockholders for their approval for business or other legal reasons, the Corporation shall offer to redeem the Offering Shares, subject to lawfully available funds therefor, in accordance with the provisions of Section 5.2(a) hereof, in conjunction with a proxy solicitation pursuant to the Proxy Solicitation Rules (and not the Tender Offer Rules) at a price per share equal to the Redemption Price calculated in accordance with the following provisions of this Section 5.2(b). In the event that the Corporation offers to redeem the Offering Shares pursuant to a tender offer in accordance with the Tender Offer Rules, the Redemption Price per share of the Common Stock payable to holders of the Offering Shares tendering their Offering Shares pursuant to such tender offer shall be equal to the quotient obtained by dividing: (i) the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the completion of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Corporation to pay its taxes by (ii) the number of the then outstanding Offering Shares. If the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on the proposed initial Business Combination pursuant to a proxy solicitation, the Redemption Price per share of the Common Stock payable to holders of the Offering Shares exercising their Redemption Rights shall be equal to the quotient obtained by dividing (a) the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the completion of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Corporation to pay its taxes by (b) the number of the then outstanding Offering Shares.
(c) If the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on an initial Business Combination pursuant to a proxy solicitation, a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13(d)(3) of the Exchange Act), shall be restricted from seeking Redemption Rights with respect to more than an aggregate of 15% of the Offering Shares without the prior consent of the Corporation.
(d) In the event that the Corporation has not completed an initial Business Combination within nine (9) months from the closing of the Offering (unless extended in accordance with the provisions of Section 5.9 below), the Corporation shall (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Offering Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account not previously released to the Corporation to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then outstanding Offering Shares, which redemption will completely extinguish rights of the Public Stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Board in accordance with applicable law, liquidate and dissolve, subject in each case to the Corporation’s obligations under the GCL to provide for claims of creditors and the requirements of other applicable law.
(e) If the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on an initial Business Combination, the Corporation shall consummate the proposed initial Business Combination only if (i) such initial Business Combination is approved by the affirmative vote of the holders of a majority of the shares of the Common Stock that are voted at a stockholder meeting held to consider such initial Business Combination and (ii) either (A) the Redemption Limitation is not exceeded or (B) the shares of the Corporation’s Common Stock are listed on a national securities exchange, as contemplated by Rule 3a51-1(a) under the Exchange Act, or any successor rule.
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(f) If the Corporation conducts a tender offer pursuant to Section 5.2(b), the Corporation shall consummate the proposed initial Business Combination only if either (i) the Redemption Limitation is not exceeded or (ii) the shares of the Corporation’s Common Stock are listed on a national securities exchange, as contemplated by Rule 3a51-1(a) under the Exchange Act, or any successor rule.
Section 5.3 Distributions from the Trust Account.
(a) A Public Stockholder shall be entitled to receive funds from the Trust Account only as provided in Sections 5.2(a), 5.2(b), 5.2(d) or 5.7 hereof. In no other circumstances shall a Public Stockholder have any right or interest of any kind in or to distributions from the Trust Account, and no stockholder other than a Public Stockholder shall have any interest in or to the Trust Account.
(b) Each Public Stockholder that does not exercise its Redemption Rights shall retain its interest in the Corporation and shall be deemed to have given its consent to the release of the remaining funds in the Trust Account to the Corporation, and following payment to any Public Stockholders exercising their Redemption Rights, the remaining funds in the Trust Account shall be released to the Corporation.
(c) The exercise by a Public Stockholder of the Redemption Rights shall be conditioned on such Public Stockholder following the specific procedures for redemptions set forth by the Corporation in any applicable tender offer or proxy materials sent to the Public Stockholders relating to the proposed initial Business Combination, including the requirement that any Public Stockholder holder that holds Offering Shares beneficially through a nominee must identify itself to the Corporation in connection with any redemption election in order to validly redeem such Offering Shares. Holders of Offering Shares seeking to exercise their Redemption Rights may be required to either tender their certificates (if any) to the Corporation’s transfer agent or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, prior to a date set forth in the tender offer documents or proxy materials, as the case may be, sent in connection with the proposal to approve the Business Combination. Payment of the amounts necessary to satisfy the Redemption Rights properly exercised shall be made as promptly as practical after the consummation of the initial Business Combination.
Section 5.4 Share Issuances. Prior to or in connection with the consummation of the Corporation’s initial Business Combination, the Corporation shall not issue any additional securities of the Corporation that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote on the Corporation’s initial Business Combination or any other proposal presented to the stockholders prior to or in connection with the completion of an initial Business Combination.
Section 5.5 Transactions with Affiliates. In the event the Corporation seeks to complete its initial Business Combination with a business combination target that is affiliated with the Sponsor, or the executive officers or directors of the Corporation, the Corporation, or a committee of independent directors of the Corporation, shall obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority or an independent accounting firm, that such initial Business Combination is fair to the Corporation from a financial point of view.
Section 5.6 No Transactions with Other Blank Check Companies. The Corporation shall not enter into an initial Business Combination with another blank check company or a similar company with nominal operations.
Section 5.7 Additional Redemption Rights. If, in accordance with Section 5.1(b), any amendment is made to Section 5.2(d) that would affect the substance or timing of the Corporation’s obligation to allow redemption in connection with the Corporation’s initial Business Combination or to redeem 100% of the Offering Shares if the Corporation does not complete an initial Business Combination within a maximum of 21 months from the closing of the Offering or with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, the Public Stockholders shall be provided with the opportunity to redeem their Offering Shares upon approval of any such amendment, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Corporation to pay its taxes, divided by the number of the then outstanding Offering Shares; provided, however, that any such amendment will be voided, and this Article FIFTH will remain unchanged, if any stockholders who wish to redeem are unable to redeem due to the Redemption Limitation, unless the shares of the Corporation’s Common Stock are listed on a national securities exchange, as contemplated by Rule 3a51-1(a) under the Exchange Act, or any successor rule.
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Section 5.8 Minimum Value of Target. The Corporation’s initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding taxes payable on the interest earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination.
Section 5.9 Duration of Existence; Extension. In the event that the Corporation does not consummate a Business Combination within nine (9) months after the consummation of the Offering, the Board of Directors of the Corporation may extend the period of time to consummate a Business Combination up to twelve (12) times, each by an additional period of one (1) month, for an aggregate of twelve (12) additional months (the latest such date being referred to as the “Termination Date”) provided that (i) for each such extension the Sponsor (or its affiliates or designees) must deposit into the Trust Account an amount of $206,667 (or $237,667 if the over-allotment option provided for in the Offering is exercised by the underwriters in full)($0.0333 per Offering Share) per extension, and up to a maximum of $2,480,000(or $2,852,000 if the over-allotment option provided for in the Offering is exercised by the underwriters in full)(a maximum of $0.40 per Offering Share) if all twelve (12) extensions occur and (ii) the procedures relating to any such extension, as set forth in the Investment Management Trust Agreement between the Corporation and Continental Stock Transfer & Trust Company, shall have been complied with. The total amount of such deposits will be added to the proceeds from the Offering to be held in the Trust Account and shall be used to fund the redemption of the Offering Shares in accordance with this Section 5.9. In the event that the Corporation does not consummate a Business Combination by the Termination Date, the Corporation shall comply with Section 5.2(d) of this Amended and Restated Certificate.
SIXTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
Section 6.1. Election of directors need not be by ballot unless the bylaws of the Corporation so provide.
Section 6.2. The Board of Directors shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to or repeal the bylaws of the Corporation as provided in the bylaws of the Corporation.
Section 6.3. The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors’ interests, or for any other reason.
Section 6.4. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate of Incorporation, and to any bylaws from time to time made by the stockholders; provided, however, that no bylaw so made shall invalidate any prior act of the directors which would have been valid if such bylaw had not been made.
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SEVENTH:
Section 7.1. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended. Any repeal or modification of this paragraph A by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation with respect to events occurring prior to the time of such repeal or modification.
Section 7.2. The Corporation, to the full extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.
Section 7.3. Notwithstanding the foregoing provisions of this Article Seventh, no indemnification nor advancement of expenses will extend to any claims made by the Company’s officers and directors to cover any loss that such individuals may sustain as a result of such individuals’ agreement to pay debts and obligations to target businesses or vendors or other entities that are owed money by the Corporation for services rendered or contracted for or products sold to the Corporation, as described in the Registration Statement.
EIGHT: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
NINTH:
Section 9.1. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the GCL or this Certificate of Incorporation or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, (a) any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction, and (b) any action or claim arising under the Exchange Act or Securities Act of 1933, as amended.
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Section 9.2 If any action the subject matter of which is within the scope of Section 9.1 is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 9.1 immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Section 9.3. If any provision or provisions of this Article NINTH shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article NINTH (including, without limitation, each portion of any sentence of this Article NINTH containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article NINTH.
TENTH: Prior to the consummation of the Corporation’s initial Business Combination, the doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation or any of its officers or directors in circumstances where the application of any such doctrine to a corporate opportunity would conflict with any fiduciary duties or contractual obligations they may have as of the date of this Amended and Restated Certificate or in the future, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation will offer any such corporate opportunity of which he or she may become aware to the Corporation. In addition to the foregoing, prior to the consummation of the Corporation’s initial Business Combination, the doctrine of corporate opportunity shall not apply to any other corporate opportunity with respect to any of the directors or officers of the Corporation unless such corporate opportunity is offered to such person solely in his or her capacity as a director or officer of the Corporation and such opportunity is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation to pursue and the director or officer is permitted to refer that opportunity to the Corporation without violating any legal obligation.
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IN WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated Certificate of Incorporation to be duly executed on behalf of the Corporation by an authorized officer as of the date first set forth above.
Mana Capital Acquisition Corp.
By: /s/ Jonathan Intrater
Name: Jonathan Intrater
Title: Chief Executive Officer
[Signature Page to Second Amended and Restated Certificate of Incorporation]
8
Exhibit 10.4
CARDIO DIAGNOSTICS HOLDINGS INC.
2022 EQUITY INCENTIVE PLAN
Table of Contents
Page
| SECTION 1 Establishment and Purpose. | 1 |
| (a) Purpose | 1 |
| (b) Adoption and Term | 1 |
| SECTION 2 Definitions | 1 |
| SECTION 3 Administration | 4 |
| (a) Committee of the Board of Directors | 5 |
| (b) Authority. | 5 |
| (c) Exchange Program | 5 |
| (d) Delegation by the Committee | 5 |
| (e) Indemnification | 6 |
| SECTION 4 Eligibility and Award Limitations. | 6 |
| (a) Award Eligibility | 6 |
| (b) Award Limitations | 6 |
| SECTION 5 Stock Subject To The Plan. | 6 |
| (a) Shares Subject to the Plan | 6 |
| (b) Lapsed Awards | 6 |
| SECTION 6 Terms And Conditions Of Stock Options | 6 |
| (a) Power to Grant Options | 6 |
| (b) Optionee to Have No Rights as a Stockholder | 6 |
| (c) Award Agreements | 6 |
| (d) Vesting | 7 |
| (e) Exercise Price and Procedures | 7 |
| (f) Effect of Termination of Service | 7 |
| (g) Limited Transferability of Options | 8 |
| (h) Acceleration of Exercise Vesting | 8 |
| (i) No Repricing | 8 |
| (j) Modification, Extension, Cancellation and Regrant | 8 |
| (k) Term of Option | 8 |
| (l) Special Rules For Incentive Stock Options (“ISOs”). | 8 |
| (m) Shareholder Rights | |
| SECTION 7 Restricted Stock | 9 |
| (a) Grant of Restricted Stock. | 9 |
| (b) Establishment of Performance Criteria and Restrictions | 9 |
| (c) Share Certificates and Transfer Restrictions | 9 |
| (d) Voting and Dividend Rights | 9 |
| (e) Award Agreements | 10 |
| (f) Time Vesting | 10 |
| (g) Acceleration of Vesting. | 10 |
| SECTION 8 Restricted Stock Units | 10 |
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| (a) Grant | 10 |
| (b) Vesting Criteria and Other Terms | 10 |
| (c) Earning of Restricted Stock Units | 11 |
| (d) Dividend Equivalents | 11 |
| (e) Form and Timing of Payment | 11 |
| (f) Cancellation | 11 |
| SECTION 9 Stock Appreciation Rights | 11 |
| (a) Grant | 11 |
| (b) Exercise and Payment | 11 |
| SECTION 10 Performance Units and Performance Shares | 11 |
| (a) Grant of Performance Units/Shares | 11 |
| (b) Value of Performance Units/Shares | 12 |
| (c) Performance Objectives and Other Terms | 12 |
| (d) Measurement of Performance Goals | 12 |
| (e) Earning of Performance Units/Shares | 13 |
| (f) Form and Timing of Payment of Performance Units/Shares | 13 |
| (g) Cancellation of Performance Units/Shares | 13 |
| (h) Non-transferability | 13 |
| SECTION 11 Tax Withholding | 13 |
| (a) Tax Withholding for Options | 13 |
| (b) Tax Withholding for Restricted Stock and Other Awards | 13 |
| SECTION 12 Adjustment of Shares and Representations | 13 |
| (a) General | 13 |
| (b) Mergers and Consolidations | 14 |
| (c) Reservation of Rights. | 14 |
| SECTION 13 Miscellaneous | 14 |
| (a) Regulatory Approvals | 14 |
| (b) Strict Construction. | 14 |
| (c) Choice of Law | 14 |
| (d) Compliance With Code Section 409A | 15 |
| (e) Date of Grant | 15 |
| (f) Conditions Upon Issuance of Shares | 15 |
| (g) Clawback Provisions | 15 |
| (h) Stockholder Approval | 15 |
| SECTION 14 No Employment or Service Retention Rights | 15 |
| SECTION 15 Duration and Amendments | 15 |
| (a) Term of the Plan | 15 |
| (b) Right to Amend or Terminate the Plan | 15 |
| (c) Effect of Amendment or Termination | 15 |
| SECTION 16 Execution | 16 |
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CARDIO DIAGNOSTICS HOLDNGS INC.
2022 EQUITY INCENTIVE PLAN
SECTION 1 Establishment and Purpose.
(a) Purpose. The purpose of the Plan is to promote the interests of Cardio Diagnostics Holdings Inc., a Delaware corporation (the “Company”), and its stockholders by providing eligible employees, directors and consultants with additional incentives to remain with the Company and its subsidiaries, to increase their efforts to make the Company more successful, to reward such persons by providing an opportunity to acquire shares of Common Stock on favorable terms and to attract and retain the best available personnel to participate in the ongoing business operations of the Company.
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
(b) Adoption and Term. The Plan has been approved by the Board of Directors (the “Board”) of the Company, and subject to stockholder approval, and is effective as of October 25, 2022. The Plan will remain in effect until terminated by action of the Board except as otherwise provided in Section 15.
SECTION 2 Definitions.
(a) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
(b) “Award” means the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units or Performance Shares made pursuant to the Plan.
(c) “Award Agreement” means an agreement entered into by the Company and the Participant setting forth the terms applicable to an Award granted to the Participant under the Plan.
(d) “Board” means the Board of Directors of the Company, as constituted from time to time.
(e) “Cause” means (i) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other crime that causes the Company public disgrace or disrepute, or adversely affects the Company's operations, condition (financial or otherwise), prospects or interests, (ii) gross negligence or willful misconduct with respect to the Company, including, without limitation fraud, embezzlement, theft or dishonesty in the course of his or her employment; (iii) alcohol abuse or use of controlled drugs other than in accordance with a physician's prescription; (iv) refusal, failure or inability to perform any material obligation or fulfill any duty (other than any duty or obligation of the type described in clause (6) below) to the Company (other than due to a disability), which failure, refusal or inability is not cured within 10 days after delivery of notice thereof; (v) material breach of any agreement with or duty owed to the Company; or (vi) any breach of any obligation or duty to the Company (whether arising by statute, common law, contract or otherwise) relating to confidentiality, noncompetition, nonsolicitation or proprietary rights. Notwithstanding the foregoing, if a Participant and the Company have entered into an employment agreement, consulting agreement or other similar agreement that specifically defines "Cause," then with respect to such Participant, "Cause" shall have the meaning defined in that employment agreement, consulting agreement or other agreement.
(f) “Change of Control” means the occurrence of any of the following, in one transaction or a series of related transactions: (i) any person (as such term is used in Section 13(d) and 14(d) of the Exchange Act) becoming a "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of the Company's then outstanding capital stock; (ii) a consolidation, share exchange, reorganization or merger of the Company resulting in the stockholders of the Company immediately prior to such event not owning at least a majority of the voting power of the resulting entity's securities outstanding immediately following such event or, if the resulting entity is a direct or indirect subsidiary of the entity whose securities are issued in such transaction(s), the voting power of such issuing entity's securities outstanding immediately following such event; (iii) the sale or other disposition of all or substantially all the assets of the Company (other than a transfer of financial assets made in the ordinary course of business for the purpose of securitization or any similar purpose); (iv) a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; (v) a liquidation or dissolution of the Company; or (vi) any similar event deemed by the Committee to constitute a Change in Control for purposes of the Plan. For the avoidance of doubt, a transaction or a series of related transactions will not constitute a Change in Control if such transaction(s) result(s) in the Company, any successor to the Company, or any successor to the Company's business, being controlled, directly or indirectly, by the same person or persons who controlled the Company, directly or indirectly, immediately before such transaction(s).
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(g) “Code” means the Internal Revenue Code of 1986, as amended.
(h) “Committee” means the Compensation Committee of the Board of Directors or such other committee or individuals satisfying Applicable Laws appointed by the Board in accordance with Section 3 hereof.
(i) “Common Stock” means the common stock of the Company.
(j) “Company” means Cardio Diagnostics Holdings, Inc., a Delaware corporation and where applicable, its Subsidiaries.
(k) “Consultant” means any person other than an Employee, engaged by the Company or Subsidiary to render services to such entity.
(l) “Date of Grant” means the date on which the Committee grants an Award pursuant to the Plan.
(m) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Committee in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Committee from time to time.
(n) “Effective Date” means __________, 2022.
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(o) “Employee” means any individual who is a common-law employee of the Company or a Subsidiary.
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q) “Exchange Program” means a program established by the Committee under which outstanding Awards are amended to provide for a lower Exercise Price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different type of Award or awards under a different equity incentive plan, (iii) cash, or (iv) a combination of (i), (ii) and/or (iii). Notwithstanding the preceding, the term Exchange Program does not include any (i) action described in Section 12 or any action taken in connection with a Change in Control transaction or (ii) transfer or other disposition permitted under Section 12. For the purpose of clarity, each of the actions described in the prior sentence, none of which constitute an Exchange Program, may be undertaken (or authorized) by the Committee in its sole discretion without approval by the Company's shareholders.
(r) “Exercise Price” with respect to an Option, means the price per share at which an Optionee may exercise his Option to acquire all or a portion of the shares of Common Stock that are the subject of such Option, as determined by the Committee on the Date of Grant. In no event shall the Exercise Price of any Common Stock made the subject of an Option, be less than the Fair Market Value on the Date of Grant.
(s) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sale price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, or if the Common Stock is quoted on the Over-the-Counter (OTC) market, be that the OTCQB, OTCBB or Pink Sheets, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal, the OTC, or such other source as the Committee deems reliable;
(iii) For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company's Common Stock; or
(iv) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Board after taking into account such factors as the Board shall deem appropriate.
(t) “Incentive Stock Option” or “ISO” means a stock option intended to satisfy the requirements of Section 422(b) of the Code.
(u) “Nonstatutory Option” means a stock option not intended to satisfy the requirements of Section 422(b) of the Code.
(v) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(w) “Option” means an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase shares of Common Stock.
(x) “Option Stock” means those shares of Common Stock made the subject of an Option granted pursuant to the Plan.
(y) “Optionee” means an individual who is granted an Option.
(z) “Outside Director” means a member of the Board of Directors who is not an Employee.
(aa) “Participant” means a person who has an outstanding Award under the Plan. The term Participant also refers to an Optionee.
(bb) “Performance Goal” means a performance goal established by the Committee pursuant to Section 10(c) of the Plan.
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(cc) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Committee may determine pursuant to Section 10.
(dd) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Committee may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10.
(ee) “Plan” means this Cardio Diagnostics Holdings Inc. 2022 Equity Incentive Plan.
(ff) “Registration Date” means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company's securities.
(gg) “Repricing” means (i) reducing the exercise price of Nonqualified Stock Options, Incentive Stock Options, or Stock Appreciation Right (collectively, “Stock Rights”), (ii) cancel outstanding Stock Rights in exchange for cash, other Awards or Options or SARs with an exercise price that is less than the exercise price of the original options or base price of stock appreciation rights, as applicable, (iii) cancel outstanding Stock Rights with an exercise price or base price, as applicable, that is less than the then current Fair Market Value of a Share in exchange for other Awards, cash or other property; or (iv) otherwise effect a transaction that would be considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Shares are listed or quoted without stockholder approval.
(hh) “Restricted Stock” means those shares of Common Stock made the subject of an Award granted under the Plan.
(ii) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(jj) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(kk) “Section 16(b)” means Section 16(b) of the Exchange Act.
(ll) “Service” means service as an Employee, Consultant or Outside Director.
(mm) “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.
(nn) “Stock Appreciation Right” or “SAR” means a right awarded to a Participant pursuant to Section 9 of the Plan, which shall entitle the Participant to receive cash, Common Stock, other property or a combination thereof, as determined by the Committee, in an amount equal to or otherwise based on the excess of (a) the Fair Market Value of a share of Common Stock at the time of exercise over (b) the exercise price of the right, as established by the Committee on the date the award is granted.
(oo) “Subsidiary” means any Company (other than the Company) in an unbroken chain of companies beginning with the Company if each of the companies other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain. A company that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3 Administration.
(a) Committee of the Board of Directors. The Plan may be administered by the Compensation Committee of the Board or such other Committee or individuals as appointed by the Board to administer the Plan. Each Committee shall have such authority and be responsible for such functions as the Board has assigned to it. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authorities previously delegated to the Committee. If no Committee has been appointed, the entire Board shall administer the Plan.
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To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
(b) Authority. Subject to the terms and conditions of the Plan, the Committee shall have the sole discretionary authority:
(i) to authorize the granting of Awards under the Plan;
(ii) to select the Employees, Consultants or Outside Directors who are to be granted Awards under the Plan and to determine the conditions subject to such Awards;
(iii) to construe and interpret the Plan;
(iv) to determine Fair Market Value;
(v) to establish and modify administrative rules for the Plan;
(vi) to impose such conditions and restrictions with respect to the Awards, not inconsistent with the terms of the Plan, as it determines appropriate;
(vii) to execute or cause to be executed Award Agreements; and
(viii) generally, to exercise such power and perform such other acts in connection with the Plan and the Awards, and to make all determinations under the Plan as it may deem necessary or advisable or as required, provided or contemplated hereunder.
Any person delegated or designated by the Committee shall be subject to the same obligations and requirements imposed on the Committee and its members under the Plan.
(c) Exchange Program. Notwithstanding anything in this Section 3, the Committee shall not implement an Exchange Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled to vote at any annual or special meeting of Company's shareholders.
(d) Delegation by the Committee. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Company; provided, however, that the Committee may not delegate its authority and powers (a) with respect to an Officer or (b) in any way which would jeopardize the Plan's qualification under Code Section 162(m), if applicable, or Rule 16b-3.
(e) Indemnification. To the maximum extent permitted by law, the Company shall indemnify each member of the Committee, the Board, and any Employee with duties under the Plan, against all liabilities and expenses (including any amount paid in settlement or in satisfaction of a judgment) reasonably incurred by the individual in connection with any claims against the individual by reason of the performance of the individual's duties under the Plan. This indemnity shall not apply, however, if: (i) it is determined in the action, lawsuit, or proceeding that the individual is guilty of gross negligence or intentional misconduct in the performance of those duties; or (ii) the individual fails to assist the Company in defending against any such claim. The Company shall have the right to select counsel and to control the prosecution or defense of the suit. The Company shall not be obligated to indemnify any individual for any amount incurred through any settlement or compromise of any action unless the Company consents in writing to the settlement or compromise.
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SECTION 4 Eligibility and Award Limitations.
(a) Award Eligibility. Employees, Consultants, and Outside Directors shall be eligible for the grant of Awards under the Plan. Only Employees shall be eligible for the grant of Incentive Stock Options.
(b) Award Limitations. The Company may apply limits on the grant of Awards during any fiscal year or any particular type or amount of Award.
SECTION 5 Stock Subject To The Plan.
(a) Shares Subject to the Plan. The maximum aggregate number of Shares that may be issued under the Plan immediately after the Effective Date is [3,265,516] Shares, subject to both increase under Section 5(b) and adjustment under Section 12 after the Effective Date (the “Share Reserve”); provided, however that the Share Reserve will increase on January 1st of each calendar year beginning on January 1, 2023 and ending on and including January 1, 2027 (each, an “Evergreen Date”), in an amount equal to the lesser of (i) 7% of the total number of shares of Common Stock outstanding on the December 31st immediately preceding the applicable Evergreen Date and (ii) such lesser number of shares of Common Stock as determined to be appropriate by the Committee in its sole discretion. Notwithstanding the foregoing and, subject to adjustment as provided in Section 12, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options is [3,216,516].
(b) Lapsed Awards. To the extent an Award expires, is surrendered pursuant to an Exchange Program or becomes unexercisable without having been exercised or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). Notwithstanding the foregoing (and except with respect to Shares of Restricted Stock that are forfeited rather than vested), Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.
SECTION 6 Terms And Conditions Of Stock Options.
(a) Power to Grant Options. Subject to the maximum per person share limitation in Section 4, the Committee may grant to such Employees or persons as the Committee may select, Options entitling the Optionee to purchase shares of Common Stock from the Company in such quantity, and on such terms and subject to such conditions not inconsistent with the terms of the Plan, as may be established by the Committee at the time of grant or pursuant to applicable resolution of the Committee, and as set forth in the Participant’s Option Award Agreement. Options granted under the Plan may be Nonstatutory Stock Options or Incentive Stock Options.
(b) Optionee to Have No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder of the Company with respect to the shares of Common Stock made subject to an Option unless and until such Optionee exercises such Option and is issued the shares purchased thereby. No adjustments shall be made for distributions, dividends, allocations, or other rights with respect to any shares of Common Stock prior to the exercise of such Option.
(c) Award Agreements. The terms of any Option shall be set forth in an Award Agreement in such form as the Committee shall from time to time determine. Each Award Agreement shall comply with and be subject to the terms and conditions of the Plan and such other terms and conditions as the Committee may deem appropriate. In the event that any provision of an Option granted under the Plan shall conflict with any term in the Plan as constituted on the Date of Grant of such Option, the term in the Plan constituted on the Date of Grant of such Option shall control. No person shall have any rights under any Option granted under the Plan unless and until the Company and the Optionee have executed an Award Agreement setting forth the grant and the terms and conditions of the Option.
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(d) Vesting. Unless a different vesting schedule is listed in an individual Award Agreement, the Shares subject to an Option granted under the Plan shall vest and become exercisable in accordance with the following schedule:
| Completed Years of Employment/Service From Date of Grant |
Cumulative Vesting Percentage |
| 1 | 25% |
| 2 | 50% |
| 3 | 75% |
| 4 Years or more | 100% |
(e) Exercise Price and Procedures.
(1) Exercise Price. The Exercise Price means the price per share at which an Optionee may exercise his Option to acquire all or a portion of the shares of Common Stock that are the subject of such Option. Notwithstanding the foregoing, in no event shall the Exercise Price of any Common Stock made the subject of an Option be less than the Fair Market Value of such Common Stock, determined as of the Date of Grant.
(2) Exercise Procedures. Each Option granted under the Plan shall be exercised by providing written notice to the Committee, together with payment of the Exercise Price, which notice and payment must be received by the Committee on or before the earlier of (i) the date such Option expires, and (ii) the last date on which such Option may be exercised as provided in paragraph (f) below.
(3) Payment of Exercise Price. The Exercise Price times the number of the shares to be purchased upon exercise of an Option granted under the Plan shall be paid in full at the time of exercise. The Committee will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Committee will determine the acceptable form of consideration at the time of grant. Such consideration for both types of Options may consist entirely of: (i) cash; (ii) check; (iii) promissory note, to the extent permitted by Applicable Laws, (iv) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Committee determines in its sole discretion; (v) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (vi) by net exercise; (vii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (viii) any combination of the foregoing methods of payment.
(f) Effect of Termination of Service. Subject to paragraph (k) below regarding Special Rules for Incentive Stock Options, the following provisions shall govern the exercise of any Options granted to an Optionee that are vested and outstanding at the time Optionee’s Service ceases:
(1) Termination of Employment for Reasons Other than Death, Disability or a Termination for Cause. Should Optionee’s Service with the Company cease for any reason other than death, Disability or a termination for Cause (as determined by the Committee), then each Option shall remain exercisable until the close of business on the earlier of (i) 3 months following the date Optionee’s Service ceased or (ii) the expiration date of the Option.
(2) Termination of Employment Due to Death or Disability. Should Optionee’s Service cease due to death or Disability, then each Option shall remain exercisable until the close of business on the earlier of (i) the 12 month anniversary of the date Optionee’s Service ceased, or (ii) the expiration date of the Option.
(3) Termination for Cause. Should Optionee’s Service be terminated for Cause while his Option remains outstanding, each outstanding Option granted to Optionee (whether vested or unvested) shall terminate immediately and Optionee shall forfeit all rights with respect to such Award.
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(g) Limited Transferability of Options. An Option shall be exercisable only by the Optionee during his lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following Optionee’s death.
(h) Acceleration of Exercise Vesting. Notwithstanding anything to the contrary in the Plan, the Committee, in its discretion, may allow the exercise in whole or in part, at any time after the Date of Grant, any Option held by an Optionee, which Option has not previously become exercisable. In the event of a Change of Control of the Company, the Committee, in its discretion may provide that Options shall become 100% vested and exercisable on the date of the Change of Control. Options shall also become 100% vested in the event Optionee dies or becomes Disabled while employed.
(i) No Repricing. The terms of any outstanding Award may not be amended, and action may not otherwise be taken, in a manner to achieve a Repricing; provided, however, that nothing herein shall prevent the Committee from taking any action provided for in Section 14 below
(j) Modification, Extension, Cancellation and Regrant. Within the limitations of the Plan and after taking into account any possible adverse tax or accounting consequences, the Committee may modify, or extend outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations under such Option or cause a violation of Code Section 409A.
(k) Term of Option. No Option shall have a term in excess of ten (10) years measured from the date that the Option is granted.
(l) Special Rules For Incentive Stock Options (“ISOs”). In addition to the provisions of this Section 6, the terms specified below shall be applicable to all Incentive Stock Options granted under the Plan. Except as modified by the provisions of this paragraph (k), all of the provisions of the Plan shall be applicable to Incentive Stock Options. Options that are specifically designated as Nonstatutory Options are not subject to the terms of this paragraph (k).
(1) Eligibility. Incentive Options may only be granted to Employees.
(2) Dollar Limitation. The aggregate Fair Market Value of the shares of Common stock (determined as of the Date of Grant) for which one or more Incentive Options granted to any Employee pursuant to the Plan may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed $100,000. To the extent that an Optionee’s Options exceed that limit, they will be treated as Nonstatutory Options (but all of the other provisions of the Option shall remain applicable), with the first Options that were awarded to Optionee to be treated as Incentive Stock Options.
(3) Restrictions on Sale of Shares. Shares issued pursuant to the exercise of an Incentive Stock Option may not be sold by the Employee until the expiration of 12 months after exercise and 24 months from the Date of Grant. Shares that do not satisfy these restrictions shall be treated as a grant of Nonstatutory Options.
(4) Special Rules for Incentive Stock Options Granted to 10% Stockholder.
a. Exercise Price. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, the Exercise Price of the Incentive Stock Option must be at least 110% of the Fair Market Value of the Company’s Common Stock.
b. Term of Option. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, then the Option term shall not exceed five years measured from the date the Incentive Stock Option is granted.
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c. Definition of 10% Stockholder. For purposes of the Plan, an Employee is deemed to be a “10% Stockholder” if he owns more than 10% of the Company or any Subsidiary.
(5) Special Rules for Exercise of Incentive Stock Options Following Termination of Employment.
a. Death or Disability. In order to preserve tax treatment as an Incentive Stock Option, Options granted to an Optionee who dies or becomes Disabled while employed must be exercised by the Optionee or his executor or beneficiary no later than (i) 12 months following the date of death or Disability, or (ii) the expiration date of the Incentive Stock Option, if earlier.
b. Termination For Reason Other Than Death or Disability. In order to preserve tax treatment as an Incentive Stock Option, an Optionee must exercise any vested and outstanding Incentive Stock Options no later than: (i) three (3) months following the date the Optionee terminates employment for any reason other than death or Disability; or (ii) the expiration date of the Incentive Stock Option if earlier.
(6) Miscellaneous. With respect to Incentive Stock Options, if this Plan does not contain any provision required to be included herein under Section 422 of the Code, such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been set out at length herein. To the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, such Option, to that extent, shall be deemed to be a Nonstatutory Stock Option for all purposes of this Plan.
(m) Shareholder Rights. Until the Shares covered by an Option are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.
SECTION 7 Restricted Stock.
(a) Grant of Restricted Stock. The Committee may cause the Company to issue shares of Restricted Stock under the Plan, subject to such restrictions, conditions and other terms as the Committee may determine in addition to those set forth herein.
(b) Establishment of Performance Criteria and Restrictions. Restricted Stock Awards will be subject to time vesting under paragraph (f) of this Section 7. The Committee may, in its sole discretion, at the time a grant is made, prescribe restrictions in addition to or other than time vesting, including the satisfaction of corporate or individual performance objectives, which shall be applicable to all or any portion of the Restricted Stock. Corporate or individual performance criteria include, but are not limited to, designated levels or changes in total shareholder return, net income, total asset return, or such other financial measures or performance criteria as the Committee may select. Such restrictions shall be set forth in the Participant’s Restricted Stock Agreement.
(c) Share Certificates and Transfer Restrictions. Restricted Stock awarded to a Participant may be held under the Participant’s name in a book entry account maintained by or on behalf of the Company. Upon vesting of the Restricted Stock, the Company will establish procedures regarding the delivery of share certificates or the transfer of shares in book entry form. None of the Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of prior to the date on which such Restricted Stock vests in accordance with the Plan.
(d) Voting and Dividend Rights. Except as otherwise determined by the Committee either at the time Restricted Stock is awarded or at any time thereafter prior to the lapse of the restrictions, holders of Restricted Stock shall not have the right to vote such shares or the right to receive any dividends with respect to such shares, until such shares are vested. All distributions, if any, received by the Participant with respect to Restricted Stock as a result of any stock split, stock distributions, combination of shares, or other similar transaction shall be subject to the restrictions of the Plan.
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(e) Award Agreements. The terms of the Restricted Stock granted under the Plan shall be as set forth in an Award Agreement in such form as the Committee shall from time to time determine. Each Award Agreement shall comply with and be subject to the terms and conditions of the Plan and such other terms and conditions as the Committee may deem appropriate. No Person shall have any rights under the Plan unless and until the Company and the Participant have executed an Award Agreement setting forth the grant and the terms and conditions of the Restricted Stock. The terms of the Plan shall govern all Restricted Stock granted under the Plan. In the event that any provision of an Award Agreement shall conflict with any term in the Plan as constituted on the Date of Grant, the term in the Plan shall control.
(f) Time Vesting. Except as otherwise provided in a Participant’s Award Agreement, the Restricted Stock granted under the Plan will vest in accordance with the following schedule:
| Completed Years of Employment/Service From Date of Grant |
Cumulative Vesting Percentage |
| 1 | 25% |
| 2 | 50% |
| 3 | 75% |
| 4 Years or more | 100% |
In the event a Participant terminates employment prior to 100% vesting, any Shares of Restricted Stock which are not vested shall be forfeited immediately and permanently. However, a Participant shall be 100% vested in his Restricted Stock in the event he terminates employment by reason of death or Disability. A Participant shall also be 100% vested in his Restricted Stock on the date of a Change of Control. If a Participant’s Service is terminated for Cause as determined in the sole discretion of the Committee, his or her Restricted Stock Award (whether vested or unvested) shall be forfeited immediately. The Committee may approve Restricted Stock grants that provide alternate vesting schedules. Fractional shares shall be rounded down.
(g) Acceleration of Vesting. Notwithstanding anything to the contrary in the Plan, the Board, in its discretion, may accelerate, in whole or in part, the vesting schedule applicable to a grant of Restricted Stock.
SECTION 8 Restricted Stock Units
(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Committee. After the Committee determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions (if any) related to the grant, including the number of Restricted Stock Units.
(b) Vesting Criteria and Other Terms. The Committee will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Committee may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis (including the passage of time) determined by the Committee in its discretion. Unless a different vesting schedule is set forth in the Award Agreement, the following time vesting schedule will apply:
| Completed Years of Employment/Service From Date of Grant |
Cumulative Vesting Percentage |
| 1 | 25% |
| 2 | 50% |
| 3 | 75% |
| 4 Years or more | 100% |
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(c) Earning of Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Committee and as set forth in the Award Agreement on the Date of Grant. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Committee, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout as long as such reduction or waiver does not violate Code Section 409A.
(d) Dividend Equivalents. The Committee may, in its sole discretion, award dividend equivalents in connection with the grant of Restricted Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination thereof.
(e) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made upon the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both. Timing and payment of Restricted Stock Units will be subject to and structured to comply with the rules of Code Section 409A and the treasury regulations thereunder.
(f) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.
SECTION 9 Stock Appreciation Rights.
(a) Grant. A Participant may be granted one or more Stock Appreciation Rights under the Plan and such SARs shall be subject to such terms and conditions, consistent with the other provisions of the Plan, as shall be determined by the Committee in its sole discretion. A SAR may relate to a particular Stock Option and may be granted simultaneously with or subsequent to the Stock Option to which it relates. Except to the extent otherwise modified in the grant, (i) SARs not related to a Stock Option shall be granted subject to the same terms and conditions applicable to Stock Options as set forth in Section 6, and (ii) all SARs related to Stock Options granted under the Plan shall be granted subject to the same restrictions and conditions and shall have the same vesting, exercisability, forfeiture and termination provisions as the Stock Options to which they relate. SARs may be subject to additional restrictions and conditions. The per-share base price for exercise or settlement of SARs shall be determined by the Committee but shall be a price that is equal to or greater than the Fair Market Value of such shares. Other than as adjusted pursuant to Section 12, the base price of SARs may not be reduced without shareholder approval (including canceling previously awarded SARs and regranting them with a lower base price).
(b) Exercise and Payment. To the extent a SAR relates to a Stock Option, the SAR may be exercised only when the related Stock Option could be exercised and only when the Fair Market Value of the shares subject to the Stock Option exceed the exercise price of the Stock Option. When a Participant exercises such SARs, the Stock Options related to such SARs shall automatically be cancelled with respect to an equal number of underlying shares. Unless the Committee decides otherwise (in its sole discretion), SARs shall only be paid in cash or in shares of Common Stock. For purposes of determining the number of shares available under the Plan, each Stock Appreciation Right shall count as one share of Common Stock, without regard to the number of shares, if any, that are issued upon the exercise of the Stock Appreciation Right and upon such payment. Shares issuable in connection with a SAR are subject to the transfer restrictions under the Plan.
SECTION 10 Performance Units and Performance Shares.
(a) Grant of Performance Units/Shares. Subject to the terms of the Plan, Performance Units and Performance Shares may be granted to eligible Employees, Consultants or Outside Directors at any time and from time to time, as shall be determined by the Committee, in its sole discretion. The Committee shall have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.
(b) Value of Performance Units/Shares. Each Performance Unit shall have an initial value that is established by the Committee at the time of the grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Shares that will be paid out to the Participants. The time period during which the performance goals must be met shall be called a “Performance Period.”
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(c) Performance Objectives and Other Terms. The Committee will set Performance Goals or other vesting provisions (including, without limitation, continued status as an Employee, Consultant or Outside Director) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to an Employee, Consultant or Outside Director. The time period during which the performance objectives or other vesting provisions must be met will be called the "Performance Period." Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Committee, in its sole discretion, will determine. The Committee may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Committee in its discretion.
(d) Measurement of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets to be attained ("Performance Targets") with respect to one or more measures of business or financial performance (each, a "Performance Measure"), subject to the following:
(i) Performance Measures. For each Performance Period, the Committee shall establish and set forth in writing the Performance Measures, if any, and any particulars, components and adjustments relating thereto, applicable to each Participant. The Performance Measures, if any, will be objectively measurable and will be based upon the achievement of a specified percentage or level in one or more objectively defined and non-discretionary factors preestablished by the Committee. Performance Measures may be one or more of the following, as determined by the Committee: (i) sales or non-sales revenue; (ii) return on revenues; (iii) operating income; (iv) income or earnings including operating income; (v) net income; (vi) pre-tax income or after-tax income; (vii) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (viii) raising of financing or fundraising; (ix) project financing; (x) revenue backlog; (xi) power purchase agreement backlog; (xii) gross margin; (xiii) operating margin or profit margin; (xiv) capital expenditures, cost targets, reductions and savings and expense management; (xv) return on assets (gross or net), return on investment, return on capital, or return on shareholder equity; (xvi) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xvii) performance warranty and/or guarantee claims; (xviii) stock price or total stockholder return; (xix) earnings or book value per share (basic or diluted); (xx) economic value created; (xxi) pre-tax profit or after-tax profit; (xxii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share, geographic business expansion, objective customer satisfaction or information technology goals; (xxiii) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (xxiv) construction projects consisting of one or more objectives based upon meeting project completion timing milestones, project budget, site acquisition, site development, or site equipment functionality; (xxv) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, headcount, performance management, completion of critical staff training initiatives; (xxvi) objective goals relating to projects, including project completion timing milestones, project budget; (xxvii) key regulatory objectives; and (xxviii) enterprise resource planning.
(ii) Committee Discretion on Performance Measures. As determined in the discretion of the Committee, the Performance Measures for any Performance Period may (a) differ from Participant to Participant and from Award to Award, (b) be based on the performance of the Company as a whole or the performance of a specific Participant or one or more Subsidiaries, divisions, departments, regions, stores, segments, products, functions or business units of the Company, (c) be measured on a per share, per capita, per unit, per square foot, per employee, per branch basis, and/or other objective basis (d) be measured on a pre-tax or after-tax basis, and (e) be measured on an absolute basis or in relative terms (including, but not limited to, the passage of time and/or against other companies, financial metrics and/or an index). Without limiting the foregoing, the Committee shall adjust any performance criteria, Performance Measures or other feature of an Award that relates to or is wholly or partially based on the number of, or the value of, any stock of the Company, to reflect any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares or other similar changes in such stock.
(e) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares shall be entitled to receive a payout of the number of Performance Unit/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved. Notwithstanding the preceding sentence, after the grant of a Performance Unit/Share, and subject to restrictions under Applicable Laws such as Code Section 409A, the Committee, in its sole discretion, may waive the achievement of any performance goals for such Performance Unit/Share.
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(f) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares shall be made in a single lump sum, within 90 calendar days following the close of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate fair market value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in combination thereof. Prior to the beginning of each Performance Period, Participants may, if so permitted by the Company, elect to defer the receipt of any Performance Unit/Share payout upon such terms as the Committee shall determine.
(g) Cancellation of Performance Units/Shares. Subject to the applicable Award Agreement, upon the earlier of (a) the Participant's termination of employment, or (b) the date set forth in the Award Agreement, all remaining Performance Units/Shares shall be forfeited by the Participant to the Company, the Shares subject thereto shall again be available for grant under the Plan.
(h) Non-transferability. Performance Units/Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative.
SECTION 11 Tax Withholding.
(a) Tax Withholding for Options. The Company shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment in cash in United States dollars from an Optionee or beneficiary in lieu of withholding) the amount of any withholding or other tax required by law to be withheld or paid by the Company with respect to any amount payable and/or shares of Common Stock issuable under such Optionee's Option, and the Company may defer payment or issuance of the shares of Common Stock upon such Optionee's exercise of an Option unless indemnified to its satisfaction against any liability for such tax. The amount of any such withholding shall be determined by the Company.
(b) Tax Withholding for Restricted Stock and Other Awards. When a Participant incurs tax liability in connection with the vesting, lapse of a restriction or distribution of Restricted Stock or other Award, and the Participant is obligated to pay an amount required to be withheld under applicable tax laws, the Committee shall establish procedures to satisfy the withholding tax obligation. The Participant also has the option to make payment in cash in United States dollars pursuant to procedures established by the Company. The amount of any such withholding shall be determined by the Company.
SECTION 12 Adjustment of Shares and Representations.
(a) General. Should any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, the Committee shall make appropriate adjustments to (i) the maximum number and/or class of securities issuable pursuant to the Plan, (ii) the number and/or class of securities and the Exercise Price per share in effect for each outstanding Option in order to prevent the dilution or enlargement of benefits, (iii) the number of shares of Restricted Stock granted; or (iv) the number of Performance Shares awarded, if applicable. As a condition to the exercise of an Award, the Company may require the person exercising such Option to make such representations and warranties at the time of any such exercise as the Company may at that time determine, including without limitation, representations and warranties that (i) the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares in violation of applicable federal or state securities laws, and (ii) such person is knowledgeable and experienced in financial and business matters and is capable of evaluating the merits and the risks associated with purchasing the Shares.
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The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares under this Plan, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(b) Mergers and Consolidations. In the event that the Company is a party to a Change of Control, outstanding Awards that are not yet vested shall be subject to the agreement of merger or consolidation or asset sale. Such agreement, without the Participant’s consent, may provide for:
(i) The continuation of such outstanding Awards by the Company (if the Company is the surviving Company);
(ii) The assumption of the Plan and such outstanding Awards by the surviving Company;
(iii) The substitution by the surviving Company of options with substantially the same terms for such outstanding Awards;
(iv) Such other action as the Board determines.
Each Option that is assumed or otherwise continued in effect in connection with a Change of Control shall be appropriately adjusted, immediately after such Change of Control, to apply to the number and class of securities which would have been issuable to the Optionee in connection with the consummation of such Change of Control, had the Option been exercised immediately prior to such Change of Control.
(c) Reservation of Rights. Except as provided in this Section 12, a Participant shall have no Shareholder rights by reason of (i) any subdivision or consolidation of shares of stock of any class, or (ii) any other increase or decrease in the number of shares of stock of any class. Any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.
SECTION 13 Miscellaneous.
(a) Regulatory Approvals. The implementation of the Plan, the granting of any Options, Restricted Stock or Performance Unit/Performance Share Awards under the Plan, and the issuance of any shares of Common Stock upon the exercise of any Option, lapse of restrictions on Restricted Stock, or payout of Performance Share Award shall be subject to the Company’s procurement of all approvals and permits required by regulatory authorities, if any, including applicable securities laws having jurisdiction over the Plan, the Options or Restricted Stock granted, and the shares of Common Stock issued pursuant to it.
(b) Strict Construction. No rule of strict construction shall be implied against the Committee, the Company or Subsidiary or any other person in the interpretation of any of the terms of the Plan, any Award granted under the Plan or any rule or procedure established by the Committee.
(c) Choice of Law. All determinations made and actions taken pursuant to the Plan shall be governed by the internal laws of the State of Delaware and construed in accordance therewith.
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(d) Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A (or an exemption therefrom) and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Committee. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A, the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A (or an exemption therefrom), such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. In no event will the Company be responsible for or reimburse a Participant for any taxes or other penalties incurred as a result of applicable of Code Section 409A.
(e) Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Committee makes the determination granting such Award, or such other later date as is determined by the Committee. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
(f) Conditions Upon Issuance of Shares.
(i) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(ii) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
(g) Clawback Provisions. All Awards (including the gross amount of any proceeds, gains or other economic benefit the Participant actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to recoupment by the Company to the extent required to comply with Applicable Law or any policy of the Company providing for the reimbursement of incentive compensation, whether or not such policy was in place at the time of grant of an Award.
(h)Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
SECTION 14 No Employment or Service Retention Rights.
Nothing in the Plan or in any Award granted under the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.
SECTION 15 Duration and Amendments.
(a) Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by the Board, subject to the approval of the Company’s stockholders. In the event that the stockholders fail to approve the Plan within 12 months after its adoption by the Board, any grants of Awards that have already occurred for which shareholder approval is a prerequisite for the granting of such Awards, shall be rescinded, and no such additional grants or awards shall be made thereafter under the Plan. The Plan shall terminate upon the earliest to occur of (i) the tenth anniversary of Board approval of the Plan or (ii) the date determined by the Board pursuant to its authority pursuant to paragraph (b) below.
(b) Right to Amend or Terminate the Plan. The Plan shall terminate upon the earliest to occur of (i) the tenth anniversary of Board approval of the Plan; (ii) the date on which all Shares available for issuance under the Plan have been issued as fully vested Shares; or (iii) the date determined by the Board pursuant to its authority under Section 12.3 of the Plan.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. No Shares of Common Stock shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any shares of Restricted Stock or Performance Shares previously issued or any Option previously granted under the Plan.
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SECTION 16 Execution.
To record the adoption of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.
| CARDIO DIAGNOSTICS HOLDINGS INC. | ||
| By: | ||
| Date: | _______________, 2022 | |
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Exhibit 21.1
Subsidiaries of Cardio Diagnostics Holdings, Inc.
Cardio Diagnostics, Inc., a Delaware corporation
EXHIBIT 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Capitalized terms used but not defined in this Exhibit 99.1 shall have the meanings ascribed to them in the Current Report on Form 8-K (the “Form 8-K”)filed with the Securities and Exchange Commission (the “SEC”) on October 31, 2022 and, if not defined in the Form 8-K, then in the final prospectus and definitive proxy statement, filed by Mana Capital Acquisition Corp. with the Securities and Exchange Commission (the “SEC”) on October 7, 2022 (the “Proxy Statement/Prospectus”).
Unless the context otherwise requires, all references to (i) the “Combined Company” refer to the entity formerly known as Mana Capital Acquisition Corp., which is now named Cardio Diagnostics Holdings, Inc. after giving effect to the Business Combination; (ii) “Legacy Cardio” refers to the entity formerly known as Cardio Diagnostics, Inc., which is now named Cardio Diagnostics Holdings, Inc. after giving effect to the Business Combination; and (iii) “Mana” refers to Mana Capital Acquisition Corp. prior to giving effect to the Business Combination.
The Combined Company is providing the following unaudited pro forma condensed combined financial information to aid in the analysis of the financial aspects of the Merger and other events contemplated by the Business Combination Agreement. The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Mana and Legacy Cardio, adjusted to give effect to the Merger. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” (“Article 11 of Regulation S-X”).
The unaudited pro forma condensed combined financial statements give effect to the Merger and other events contemplated by the Business Combination Agreement as described in this Form 8-K. The unaudited pro forma condensed combined balance sheet as of June 30, 2022 combines the historical unaudited condensed balance sheet of Legacy Cardio with the historical unaudited condensed balance sheet of Mana on a pro forma basis as if the Merger and the other events contemplated by the Business Combination Agreement, summarized below, had been consummated on June 30, 2022. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022 combines the historical unaudited condensed statement of operations of Legacy Cardio for the six months ended June 30, 2022 and the historical unaudited condensed statement of operations of Mana for the six months ended June 30, 2022, giving effect to the transaction as if the Merger and other events contemplated by the Business Combination Agreement had been consummated on January 1, 2021. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2021 combines the historical audited statement of operations of Mana for the year ended December 31, 2021, with the historical audited statement of operations of Legacy Cardio for the year ended December 31, 2021, giving effect to the transaction as if the Merger and other events contemplated by the Business Combination Agreement had been consummated on January 1, 2021.
The unaudited pro forma condensed combined financial statements have been prepared for informational purposes only and are not necessarily indicative of what the Combined Company’s condensed financial position or results of operations actually would have been had the Business Combination been consummated prior to June 30, 2022, nor are they necessarily indicative of future results of operations. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the Combined Company.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes:
| • | audited historical financial statements of Mana for the year ended December 31, 2021 included in the Proxy Statement/Prospectus and incorporated by reference; | ||
| • | unaudited historical condensed financial statements of Mana as of and for the six months ended June 30, 2022 included in the Proxy Statement/Prospectus and incorporated by reference; |
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| • | audited historical financial statements of Legacy Cardio for the year ended December 31, 2021 included in the Proxy Statement/Prospectus and incorporated by reference; | ||
| • | unaudited historical condensed financial statements of Legacy Cardio as of and for the six months ended June 30, 2022 included in the Proxy Statement/Prospectus and incorporated by reference; and | ||
| • | other information relating to Mana and Cardio included in the Proxy Statement/Prospectus and incorporated by reference, including the Business Combination Agreement and the description of certain terms thereof and the financial and operational condition of Mana and Cardio (see “Proposal No. 1—The Business Combination Agreement,” “Mana Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Cardio Management’s Discussion and Analysis of Financial Condition and Results of Operations”). |
Description of the Merger
Pursuant to the Business Combination Agreement, Merger Sub merged with and into Legacy Cardio, with Legacy Cardio surviving the Merger and thereby becoming a wholly owned subsidiary of Mana. In connection with the Merger, Mana was renamed as “Cardio Diagnostics Holdings, Inc.” (hereafter referred to as Cardio). The Merger consideration paid to the Legacy Cardio equity holders at the Closing pursuant to the Business Combination Agreement was deemed to have a value of approximately $108.4 million, assuming a deemed value of $10.00 per Mana common share. Upon the consummation of the Merger, each share of Legacy Cardio capital stock was converted into the right to receive shares of Combined Company common stock.
Pursuant to the Business Combination Agreement the Company issued the following securities:
| • | holders of conversion rights issued as a component of units in Mana’s initial public offering (the “Public Rights”) were issued an aggregate of 928,571 shares of the Company’s common stock, $0.00001 par value (“Common Stock”); | ||
| • | holders of existing shares of common stock of Legacy Cardio and the holder of equity rights of Legacy Cardio (together, the “Legacy Cardio Stockholders”) received an aggregate of 6,883,306 shares of the Company’s Common Stock, calculated based on the exchange ratio of 3.427259 pursuant to the Merger Agreement (the “Exchange Ratio”) for each share of Legacy Cardio Common Stock held or, in the case of the equity rights holder, that number of shares of the Company’s Common Stock equal to 1% of the Aggregate Closing Merger Consideration, as defined in the Merger Agreement; | ||
| • | the Legacy Cardio Stockholders received, in addition, an aggregate of 43,334 shares of the Company’s Common Stock (“Conversion Shares”) upon conversion of an aggregate of $433,334 in principal amount of promissory notes issued by Mana to Legacy Cardio in connection with its loan of such amount in order to extend Mana’s duration through October 26, 2022 (the “Extension Notes”), which Conversion Shares were distributed to the Legacy Cardio Stockholders in proportion to their respective interest in Legacy Cardio; | ||
| • | each Legacy Cardio option that was outstanding immediately prior to the effective time of the Merger (the “Effective Time”), each of which was unvested prior to the Closing (the “Legacy Cardio Stock Options”), was assumed by the Company and converted into an option to purchase that number of shares of the Company’s Common Stock calculated based on the Exchange Ratio; accordingly, holders of Legacy Cardio Options received options to acquire 1,759,600 shares of the Company’s Common Stock, all of which vested and became immediately exercisable upon Closing; and | ||
| • | each Legacy Cardio warrant that was outstanding immediately prior to the Effective Time (the “Legacy Cardio Warrants”) was assumed by the Company and converted into a warrant to purchase that number of shares of the Company’s Common Stock calculated based on the Exchange Ratio; accordingly, holders of Legacy Cardio Warrants received warrants to acquire 2,204,627 shares of the Company’s Common Stock pursuant to the Exchange Ratio. |
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Following the Merger, 2,588,119 shares of Combined Company common stock held by Mana stockholders prior to the Closing remain issued and outstanding, including 1,625,000 shares of Combined Company held by the Sponsor.
The following transactions constituting the Merger took place as contemplated by the Business Combination Agreement:
| • | the Merger of Merger Sub, the wholly owned subsidiary of Mana, with and into Legacy Cardio, with Legacy Cardio as the surviving company; | ||
| • | the cancellation of each issued and outstanding share of Legacy Cardio’s capital stock and the conversion into the right to receive a number of shares of Combined Company common stock based on the Exchange Ratio; | ||
| • | the exchange of outstanding Legacy Cardio Warrants into warrants exercisable for shares of Combined Company common stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted using the Exchange Ratio; and | ||
| • | the exchange of all outstanding Legacy Cardio Options (whether vested or unvested) into Combined Company Options exercisable for shares of Combined Company common stock with the same terms except for the number of shares exercisable and the exercise price, each of which was adjusted using the Exchange Ratio; all such options became immediately exercisable. |
Other Related Events in Connection with the Merger
In connection with the Mana stockholder vote on the Business Combination, Mana stockholders redeemed an aggregate of 6,465,452 shares of Common Stock for total redemption consideration of $65,310,892 which amount was paid out of the Investment Management Trust established in connection with Mana’s initial public offering in November 2021 (the “Trust Account”). At the Closing of the Business Combination, all outstanding Public Rights automatically converted into one-seventh of a share of Common Stock, or 928,571 shares of Common Stock. The separate trading of Units and Public Rights of Mana was terminated upon the closing of the Business Combination. The information set forth under the heading “Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters – Market Information and Holders” and under Item 3.01 (Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing) of this Current Report on Form 8-K are incorporated herein by reference.
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Other related events that are contemplated to take place in connection with the Merger are summarized below:
| • | Mana Stockholder Redemptions: On October 25, 2022, Mana held a special meeting of its stockholders to approve the Business Combination. In connection with the Special Meeting and the Business Combination, the holders of 6,465,452 shares of Mana common stock exercised their right to redeem their shares for cash at a redemption price of approximately $10.10 per share, for an aggregate redemption amount of $65,310,892. These redemptions have been reflected below. | ||
| • | Extension Notes: In August and September 2022, Mana issued to Legacy Cardio non-interest bearing promissory notes aggregating $433,334 in connection with Legacy Cardio’s loans of such amount ($216,667 in each month) in order to extend Mana’s corporate existence through October 26, 2022 (the “Extension Notes”). The Extension Notes were converted into a total of 43,334 shares of the Combined Company based on a conversion rate of $10 per share (the “Conversion Shares) which Conversion Shares were distributed to the Legacy Cardio Stockholders in proportion to their respective interest in Legacy Cardio. | ||
| • | Mana Conversion Rights: At the Closing of the Business Combination, all outstanding Public Rights that were issued as a component of the units sold in Mana’s initial public offering automatically converted into one-seventh of a share of Common Stock, or 928,571 shares of Common Stock. The Public Rights ceased trading upon Closing and were delisted from Nasdaq as of October 26, 2022. |
Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an illustrative understanding of Combined Company upon consummation of the Merger in accordance with GAAP. Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial information are described in the accompanying notes.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the Merger occurred on the dates indicated. Any net cash proceeds remaining after the consummation of the Merger and the other related events contemplated by the Business Combination Agreement are expected to be used for general corporate purposes. The unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of Combined Company following the completion of the Merger. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed. MANA and Legacy Cardio did not have any historical relationship prior to the discussion of the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
Pursuant to its certificate of incorporation and as contemplated by the Business Combination Agreement, MANA provided the holders of MANA Common Stock the opportunity to redeem the outstanding shares of MANA Common Stock for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the transactions (including interest earned on the funds held in the Trust Account, net of taxes). The per share redemption amount was approximately $10.10 in the Closing Redemption.
The following table presents the selected pro forma information after giving effect to the Merger and other events contemplated by the Business Combination Agreement and the Closing Redemption. This scenario includes the Closing Redemption, following which 2,588,119 shares of MANA Common Stock remain outstanding after the completion of the Merger.
The following summarizes the pro forma fully-diluted shares of the Combined Company common stock issued and outstanding immediately after the Merger:
Fully-Diluted Shares | % | |||||||
| MANA Public Stockholders (1) | 34,548 | 0.26 | % | |||||
| Sponsor (2) | 1,625,000 | 12.09 | % | |||||
| MANA Conversion rights holders (3) | 928,571 | 6.91 | % | |||||
| Legacy Cardio equity holders (4) | 10,847,531 | 80.74 | % | |||||
| Combined Company common stock at Merger Closing (fully diluted) | 13,435,650 | 100.0 | % | |||||
| (1) | Amount reflects the Closing Redemption. Amount excludes 5,750,000 outstanding Public Warrants issued in connection with the MANA IPO. |
| (2) | The Sponsor holds 1,625,000 shares of MANA Common Stock, comprised of Founder Shares. This amount excludes Private Warrants. |
| (3) | At the Closing of the Business Combination, all outstanding Public Rights that were issued as a component of the units sold in Mana’s initial public offering automatically converted into one-seventh of a share of Common Stock, or 928,571 shares of Common Stock. The Public Rights ceased trading upon Closing and were delisted from Nasdaq as of October 26, 2022. |
| (4) | Amount excludes Combined Company options and warrants exercisable for 1,759,640 and 2,204,627 shares of Combined Company common stock, respectively, that were issued on conversion of equivalent Legacy Cardio Options and Legacy Cardio Warrants with the same terms and conditions, except for adjustment for the Exchange Ratio. |
Expected Accounting Treatment for the Merger
The Merger is accounted for as a reverse recapitalization in accordance with GAAP because Legacy Cardio has been determined to be the accounting acquirer. Under this method of accounting, MANA, which is the legal acquirer, is treated as the accounting acquiree for financial reporting purposes and Legacy Cardio, which is the legal acquiree, is treated as the accounting acquirer. Accordingly, the consolidated assets, liabilities and results of operations of Legacy Cardio have become the historical financial statements of the Combined Company, and MANA’s assets, liabilities and results of operations have been consolidated with Legacy Cardio’s beginning on the acquisition date. For accounting purposes, the financial statements of the Combined Company represent a continuation of the financial statements of Legacy Cardio with the Merger being treated as the equivalent of Legacy Cardio issuing stock for the net assets of MANA, accompanied by a recapitalization. The net assets of MANA are stated at historical costs and no goodwill or other intangible assets have been recorded. Operations prior to the Merger will be presented as those of Cardio in future reports of the Combined Company.
Legacy Cardio was determined to be the accounting acquirer presented based on evaluation of the following facts and circumstances:
| • | Legacy Cardio stockholders comprise a majority of approximately 80% of the voting power of the Combined Company on a fully-diluted basis; |
| • | Legacy Cardio had the ability to nominate a majority of the members of the board of directors of the Combined Company; |
| • | Legacy Cardio’s operations prior to the acquisition comprise the only ongoing operations of Combined Company; |
| • | Legacy Cardio’s senior management comprise the senior management of Combined Company; |
| • | The Combined Company has assumed the Cardio name; |
| • | The ongoing operations of Legacy Cardio have become the operations of the Combined Company; and |
| • | Legacy Cardio’s headquarters have become the Combined Company’s headquarters. |
| 4 |
Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements are described in the accompanying notes. The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the Merger occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of the Combined Company following the completion of the Merger. The unaudited pro forma adjustments represent management’s estimates based on information available as of the dates of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.
| 5 |
| UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET | ||||||||||||||||
| AS OF JUNE 30, 2022 | ||||||||||||||||
| MANA SPAC | Cardio Diagnostics Inc. | Transaction Adjustments | Proforma Combined | |||||||||||||
| (as reported) | (as reported) | (Maximum Redemption) | (Maximum Redemption) | |||||||||||||
| Current Assets | ||||||||||||||||
| Cash and cash equivalents | $ | 45,587 | $ | 9,660,026 | $ | 9,705,613 | ||||||||||
| Deposits for acquisition | 137,466 | 137,466 | ||||||||||||||
| Prepaid expenses and other current assets | 140,532 | 108,928 | 249,460 | |||||||||||||
| Total current assets | $ | 186,119 | $ | 9,906,420 | $ | — | $ | 10,092,539 | ||||||||
| Long-term assets | ||||||||||||||||
| Investments held in Trust Account | 65,010,733 | (65,010,733 | ) | (A) | — | |||||||||||
| Intangible assets, net | — | 45,333 | 45,333 | |||||||||||||
| Deposits | — | 4,950 | 4,950 | |||||||||||||
| Patent costs | — | 283,760 | 283,760 | |||||||||||||
| Total assets | $ | 65,196,852 | $ | 10,240,463 | ($ | 65,010,733 | ) | $ | 10,426,582 | |||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 5,000 | $ | 537,680 | $ | 542,680 | ||||||||||
| Franchise tax liability | 224,434 | 224,434 | ||||||||||||||
| Total Liabilities | $ | 229,434 | $ | 537,680 | $ | — | $ | 767,114 | ||||||||
| Commitments and Contingencies | ||||||||||||||||
| Common sock subject to possible redemption | ||||||||||||||||
| 6,500,000 shares at conversion value of $10.10 per share | 65,000,000 | (65,000,000 | ) | (A) | — | |||||||||||
| — | ||||||||||||||||
| Stockholder's equity | — | |||||||||||||||
| Preferred stock $.00001 par value, 100,000,000 authorized; none issued and outstanding | — | |||||||||||||||
| Common stock $0.00001 par value, 300,000,000 shares 1,625,000 issued and outstanding as of June 30, 2022 and December 31, 2021 (excluding 6,500,000 shares subject to possible redemption) | 16 | 133 | ||||||||||||||
| Common stock $0.0001 par value, 2,300,000 shares authorized and 1,900,918 and 1,232,315 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 190 | (190 | ) | (C) | ||||||||||||
| 108 | (D) | |||||||||||||||
| — | ||||||||||||||||
| 9 | (E) | |||||||||||||||
| APIC | 827,553 | 12,265,208 | (108 | ) | (D) | 12,221,950 | ||||||||||
| 190 | (C) | |||||||||||||||
| (10,733 | ) | (A) | ||||||||||||||
| (860,151 | ) | (B) | ||||||||||||||
| (9 | ) | (E) | ||||||||||||||
| Stock subscriptions receivable | (100,001 | ) | (100,001 | ) | ||||||||||||
| Accumulated deficit | (860,151 | ) | (2,462,614 | ) | 860,151 | (B) | (2,462,614 | ) | ||||||||
| Total stockholders' equity | (32,582 | ) | 9,702,783 | (10,733 | ) | 9,659,468 | ||||||||||
| Total liabilities and stockholders' equity | $ | 65,196,852 | $ | 10,240,463 | ($ | 65,010,733 | ) | $ | 10,426,582 | |||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
| 6 |
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2022
| MANA SPAC | Cardio Diagnostics Inc. | Transaction Adjustments | Proforma Combined | |||||||||||||||||
| (as reported) | (as reported) | (Maximum Redemption) | (Maximum Redemption) | |||||||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Operating expenses | ||||||||||||||||||||
| Operating costs | 625,671 | 625,671 | ||||||||||||||||||
| Franchise | 100,000 | 100,000 | ||||||||||||||||||
| Sales and Marketing | 49,204 | 49,204 | ||||||||||||||||||
| Research and development | 6,171 | 6,171 | ||||||||||||||||||
| General and administrative expenses | — | 956,144 | — | 956,144 | ||||||||||||||||
| Amortization | — | 8,000 | 8,000 | |||||||||||||||||
| Total operating expenses | $ | 725,671 | $ | 1,019,519 | $ | — | $ | 1,745,190 | ||||||||||||
| Income (Loss) from operations | $ | (725,671 | ) | $ | (1,019,519 | ) | $ | — | $ | (1,745,190 | ) | |||||||||
| Other income (expenses) | ||||||||||||||||||||
| Acquisition related expense | (112,534 | ) | ||||||||||||||||||
| Interest income | 107 | — | — | 107 | ||||||||||||||||
| Investment income on investment held in trust Account | 10,250 | — | — | 10,250 | ||||||||||||||||
| Total other income (expenses) | $ | 10,357 | $ | (112,534 | ) | $ | — | $ | 10,357 | |||||||||||
| Net income (loss) from operations before provision for income tax | $ | (715,314 | ) | $ | (1,132,053 | ) | $ | — | $ | — | ||||||||||
| Provision for Income tax | $ | — | $ | — | $ | — | ||||||||||||||
| Net loss from operations | $ | (715,314 | ) | $ | (1,132,053 | ) | $ | — | $ | — | ||||||||||
| Basic and fully diluted loss per common share: | ||||||||||||||||||||
| Basic and diluted weighted average shares outstanding, common stock subject to possible redemption | $ | 6,500,000 | $ | — | $ | — | $ | — | ||||||||||||
| Net loss per common share | (0.09 | ) | (0.80 | ) | (0.26 | ) | ||||||||||||||
| Net income (loss) per common share | (0.09 | ) | $ | (0.80 | ) | (aa) | $ | (0.26 | ) | (aa) | ||||||||||
| Weighted average common shares outstanding | 1,625,000 | 1,408,924 | 6,771,400 | |||||||||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
| 7 |
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
| MANA SPAC | Cardio Diagnostics Inc. | Transaction Adjustments | Proforma Combined | |||||||||||||||||
| (as reported) | (as reported) | (Maximum Redemption) | (Maximum Redemption) | |||||||||||||||||
| Revenue | $ | — | $ | 901 | $ | — | $ | 901 | ||||||||||||
| Operating expenses | — | |||||||||||||||||||
| Formation and operating costs | 20,887 | 20,887 | ||||||||||||||||||
| Franchise | 124,434 | 124,434 | ||||||||||||||||||
| Sales and Marketing | 103,318 | 103,318 | ||||||||||||||||||
| Research and development | 31,468 | 31,468 | ||||||||||||||||||
| General and administrative expenses | — | 470,563 | — | 470,563 | ||||||||||||||||
| Amortization | — | 16,000 | 16,000 | |||||||||||||||||
| Total operating expenses | $ | 145,321 | $ | 621,349 | $ | — | $ | 766,670 | ||||||||||||
| Income (Loss) from operations | $ | (145,321 | ) | $ | (620,448 | ) | $ | — | $ | (765,769 | ) | |||||||||
| Other income (expenses) | — | |||||||||||||||||||
| Interest income | — | — | — | — | ||||||||||||||||
| Investment income on investment held in trust Account | 484 | — | — | 484 | ||||||||||||||||
| Total other income (expenses) | $ | 484 | $ | — | $ | — | $ | 484 | ||||||||||||
| Net income (loss) from operations before provision for income tax | $ | (144,837 | ) | $ | (620,448 | ) | $ | — | $ | (735,285 | ) | |||||||||
| Provision for Income tax | $ | — | $ | — | $ | — | ||||||||||||||
| Net loss from operations | $ | (144,837 | ) | $ | (620,448 | ) | $ | — | $ | (765,285 | ) | |||||||||
| Basic and fully diluted loss per common share: | ||||||||||||||||||||
| Basic and diluted weighted average shares outstanding, | $ | 1,001,427 | $ | — | $ | — | ||||||||||||||
| common stock subject to possible redemption | ||||||||||||||||||||
| Net loss per common share | (0.14 | ) | (0.53 | ) | (0.08 | ) | ||||||||||||||
| Net income (loss) per common share | (0.09 | ) | $ | (0.53 | ) | (aa) | (0.08 | ) | (aa) | |||||||||||
| Weighted average common shares outstanding | 1,560,288 | 1,163,222 | 9,625,001 | |||||||||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information.
| 8 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
| 1. | Basis of Presentation |
The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, MANA, which is the legal acquirer, has been treated as the accounting acquiree for financial reporting purposes and Legacy Cardio, which is the legal acquiree, has been treated as the accounting acquirer.
The unaudited pro forma condensed combined financial statements are prepared in accordance with Article 11 of SEC Regulation S-X, as amended January 1, 2021. The historical financial information of MANA and Legacy Cardio is presented in accordance with U.S. GAAP. Management has made significant estimates and assumptions in its determination of the pro forma adjustments. The unaudited pro forma adjustments represent management’s estimates based on information available as of the dates of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed. The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination.
The pro forma adjustments reflecting the completion of the Business Combination and related transactions are based on currently available information and assumptions and methodologies that management believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available. Therefore, it is possible that the actual adjustments will differ from the pro forma adjustments and that the difference may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and related transactions based on information available at the current time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination and related transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the Combined Company. They should be read in conjunction with the historical financial statements and notes thereto of MANA and Legacy Cardio.
| 2. | Notes to Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of Operations |
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2022
| (A) | Reflects the Closing Redemption, of 6,465,452 shares of Combined Company common stock for $65,310,892 million, allocated to the Combined Company common stock and additional paid-in-capital using par value of $0.00001 per share at the redemption price of approximately $10.10 per share. |
| (B) | Reflects the elimination of MANA’s historical retained losses of $860,150 with a corresponding adjustment to additional paid-in capital for the Combined Company in connection with the reverse recapitalization at the closing. |
| (C) | Reflect the cancellation of Legacy Cardio equity holders 1.9 million shares of Common Stock issued and outstanding immediately prior to the merger. |
| (D) | Represents issuance of 10,847,531 shares of Combined Company Common Stock to existing Cardio equity holders. |
| (E) | Represents the issuance of 928,571 shares of Parent Common Stock to Mana conversion rights holders |
Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Operations
The adjustments included in the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022, and for the year ended December 31, 2021, and are related to the Merger:
(aa) Pro forma basic earnings per share is computed by dividing the net income (loss) available to common shareholders by the weighted-average shares of Common stock outstanding during the period.
| 9 |
Exhibit 99.2
Cardio Diagnostics Holdings, Inc. to List on Nasdaq Following Successful Business Combination
with Mana Capital Acquisition Corp.
Cardio Diagnostics Holdings, Inc. Scheduled to Commence Trading on NASDAQ
Under the Ticker Symbol “CDIO”
CHICAGO, IL (October 26, 2022) – Cardio Diagnostics Holdings, Inc. ("Cardio" or the “Company”), a pioneering precision cardiovascular medicine company at the intersection of epigenetics and artificial intelligence whose products enable improved prevention, early detection and treatment of cardiovascular disease, today announced the completion of its business combination (the “Business Combination”) with Mana Capital Acquisition Corp. (Nasdaq: MAAQU; MAAQ; MAAQW; MAAQR) (“Mana Capital”), a publicly traded special purpose acquisition company.
The transaction was approved at a special meeting of Mana Capital stockholders held on Tuesday, October 25, 2022. Mana Capital’s stockholders also voted to approve all other proposals presented at the special meeting. Mana Capital’s Board of Directors had previously approved the business combination and recommended that its stockholders vote in favor of it and all of the proposals relating to the business combination.
The combined company will operate under the name “Cardio Diagnostics Holdings, Inc.,” and will be led by Chief Executive Officer Meeshanthini (Meesha) Dogan, Ph.D., and the rest of its current management team. Commencing at the open of trading on or about October 26, 2022, on the Nasdaq Capital Market, Cardio’s common stock and public warrants are expected to commence trading under the new trading symbols “CDIO” and “CDIOW,” respectively. The warrant exercise price for each Cardio warrant is $11.50.
Cardio’s mission is to help physicians better detect and treat cardiovascular disease, the leading cause of death in the United States. At the core of its cardiovascular solutions is a proprietary Integrated Genetic-Epigenetic Engine™ created at the University of Iowa by company founders Meesha Dogan, Ph.D., and Robert Philibert, MD, Ph.D. This technology enables the development of a series of tests for precision prevention, early detection, and assists in personalized treatment of major types of cardiovascular diseases and associated co-morbidities.
“Heart disease prevention initiatives can deliver significant value across the healthcare continuum, but the key is that they must be evidence-based,” said Meesha Dogan, Ph.D., the CEO and Co-Founder of Cardio. “What’s clear from our research is that we’re missing a significant opportunity to prevent heart disease at scale. Key healthcare stakeholders can successfully reduce the incidence of heart disease in America and across the globe, by radically reconsidering the current standard of cardiovascular care. We look forward to working with them to drive adoption of an objective approach to cardiovascular care that is more robust and patient-centric.”
Mana Capital Chairman Jonathan Intrater stated, “We are very pleased to have combined with Cardio and created a publicly listed company set to transform cardiovascular disease through epigenetics. Cardio is the first company to develop and commercialize epigenetics-based clinical tests for cardiovascular disease that have clear value for patients, clinicians, hospitals/health systems, and payors.”
To celebrate the successful completion of the business combination, members of Cardio’s leadership team will ring the closing bell at the Nasdaq Stock Market at 4:00 p.m. Eastern Time on November 3, 2022.
Advisors
The Benchmark Company LLC acted as the financial advisor to Mana Capital and Becker & Poliakoff LLP served as legal advisor to Mana Capital.
Shartsis Friese LLP served as legal advisor to Cardio.
About Cardio Diagnostics
Cardio Diagnostics is a biotechnology company that makes cardiovascular disease prevention and early detection more accessible, personalized, and precise. The Company was formed to further develop and commercialize a proprietary Artificial Intelligence (AI)-driven Integrated Genetic-Epigenetic EngineTM (“Core Technology”) for cardiovascular disease to become one of the leading medical technology companies for enabling improved prevention, early detection, and assists in treatment of cardiovascular disease. For more information, please visit www.cardiodiagnosticsinc.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 with respect to the business combination between Mana Capital and Cardio. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predict,” “potential,” “continue,” “strategy,” “future,” “opportunity,” “would,” “seem,” “seek,” “outlook” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties that could cause the actual results to differ materially from the expected results. These statements are based on various assumptions, whether or not identified in this press release. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and they must not be relied on by an 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. These forward-looking statements include, without limitation, the combined company’s expectations with respect to financial results, future performance, development and commercialization of products and services, the potential benefits and impact of combined company’s products and services, potential regulatory approvals, anticipated financial impacts and other effects of the business combination on the combined company’s business, and the size and potential growth of current or future markets for the combined company’s products and services. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside of the combined company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: the success, cost and timing of the combined company’s product development and commercialization activities, including the degree that Epi+Gen CHD™, Cardio’s initial test, is accepted and adopted by patients, healthcare professionals and participants in other key channels; the impact of COVID-19 on the combined company’s business; the inability to maintain the listing of the combined company’s common stock on the Nasdaq following the business combination; the inability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably and retain its key employees; changes in applicable laws or regulations; the inability of the combined company to raise financing in the future; the inability of the combined company to obtain and maintain regulatory clearance or approval for its tests, and any related restrictions and limitations of any cleared or approved product; the inability of the combined company to identify, in-license or acquire additional technology; the inability of the combined company to maintain its existing or future license, manufacturing, supply and distribution agreements; the inability of the combined company to compete with other companies currently marketing or engaged in the development of products and services that could serve the same or similar functions are the combined company’s products and services; the size and growth potential of the markets for the combined company’s products and services, and its ability to serve those markets, either alone or in partnership with others; the pricing of the combined company’s products and services and reimbursement for medical tests conducted using the combined company’s products and services; the combined company’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing; the combined company’s financial performance; and other risks and uncertainties indicated from time to time in the proxy statement/prospectus relating to the business combination, including those under “Risk Factors” therein, and in the combined company’s other filings with the Securities and Exchange Commission. The combined company cautions readers that the foregoing list of factors is not exclusive and cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The combined company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
Contact Information
Investors:
Meesha Dogan, Ph.D.
CEO
855-226-9991
Media & Public Relations:
Khullani Abdullahi
651-208-9323