MKLY 8-K
McKinley Acquisition Corp (MKLY)
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:
N/A
(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:
| ☒ | Written communications pursuant to Rule 425 under the Securities Act |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC | ||||
| The Stock Market LLC |
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.
Item 1.01. Entry into a Material Definitive Agreement.
Business Combination Agreement
On July 30, 2026, McKinley Acquisition Corporation, a Cayman Islands exempted company (“McKinley”), McKinley Acquisition Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of McKinley (“Merger Sub”), and Space-Eyes, Inc., a Delaware corporation (“Space-Eyes,” and together with McKinley and Merger Sub, the “Parties”, and each, a “Party”) entered into a business combination agreement (as it may be amended and/or restated from time to time, the “Business Combination Agreement”). Capitalized terms used in this Current Report on Form 8-K but not otherwise defined herein have the meanings ascribed to them in the Business Combination Agreement.
General; Structure of the Business Combination
The Business Combination Agreement provides that McKinley will, subject to obtaining the required shareholder approvals and at least one day prior to the Closing Date, deregister as a Cayman Islands exempted company and transfer by way of continuation to and domesticate as a corporation incorporated under the laws of the State of Delaware. At the Effective Time, Merger Sub will merge with and into Space-Eyes with Space-Eyes continuing as the surviving corporation and a wholly-owned subsidiary of McKinley. In connection with the Closing, McKinley will change its name to “Space-Eyes, Inc.”
Conversion of Space-Eyes Securities
At the Effective Time: (i) each share of Space-Eyes common stock issued and outstanding prior to the Effective Time will be canceled and converted into the right to receive a number of shares of Domesticated SPAC Common Stock equal to the Exchange Ratio and (ii) all shares of Space-Eyes common stock held in treasury will be canceled.
At the Closing, each Company Bridge Amended and Restated Note held by the holders thereof and outstanding immediately prior to the Closing shall be converted into the right to receive Domesticated SPAC Common Stock at a conversion price per share equal to $5.50 per share, in accordance with the terms of the applicable Company Bridge Amended and Restated Note and the Company Bridge Securities Purchase Agreements.
Consideration to be Received in the Business Combination
Pursuant to the Business Combination Agreement, subject to the satisfaction or waiver of certain closing conditions set forth therein, at the Closing, McKinley will acquire all of the outstanding equity interests of Space-Eyes, and stockholders of Space-Eyes will receive newly-issued shares of Domesticated SPAC Common Stock, calculated by dividing $275,000,000 by $10.00(“Aggregate Transaction Consideration”).
In addition to the Aggregate Transaction Consideration, certain Space-Eyes stockholders may be entitled to receive up to 8,000,000 Earn-Out Shares, as additional consideration upon satisfaction of certain milestones, during the Earn-Out Period.
Representations, Warranties, and Covenants
The Business Combination Agreement contains customary representations and warranties by each of Space-Eyes, McKinley, and Merger Sub, as well as covenants regarding the conduct of their respective businesses prior to the closing of the transaction, efforts to obtain required approvals, and other matters. The representations and warranties in the Business Combination Agreement will not survive the closing of the transaction.
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Closing Conditions
The closing of the Merger is subject to customary closing conditions, including, among others, approval of the transaction by the stockholders of Space-Eyes and the shareholders of McKinley, effectiveness of a registration statement on Form S-4 to be filed by McKinley with the SEC in connection with the transaction, expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, accuracy of representations and warranties, the Domesticated McKinley Common Stock comprising the Aggregate Transaction Consideration to be issued pursuant to the Business Combination Agreement shall have been approved for listing on The Nasdaq Stock Market LLC, subject only to official notice of issuance thereof, the absence of any law or order prohibiting the consummation of the transaction, and other conditions as set forth in the Business Combination Agreement.
Termination Provisions
The Business Combination Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the Closing under certain specified circumstances. Either Space-Eyes or McKinley may terminate the agreement by written notice if the closing has not occurred on or before April 30, 2027 (the “Outside Date”), provided that the right to terminate on this basis is not available to any Party that either directly or indirectly through its affiliates is in breach or violation of any representation, warranty, covenant, agreement or obligation contained in the Business Combination Agreement and such breach or violation is the principal cause of the failure to close on or prior to the Outside Date.
Termination is also permitted by mutual written consent of the Parties, or by either Party if a governmental authority enacts a law or order that has the effect of making consummation of the Merger illegal or otherwise preventing or prohibiting consummation of the Merger.
Additional termination rights include the ability for either Party to terminate if the required stockholder approval from Space-Eyes or shareholder approval of McKinley are not obtained. The Business Combination Agreement may also be terminated by one Party if the other Party has committed a material breach of its representations, warranties, or covenants that would prevent the satisfaction of closing conditions, subject to a cure period of up to thirty (30) days after notice of such breach. Upon termination, the agreement becomes void and the Merger shall be abandoned, except for certain provisions that expressly survive, and subject to liability for any willful and material breach occurring prior to termination. Each Party is responsible for its own fees and expenses incurred in connection with the agreement and the contemplated transactions, except as otherwise provided.
The foregoing description of the Business Combination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Business Combination Agreement, a copy of which is attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
Certain Related Agreements
Stockholder Support Agreement
Contemporaneously with the execution of, and as a condition and an inducement to McKinley and Space-Eyes entering into the Business Combination Agreement, certain Space-Eyes stockholders are entering into and delivering a stockholder support agreement (the “Stockholder Support Agreement”), pursuant to which each such Space-Eyes stockholder has agreed, among other things, upon the terms and subject to the conditions set forth in the Stockholder Support Agreement, to vote all of its shares of Space-Eyes common stock (including by delivery of the Written Consent) in favor of the Business Combination Agreement, the Merger and the Transactions.
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The foregoing description of the Stockholder Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Stockholder Support Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
Sponsor Support Agreement
Contemporaneously with the execution of, and as a condition and an inducement to McKinley and Space-Eyes entering into the Business Combination Agreement, the Sponsor, Space-Eyes and McKinley are entering into a sponsor support agreement, dated as of the date hereof (the “Sponsor Support Agreement”), pursuant to which the Sponsor has agreed, among other things, upon the terms and subject to the conditions set forth in the Sponsor Support Agreement, to (a) vote all of its McKinley Class B Ordinary Shares in favor of the Transactions and the McKinley Proposals, and (b) abstain from exercising any Redemption Rights in connection with the Transactions.
The foregoing description of the Sponsor Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support Agreement, a copy of which is filed as Exhibit 10.2 hereto and incorporated by reference herein.
Registration Rights and Lock-Up Agreement
The Business Combination Agreement contemplates that, in connection with the Closing, McKinley, certain stockholders of Space-Eyes and certain shareholders of McKinley shall enter into an amended and restated registration rights agreement of McKinley (the “Registration Rights and Lock-Up Agreement”), pursuant to which McKinley will grant to the holders party thereto certain registration rights with respect to the Registrable Securities (as defined therein) and the holders will agree not to transfer any Founder Shares (as defined therein) until one year from the consummation of the Business Combination, subject to certain exceptions.
The foregoing description of the form of Registration Rights and Lock-Up Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Registration Rights and Lock-Up Agreement, a copy of which is filed as Exhibit 10.3 hereto and incorporated by reference herein.
The PIPE Investment
In addition, on July 30, 2026, Space-Eyes, McKinley, and funds managed, advised, or sub-advised by JBA Asset Management LLC, entered into a Securities Purchase Agreement (the “SPA”), providing for an aggregate principal amount of up to approximately $83,660,130, with aggregate net proceeds to the Company of up to $75,000,000.
The SPA provides for the issuance and sale of senior secured convertible notes (the “Notes”) in an aggregate principal amount of $5,882,352.94 at an initial closing, subject to certain conditions, that will take place upon the filing of a registration statement on Form S-4 in connection with the Merger. The proceeds of the initial closing will be funded into a control account, to be released in certain circumstances. The SPA also provides for the issuance of additional Notes in an aggregate principal amount of $77,777,777.78, together with warrants to purchase shares of common stock (the “Warrants”) at a subsequent closing, subject to certain conditions, that will occur concurrently with the Closing of the Merger. At the subsequent closing, Space-Eyes is obligated to issue to the buyers a number of shares of common stock equal to 9.9% of McKinley’s outstanding common stock immediately following the Merger. The buyers may apply such shares to satisfy share issuance obligations under the Notes. Any such shares which are not used to satisfy share issuance obligations under the Notes will be returned upon the maturity date of the Notes. The Notes bear interest at 10% per annum and mature in 2031. The exercise price of the Warrants is $12.00 per share, subject to adjustment.
The Notes contain affirmative and negative covenants, including, among others, restrictions on additional indebtedness, liens, investments, distributions, asset transfers and transactions with affiliates, as well as minimum liquidity requirements.
The conversion price of the Notes is equal to (A) one thousand dollars ($1,000) divided by (B) the conversion rate. The conversion rate is equal to $1,000 divided by the lower of (i) twelve dollars ($12.00) and (ii) one hundred twenty percent (120%) of the last reported sale price of the common stock on the closing of the Merger, subject to adjustment.
The securities issued under the SPA will be secured by a first priority security interest in substantially all tangible and intangible assets of Space-Eyes and its subsidiaries, together with control agreements over a controlled cash account. Concurrently with the consummation of the Merger, McKinley and the buyers will execute security agreements granting an equivalent first priority security interest in substantially all of McKinley’s and its subsidiaries’ assets. The initial closing of the SPA is conditioned on the execution of an intercreditor and subordination agreement among the Collateral Agent (as defined in the SPA), the agent for the holders of certain existing secured notes of Space-Eyes, and Space-Eyes, pursuant to which the existing secured indebtedness of Space-Eyes will be subordinated to the Notes.
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In addition, concurrently with the consummation of the Merger, the Notes and the Warrants issued by Space-Eyes will automatically be exchanged for corresponding notes and warrants issued by McKinley, on materially identical terms, and the Space-Eyes securities will be cancelled.
The foregoing description of the PIPE investment does not purport to be complete and is qualified in its entirety by the terms and conditions of the SPA, the form of Note and the form of Warrant, copies of which are filed as Exhibits 10.4, 10.5 and 10.6 hereto and incorporated by reference herein.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet.
The information disclosed in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information disclosed in Item 1.01 of this Current Report on Form 8-K regarding the SPA, the issuance of the Notes, the Warrants and the underlying shares of common stock is incorporated herein by reference. The Notes, the Warrants and the underlying shares of common stock have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. McKinley is relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D, and similar exemptions under applicable state laws.
Item 7.01. Regulation FD Disclosure.
On July 31, 2026, McKinley and Space-Eyes jointly issued a press release announcing the execution of the Business Combination Agreement. The press release is attached hereto as Exhibit 99.1.
The information in this Item 7.01, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of McKinley under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information of the information contained in this Item 7.01, including Exhibit 99.1.
Important Information About the Merger and Where to Find It
The Merger will be submitted to shareholders of McKinley for their consideration. McKinley intends to file a registration statement with the SEC which will include a preliminary proxy statement/prospectus (a “Proxy Statement/Prospectus”). A definitive Proxy Statement/Prospectus will be mailed to McKinley shareholders as of a record date to be established for voting on the Merger. McKinley may also file other relevant documents regarding the Merger with the SEC. McKinley’s shareholders and other interested persons are advised to read, once available, the preliminary Proxy Statement/Prospectus and any amendments thereto and, once available, the definitive Proxy Statement/Prospectus, in connection with McKinley’s solicitation of proxies for its special meeting of shareholders to be held to approve, among other things, the Merger, because these documents will contain important information about McKinley, Space-Eyes and the Merger. Shareholders may also obtain a copy of the preliminary or definitive proxy statement, once available, as well as other documents filed with the SEC regarding the Merger and other documents filed with the SEC by McKinley, without charge, at the SEC’s website located at www.sec.gov or by directing a request to: McKinley’s Chief Executive Officer at 75 Second Ave., Suite 605, Needham, MA 02494.
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Participants in the Solicitation
McKinley and Space-Eyes and certain of their respective directors, executive officers and other members of management and employees may be considered participants in the solicitation of proxies with respect to the Merger under the rules of the SEC. Information about the directors and executive officers of McKinley and Space-Eyes and a description of their interests in McKinley, Space-Eyes and the Merger are set forth in McKinley’s Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026, and/or will be contained in the registration statement and the Proxy Statement/Prospectus when available, which documents can be obtained free of charge from the sources indicated above.
Forward-Looking Statements
This Current Report on Form 8-K contains statements that are not historical facts but are “forward-looking statements” for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to statements regarding the anticipated benefits of the Merger, the anticipated timing of the Merger, the implied enterprise value, future financial condition and performance of Space-Eyes and the combined company after the Closing and expected financial impacts of the Merger, the satisfaction of closing conditions to the Merger, the level of redemptions of McKinley’s public shareholders and the products and markets and expected future performance and market opportunities of Space-Eyes. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward looking. These statements are based on various assumptions, whether or not identified in this Current Report on Form 8-K, and on the current expectations of McKinley’s and Space-Eyes’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of McKinley and Space-Eyes. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect the price of McKinley’s securities, (ii) the risk that the transaction may not be completed by McKinley’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by McKinley, (iii) the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the Business Combination Agreement by the shareholders of McKinley and Space-Eyes, (iv) the occurrence of any event, change or other circumstance that could give rise to the termination of the Business Combination Agreement, (v) the effect of the announcement or pendency of the transaction on Space-Eyes’ business relationships, performance, and business generally, (vi) risks that the proposed transaction disrupts current plans of Space-Eyes and potential difficulties in Space-Eyes employee retention as a result of the proposed transaction, (vii) the outcome of any legal proceedings that may be instituted against Space-Eyes or against McKinley related to the Business Combination Agreement or the proposed transaction, (viii) the ability to maintain the listing of McKinley’s securities on Nasdaq, (ix) the price of McKinley’s securities may be volatile due to a variety of factors, including changes in the competitive and highly regulated industries in which Space-Eyes plans to operate, variations in performance across competitors, changes in laws and regulations affecting Space-Eyes’ business and changes in the combined capital structure, and (x) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities. You should carefully consider the foregoing factors and the other risks and uncertainties as set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in McKinley’s Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026, and/or will be contained in the Registration Statement and the Proxy Statement/Prospectus when available, and in those other documents that McKinley has filed, or will file, with the SEC. The risks and uncertainties above are not exhaustive, and there may be additional risks that neither McKinley nor Space-Eyes presently know or that McKinley and Space-Eyes currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect McKinley’s and Space-Eyes’ expectations, plans or forecasts of future events and views as of the date of this Current Report on Form 8-K. McKinley and Space-Eyes anticipate that subsequent events and developments will cause McKinley’s and Space-Eyes’ assessments to change. However, while McKinley and Space-Eyes may elect to update these forward-looking statements at some point in the future, McKinley and Space-Eyes specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing McKinley’s and Space-Eyes’ assessments as of any date subsequent to the date of this Current Report on Form 8-K. Accordingly, undue reliance should not be placed upon the forward-looking statements.
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No Offer or Solicitation
This Current Report on Form 8-K shall not constitute an offer to sell, or a solicitation of an offer to buy, or a recommendation to purchase, any securities in any jurisdiction, or the solicitation of any vote, consent or approval in any jurisdiction in connection with the Merger, nor shall there be any sale, issuance or transfer of any securities in any jurisdiction where, or to any person to whom, such offer, solicitation or sale may be unlawful under the laws of such jurisdiction. This Current Report on Form 8-K does not constitute either advice or a recommendation regarding any securities. No offering of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act, or an exemption therefrom.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| † | Certain of the schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 5, 2026 | ||
| MCKINLEY ACQUISITION CORPORATION | ||
| By: | /s/ Peter Wright | |
| Name: | Peter Wright | |
| Title: | Chief Executive Officer | |
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Exhibit 2.1
EXECUTION VERSION
BUSINESS COMBINATION AGREEMENT
by and among
McKinley Acquisition Corporation
McKinley Acquisition Merger Sub Inc.
and
Space-Eyes, Inc.
Dated as of July 30, 2026
THIS IS A DRAFT AGREEMENT ONLY AND DELIVERY OR DISCUSSION OF THIS DRAFT AGREEMENT SHOULD NOT BE CONSTRUED AS A COMMITMENT WITH RESPECT TO THE PROPOSED TRANSACTION TO WHICH THIS DRAFT AGREEMENT PERTAINS. NOTWITHSTANDING THE DELIVERY OF THIS DRAFT AGREEMENT OR ANY PAST, PRESENT OR FUTURE APPROVALS BY THE MANAGEMENT, BOARD OF DIRECTORS, OR SECURITY HOLDERS OF ANY PARTY TO THE PROPOSED TRANSACTION (OR ANY RELATED PERSON OR ENTITY) OR ANY OTHER PAST, PRESENT OR FUTURE WRITTEN OR ORAL INDICATIONS OF ASSENT, OR THE RESULTS OF ANY NEGOTIATIONS, NO PARTY TO THE PROPOSED TRANSACTION (AND NO PERSON OR ENTITY RELATED TO ANY SUCH PARTY) WILL BE UNDER ANY LEGAL OBLIGATION WITH RESPECT TO THE PROPOSED TRANSACTION OF ANY NATURE WHATSOEVER UNLESS AND UNTIL THE DEFINITIVE AGREEMENT PROVIDING FOR THE TRANSACTION HAS BEEN EXECUTED AND DELIVERED BY ALL PARTIES THERETO. THIS DRAFT REMAINS SUBJECT TO MCKINLEY ACQUISITION CORPORATION’S ONGOING DUE DILIGENCE IN ALL RESPECTS.
TABLE OF CONTENTS
| Page | |
| ARTICLE I. DEFINITIONS | 3 |
| Section 1.01 Certain Definitions | 15 |
| Section 1.02 Construction | 15 |
| ARTICLE II. DOMESTICATION | 15 |
| Section 2.01 Domestication | 15 |
| Section 2.02 Plan of Domestication | 16 |
| Section 2.03 Unit Separation | 16 |
| ARTICLE III. AGREEMENT AND PLAN OF MERGER | 16 |
| Section 3.01 The Merger | 16 |
| Section 3.02 Effective Time; Closing | 16 |
| Section 3.03 Effect of the Merger | 17 |
| Section 3.04 Certificate of Incorporation; Bylaws | 17 |
| Section 3.05 Directors and Officers | 17 |
| Section 3.06 Exchange of Company July 2026 Senior Secured Convertible Notes | 18 |
| Section 3.07 Exchange of Company July 2026 Warrants; Assumption of Company Bridge Amended and Restated Warrants | 18 |
| Section 3.08 Tax Treatment | 18 |
| ARTICLE IV. CONVERSION OF SECURITIES; Exchange of certificates | 19 |
| Section 4.01 Conversion of Securities | 19 |
| Section 4.02 Exchange of Certificates | 20 |
| Section 4.03 Appraisal Rights | 21 |
| Section 4.04 Withholding Rights | 21 |
| Section 4.05 Earn-Out Shares | 22 |
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TABLE OF CONTENTS
| Page | |
| ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 22 |
| Section 5.01 Organization and Qualification; Subsidiaries | 22 |
| Section 5.02 Certificates of Incorporation and Bylaws | 23 |
| Section 5.03 Capitalization | 23 |
| Section 5.04 Authority Relative to this Agreement | 23 |
| Section 5.05 No Conflict; Required Filings and Consents | 24 |
| Section 5.06 Permits; Compliance | 24 |
| Section 5.07 Financial Statements | 24 |
| Section 5.08 Absence of Certain Changes or Events | 26 |
| Section 5.09 Absence of Litigation | 27 |
| Section 5.10 Employee Benefit Plans | 27 |
| Section 5.11 Labor and Employment Matters | 29 |
| Section 5.12 Real Property; Title to Assets | 31 |
| Section 5.13 Intellectual Property | 31 |
| Section 5.14 Taxes | 35 |
| Section 5.15 Environmental Matters | 37 |
| Section 5.16 Material Contracts | 37 |
| Section 5.17 Government Contracts; Bids | 39 |
| Section 5.18 Insurance | 41 |
| Section 5.19 Board Approval; Vote Required | 41 |
| Section 5.20 Certain Business Practices | 41 |
| Section 5.21 Artificial Intelligence | 42 |
| Section 5.22 Interested Party Transactions | 43 |
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TABLE OF CONTENTS
| Page | |
| Section 5.23 Exchange Act | 44 |
| Section 5.24 Brokers | 44 |
| Section 5.25 Equipment and Other Tangible Property | 44 |
| Section 5.26 Top Customers and Top Vendors | 44 |
| Section 5.27 Absence of Certain Business Practices and Anti-corruption Compliance | 44 |
| Section 5.28 Exclusivity of Representations and Warranties | 45 |
| ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SPAC AND MERGER SUB | 45 |
| Section 6.01 Corporate Organization | 45 |
| Section 6.02 Memorandum, Certificate of Incorporation and Bylaws | 46 |
| Section 6.03 Capitalization | 46 |
| Section 6.04 Authority Relative to this Agreement | 47 |
| Section 6.05 No Conflict; Required Filings and Consents | 48 |
| Section 6.06 Compliance | 48 |
| Section 6.07 SEC Filings; Financial Statements; Sarbanes-Oxley | 48 |
| Section 6.08 Absence of Certain Changes or Events | 50 |
| Section 6.09 Absence of Litigation | 50 |
| Section 6.10 Board Approval; Vote Required | 50 |
| Section 6.11 No Prior Operations of Merger Sub | 50 |
| Section 6.12 Brokers | 51 |
| Section 6.13 SPAC Trust Fund | 51 |
| Section 6.14 Employees | 51 |
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TABLE OF CONTENTS
| Page | |
| Section 6.15 Taxes | 52 |
| Section 6.16 Listing | 53 |
| Section 6.17 Investment Company Act | 53 |
| Section 6.18 Takeover Statutes and Charter Provisions | 53 |
| Section 6.19 Exclusivity of Representations and Warranties | 54 |
| ARTICLE VII. CONDUCT OF BUSINESS PENDING THE MERGER | 54 |
| Section 7.01 Conduct of Business by the Company Pending the Merger | 54 |
| Section 7.02 Conduct of Business by SPAC and Merger Sub Pending the Merger | 57 |
| Section 7.03 Claims Against Trust Account | 58 |
| ARTICLE VIII. ADDITIONAL AGREEMENTS | 59 |
| Section 8.01 Proxy Statement; Registration Statement | 59 |
| Section 8.02 SPAC Shareholders’ Meeting; and Merger Sub Stockholder’s Approval | 61 |
| Section 8.03 Company Stockholders’ Written Consent | 61 |
| Section 8.04 Access to Information; Confidentiality | 61 |
| Section 8.05 Directors’ and Officers’ Indemnification; D&O Tail | 62 |
| Section 8.06 Notification of Certain Matters | 63 |
| Section 8.07 Further Action; Reasonable Best Efforts | 63 |
| Section 8.08 Public Announcements | 64 |
| Section 8.09 Tax Matters | 64 |
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TABLE OF CONTENTS
| Page | |
| Section 8.10 Stock Exchange Listing | 64 |
| Section 8.11 PCAOB Audited Financials; Unaudited 2026 Financials | 64 |
| Section 8.12 Exclusivity | 65 |
| Section 8.13 Trust Account | 66 |
| Section 8.14 Stock Incentive Plan | 66 |
| Section 8.15 Financing | 66 |
| Section 8.16 HSR Act | 66 |
| Section 8.17 Section 16 Matters | 67 |
| Section 8.18 SPAC Public Filings | 67 |
| Section 8.19 Executive Compensation Arrangements | 67 |
| ARTICLE IX. CONDITIONS TO THE MERGER | 67 |
| Section 9.01 Conditions to the Obligations of Each Party | 67 |
| Section 9.02 Conditions to the Obligations of SPAC and Merger Sub | 68 |
| Section 9.03 Conditions to the Obligations of the Company | 69 |
| ARTICLE X. TERMINATION, AMENDMENT AND WAIVER | 70 |
| Section 10.01 Termination | 70 |
| Section 10.02 Effect of Termination | 71 |
| Section 10.03 Expenses | 71 |
| Section 10.04 Amendment | 72 |
| Section 10.05 Waiver | 72 |
| Section 10.06 Trust Account Waiver | 72 |
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TABLE OF CONTENTS
| Page | |
| ARTICLE XI. GENERAL PROVISIONS | 73 |
| Section 11.01 Notices | 73 |
| Section 11.02 Nonsurvival of Representations, Warranties and Covenants | 73 |
| Section 11.03 Severability | 74 |
| Section 11.04 Entire Agreement; Assignment | 74 |
| Section 11.05 Parties in Interest | 74 |
| Section 11.06 Governing Law | 74 |
| Section 11.07 Waiver of Jury Trial | 74 |
| Section 11.08 Headings | 75 |
| Section 11.09 Counterparts | 75 |
| Section 11.10 Specific Performance | 75 |
| Section 11.11 Arm’s Length Bargaining; No Presumption Against Drafter | 75 |
| EXHIBIT A | Stockholder Support Agreement |
| EXHIBIT B | Sponsor Support Agreement |
| EXHIBIT C | Registration Rights and Lock-Up Agreement |
| SCHEDULE A | Company Knowledge Parties |
| SCHEDULE B | Key Company Stockholders |
| SCHEDULE C | SPAC Knowledge Parties |
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BUSINESS COMBINATION AGREEMENT, dated as of July 30, 2026 (this “Agreement”), by and among McKinley Acquisition Corporation, a Cayman Islands exempted company (“SPAC”), McKinley Acquisition Merger Sub Inc., a Delaware corporation (“Merger Sub”), and Space-Eyes, Inc., a Delaware corporation (the “Company,” and together with SPAC and Merger Sub, the “Parties”).
WHEREAS, SPAC is a special purpose acquisition company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses;
WHEREAS, Merger Sub is a wholly owned direct subsidiary of SPAC;
WHEREAS, prior to the Effective Time and subject to the conditions of this Agreement, SPAC shall migrate to, and domesticate as, a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended (the “DGCL”) and the Cayman Islands Companies Act (As Revised) (the “Domestication”);
WHEREAS, concurrently with the Domestication, SPAC shall file a certificate of incorporation with the Secretary of State of Delaware and adopt bylaws in each case as agreed in writing by SPAC and the Company (such certificate of incorporation, the “SPAC Certificate of Incorporation,” and such bylaws, the “SPAC Bylaws”);
WHEREAS, at least one business day following the Domestication, upon the terms and subject to the conditions of this Agreement and the DGCL, SPAC and the Company will enter into a business combination transaction pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of SPAC;
WHEREAS, the Board of Directors of the Company (the “Company Board”) has unanimously (a) determined that the Merger is fair to, and in the best interests of, the Company and its stockholders and has approved and adopted this Agreement and declared its advisability and approved the Merger and the other Transactions, and (b) recommended the approval and adoption of this Agreement and the Merger by the stockholders of the Company;
WHEREAS, the Board of Directors of SPAC (the “SPAC Board”) has unanimously (a) determined that the Merger is fair to, and in the best interests of, SPAC and its shareholders and has approved and adopted this Agreement and declared its advisability and the advisability of the Transactions, and (b) recommended the approval and adoption of this Agreement and the Transactions by the shareholders of SPAC;
WHEREAS, the Board of Directors of Merger Sub (the “Merger Sub Board”) has unanimously (a) determined that the Merger is fair to, and in the best interests of, Merger Sub and its sole stockholder and has approved and adopted this Agreement and declared its advisability and approved the Merger and the other Transactions, and (b) recommended the approval and adoption of this Agreement and the Merger by the sole stockholder of Merger Sub;
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WHEREAS, SPAC, the Company and the Key Company Stockholders, concurrently with the execution and delivery of this Agreement, and as an inducement for the parties to enter into the Transactions, are entering into the Stockholder Support Agreement, dated as of the date hereof (the “Stockholder Support Agreement”) substantially in the form of Exhibit A, pursuant to which the Key Company Stockholders have agreed, among other things, upon the terms and subject to the conditions set forth in the Stockholder Support Agreement, to vote all of their shares of Company Common Stock (including by delivery of the Written Consent) in favor of this Agreement, the Merger and the Transactions;
WHEREAS, the Sponsor and the Company, concurrently with the execution and delivery of this Agreement, and as an inducement for the parties to enter into the Transactions, are entering into a sponsor support agreement, dated as of the date hereof (the “Sponsor Support Agreement”) substantially in the form of Exhibit B, pursuant to which the Sponsor has agreed, among other things, upon the terms and subject to the conditions set forth in the Sponsor Support Agreement, to (a) vote all of its SPAC Class B Ordinary Shares in favor of the Transactions and the SPAC Proposals, and (b) abstain from exercising any Redemption Rights in connection with the Transactions;
WHEREAS, in connection with the Closing, SPAC, certain stockholders of the Company and certain shareholders of SPAC shall enter into an amended and restated registration rights agreement of SPAC (the “Registration Rights and Lock-Up Agreement”), substantially in the form attached hereto as Exhibit C; and
WHEREAS, SPAC and the Company are, concurrently with the execution and delivery of this Agreement, entering into securities purchase agreement (collectively, the “PIPE Securities Purchase Agreement”) with certain investors (collectively, the “PIPE Investors”), pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase warrants and senior secured convertible notes of the Company and the SPAC up to an aggregate principal amount of approximately $75,000,000, (i) $5,000,000 of which is expected to be issued by the Company on or about the date of the initial filing of the Registration Statement (the “Initial Notes”) and (ii) the remainder of which will be available for issuance following the Closing of the Merger, in each case, on the terms and subject to the conditions set forth therein (such equity financing hereinafter referred to as the “Financing”);
WHEREAS, for United States federal and applicable state income Tax purposes, it is intended that (i) the Domestication qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code and the Treasury Regulations promulgated thereunder (the “Domestication Intended Tax Treatment”), and (ii) the Merger qualify as a reorganization within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder (the “Merger Intended Tax Treatment”).
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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Certain Definitions.
“affiliate” of a specified person means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person.
“Aggregate Transaction Consideration” means a number of shares of Domesticated SPAC Common Stock equal to the quotient of (a) the Company Equity Value divided by (b) $10.00.
“AI Inputs” means any and all data, content or materials of any nature (including text, numbers, images, photos, graphics, video, audio or computer code) used to train, validate, test, improve or deploy any AI Technology.
“AI Laws” has the meaning ascribed to such term in Section 5.21(c).
“AI Technology” means any Technology, including all machine learning, deep learning, and other artificial intelligence Technologies that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments, including statistical learning algorithms, models (e.g., large language models), and neural networks, including for the avoidance of doubt all Software and hardware implementations of any of the foregoing.
“Ancillary Agreements” means the Stockholder Support Agreement, the Sponsor Support Agreement, the Registration Rights and Lock-Up Agreement, the Restrictive Covenant Agreements, and all other agreements, certificates and instruments executed and delivered by SPAC, Merger Sub, the Company or the Restricted Persons at the Company in connection with the Transactions and specifically contemplated by this Agreement.
“Business Data” means all information and data, excluding Personal Information that is accessed, collected, used, processed, stored, shared, distributed, transferred, disclosed, destroyed, or disposed of by any of the Business Systems, Products or otherwise in the course of the conduct of the business of the Company or any of its Subsidiaries.
“Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in New York, New York.
“Business Systems” means all Software, algorithms, processes, computer hardware (whether general or special purpose), and all equipment and systems (including networks, interfaces, platforms, servers, peripherals) related to electronic data processing, record keeping, communications, and telecommunications, including any such outsourced Software, algorithms, processes, hardware, equipment and systems, in each case that are owned or used in the conduct of the business of the Company or any Subsidiary. Business Systems include Products that are used in the conduct of the business of the Company or any Subsidiary.
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“Code” means the United States Internal Revenue Code of 1986, as amended.
“Company Acquisition Proposal” means any proposal or offer from any person or group of persons (other than the SPAC, Merger Sub or their respective affiliates) relating to (i) any transaction or series of related transactions under which any persons, directly or indirectly, (A) acquires or otherwise purchases the Company or any of the Subsidiaries or (B) all or a material portion of the assets or businesses of the Company and the Subsidiaries, taken as a whole (in the case of each of clause (A) and (B), whether by merger, consolidation, recapitalization, purchase or issuance of equity securities, tender offer or otherwise), or (ii) any equity or similar investment in the Company or any of the Subsidiaries.
“Company AI” means all AI Technology currently or previously used by the Company or any of its Subsidiaries, including all such AI Technology incorporated or employed in or used in the development of the Products, including any usage of AI Technology to assist in the development of source code for Software within the Products, the development or use of proprietary AI Technology, and the development or use of AI Inputs to train, validate test, improve or deploy any third party AI.
“Company Certificate of Incorporation” means the certificate of incorporation of the Company dated March 22, 2001, as such may have been amended, supplemented or modified from time to time.
“Company Common Stock” means the Company’s common stock, $0.001 par value per share.
“Company Equity Value” means $275,000,000.
“Company IP” means, collectively, all Company-Owned IP and Company-Licensed IP.
“Company Material Adverse Effect” means any event, circumstance, change or effect that, individually or in the aggregate with all other events, circumstances, changes and effects, (a) is or would reasonably be expected to be materially adverse to the business, condition (financial or otherwise), assets, liabilities or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) would prevent, materially delay or materially impede the performance by the Company of its obligations under this Agreement or the consummation of the Merger and the other Transactions; provided, however, that none of the following (or the effect of any of the following) shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be a Company Material Adverse Effect: (i) any change in or change in the interpretation of, any Law or GAAP; (ii) events or conditions generally affecting the industries or geographic areas in which the Company operates; (iii) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (iv) acts of war, sabotage, civil unrest or terrorism, or any escalation or worsening of any such acts of war, sabotage, civil unrest or terrorism, or changes in global, national, regional, state or local political or social conditions; (v) any hurricane, tornado, flood, earthquake, wild fire or other natural disaster, epidemic, disease outbreak, pandemic (including the COVID-19 or SARS-CoV-2 virus or any mutation or variation thereof or related health condition), or acts of God, (vi) any actions taken or not taken by the Company or any Subsidiary as required by this Agreement, or any Ancillary Agreement, (vii) any effect attributable to the announcement or execution, pendency, negotiation or consummation of the Merger or any of the other Transaction (including the impact thereof on relationships with customers, suppliers, employees or Governmental Authorities), (viii) any failure to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions, provided that this clause (viii) shall not prevent a determination that any change, event, or occurrence underlying such failure has resulted in a Company Material Adverse Effect or (ix) any actions taken, or failures to take action, or such other changes or events, in each case, which SPAC has requested or to which it has consented or which actions are contemplated by this Agreement, except in the cases of clauses (i) through (iii), to the extent that the Company or its Subsidiaries are materially and disproportionately affected thereby as compared to other participants in the industries in which the Company or any of its Subsidiaries operates.
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“Company Organizational Documents” means the Company Certificate of Incorporation and the bylaws of the Company, as amended, modified or supplemented from time to time.
“Company-Licensed IP” means all Intellectual Property rights owned or purported to be owned by a third party and licensed to the Company or any Subsidiary or to which the Company or any Subsidiary otherwise has a right to use.
“Company-Owned IP” means all Intellectual Property owned or purported to be owned by the Company or any Subsidiary.
“Company Bridge Amended and Restated Notes” means any and all amended and restated senior subordinated secured convertible notes issued by the Company pursuant to the Company Bridge Securities Purchase Agreements, pursuant to which each such note held by the holders thereof at the Closing of the Merger shall be converted into the right to receive Domesticated SPAC Common Stock at a conversion price per share equal to $5.50 per share.
“Company Bridge Amended and Restated Warrants” means any and all amended and restated warrants issued by the Company pursuant to the Company Bridge Securities Purchase Agreements, pursuant to which each such warrant held by the holders thereof at the Closing of the Merger shall either (i) in the case of a holder that converts its Company Bridge Amended and Restated Note into shares of Domesticated SPAC Common Stock at the Closing of the Merger, be converted into a warrant to purchase shares of Domesticated SPAC Common Stock in an amount equal to 50% of the number of shares of Domesticated SPAC Common Stock received by such holder upon conversion of such holder’s Company Note at the Closing of the Merger at an exercise price equal to $11.00 per share, or (ii) in the case of a holder that does not convert its Company Bridge Amended and Restated Note into shares of Domesticated SPAC Common Stock at the Closing of the Merger, be converted into a warrant to purchase shares of Domesticated SPAC Common Stock in an amount equal to 50% of the number of shares of Domesticated SPAC Common Stock that would have been received by such holder upon conversion of such holder’s Company Note at the Closing of the Merger at a conversion price of $5.50 per share, at an exercise price equal to $11.00 per share.
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“Company Bridge Securities Purchase Agreements” means that certain (i) Securities Purchase Agreement, dated as of August 19, 2025, and accepted by the Company as to certain holders of Company Bridge Notes on August 19, 2025, September 2, 2025, September 15, 2025, September 29, 2025, (ii) Securities Purchase Agreement, dated as of April 20, 2026, and accepted by the Company as to certain holders of Company Bridge Notes on April 20, 2026, and (iii) Omnibus Amendment to Securities Purchase Agreement, Security Agreement, Warrants and Notes dated as of July 30 2026, by and among the Company and holders of Company Bridge Notes equal to fifty percent (50%) of the aggregate subscription amounts for all holders of Company Bridge Notes.
“Company July 2026 Securities Purchase Agreement” means that certain PIPE Securities Purchase Agreement, dated as of July 30, 2026 by and among the Company and the PIPE Investors, relating to the issuance of Company July 2026 Senior Secured Convertible Notes in the aggregate principal amount of up to $75 million.
“Company July 2026 Senior Secured Convertible Notes” means any and all senior secured convertible notes issued by the Company pursuant to the Company July 2026 Securities Purchase Agreement.
“Company July 2026 Warrants” means any and all warrants of the Company outstanding issued pursuant to the Company July 2026 Securities Purchase Agreement.
“Confidential Information” means any information, knowledge or data concerning the businesses and affairs of the Company or its Subsidiaries or any suppliers or customers of the Company or SPAC or its Subsidiaries (as applicable) that is not already generally available to the public, including any non-public Intellectual Property.
“Consent” means any notice, authorization, qualification, registration, filing, notification, waiver, order, consent or approval to be obtained from, filed with or delivered to, a Governmental Authority or other Person.
“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“COTS Technology” means any non-customized Intellectual Property, Software, or other Technology (including Software provided as a software-as-a-service offering) that is available to any purchaser or licensee upon acceptance of a publisher’s, manufacturer’s, distributor’s, service provider’s, distributor’s or reseller’s standard contract, license, terms of use, terms of service, or similar contractual provisions for the applicable Intellectual Property, Software, or other Technology on a non-exclusive basis for a cost of less than $25,000 in the aggregate or less than $25,000 per year for the applicable items of Intellectual Property, Software, or other Technology.
“Disabling Devices” means any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus” or “worm” (as such terms are commonly understood in the software industry) or any other Software designed or intended to have, or that without user intent will cause, any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or providing unauthorized access to, any Product or any computer or other device on which such Software is stored, installed or used; (ii) damaging or destroying any data or file without the user’s consent; or (iii) bypass any technical security measure or masquerade as compliant so as to obtain access to any hardware or Software in contravention of such technical security measures.
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“Environmental Laws” means any United States federal, state or local laws relating to: (a) releases or threatened releases of Hazardous Substances; (b) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances; or (c) pollution or protection of the environment or natural resources.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity that together with the Company would be deemed a “single employer” for purposes of Section 4001(b)(1) of ERISA and/or Sections 414(b), (c) and/or (m) of the Code.
“Exchange Ratio” means an amount equal to the quotient of (a) the number of shares constituting the Aggregate Transaction Consideration minus the number of shares of Domesticated SPAC Common Stock issued pursuant to Section 4.01(a), divided by (b) the number of issued and outstanding shares of Company Common Stock as of immediately prior to the Effective Time (other than any such shares held in treasury).
“GAAP” means United States generally accepted accounting principles.
“Government Bid” means any quotation, bid or proposal that, if accepted or awarded, would lead to a Government Contract.
“Government Contract” means, with respect to any Person, any prime contract, subcontract, facility contract, teaming agreement or arrangement, strategic alliance agreement, joint venture agreement, basic ordering agreement, pricing agreement, letter contract, purchase order, delivery order, task order or other contractual arrangement of any kind, as modified by binding modification or change order, in each case between such Person and (a) any Governmental Authority, (b) any prime contractor of a Governmental Authority or (c) any subcontractor with respect to any contract of a type described in foregoing clause (a) or (b).
“Hazardous Substance(s)” means: (a) those substances defined in or regulated under the following United States federal statutes and their state counterparts, as each may be amended from time to time, and all regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (b) petroleum and petroleum products, including crude oil and any fractions thereof; (c) natural gas, synthetic gas, and any mixtures thereof; (d) polychlorinated biphenyls and asbestos; and (e) any substance, material or waste regulated as hazardous or toxic, or as a pollutant or contaminant, by any Governmental Authority pursuant to any Environmental Law due to its deleterious properties.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
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“Inbound IP Contracts” means assignments, licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue or assert, permissions and other contracts to which the Company or one of its Subsidiaries is a party, beneficiary or otherwise bound, in each case concerning any Intellectual Property owned by a third person pursuant to which the Company or one of its Subsidiaries is granted rights (including rights of refusal and option rights) in Intellectual Property owned by a third person (including all contracts pursuant to which the Company or one of its Subsidiaries is granted rights pertaining to Company-Licensed IP); provided that this definition excludes all contracts that pertain to Open Source Software or COTS Technology.
“Indebtedness” means an amount equal to, without duplication, (a) indebtedness for borrowed money of the Company or its Subsidiaries, including indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, (b) net obligations of the Company or its Subsidiaries in respect of interest rate swaps, hedges or similar arrangements, including any swaps, hedges or similar arrangements related to foreign exchange, (c) any deferred purchase price liabilities of the Company or its Subsidiaries related to past acquisitions, whether or not represented by a note, earnout or contingent purchase payment or otherwise, (d) obligations of the Company or its Subsidiaries under or in connection with off balance sheet financing arrangements, (e) any unfunded or underfunded liabilities pursuant to any defined benefit pension, retirement, or nonqualified deferred compensation plan or arrangement and any earned but unpaid compensation (including salary and bonuses) for any period prior to the Closing Date, and (f) all obligations of the type referred to in the foregoing clauses of this definition of other persons for the payment of which the Company or its Subsidiaries is responsible or liable, as obligor, guarantor, surety or otherwise, including any guarantee of such obligations.
“Intellectual Property” means all intellectual property rights or similar rights arising from or associated with any of the following throughout the world to the extent protectable by applicable Law: (a) patents, patent applications (including provisional patent applications), together with all reissues, continuations, continuations-in-part, divisionals, revisions, extensions, designations, validations, counterparts, revivals, reexaminations (collectively, “Patents”) and patent or invention disclosures and inventions (whether or not patentable); (b) trademarks and service marks, trade dress, logos, trade names, corporate names, brands, slogans, and other source identifiers together with all translations, adaptations, derivations, combinations and other variants of the foregoing, and all applications, registrations, designations, and renewals in connection therewith, together with all of the goodwill associated with the foregoing (collectively, “Trademarks”); (c) copyrights and registrations and applications for registration, renewals and extensions thereof (collectively, “Copyrights”) and other works of authorship (whether or not copyrightable) and moral rights; (d) Trade Secrets and non-public know-how (including ideas, formulas, compositions, inventions (whether or not patentable or reduced to practice)), customer and supplier lists, improvements, protocols, processes, methods and techniques, research and development information, industry analyses, algorithms, architectures, layouts, drawings, specifications, designs, plans, methodologies, proposals, industrial models, technical data, financial and accounting and all other data, databases, database rights, including rights in or to use Personal Information, pricing and cost information, business and marketing plans and proposals, and customer and supplier lists (including lists of prospects) and related information; (e) Software; (f) Technology; (g) Internet domain names and social media handles and accounts; (h) rights of privacy and publicity; and (i) all other intellectual property or proprietary rights of any kind or description.
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“Key Company Stockholders” means the persons and entities listed on Schedule B.
“knowledge” or “to the knowledge” of a person shall mean in the case of the Company, the actual knowledge of the individuals listed on Schedule A after reasonable inquiry, and in the case of SPAC, the actual knowledge of the individuals listed on Schedule C after reasonable inquiry.
“Leased Real Property” means the real property leased by the Company or a Subsidiary as tenant, together with, to the extent leased by the Company or a Subsidiary, all buildings and other structures, facilities or improvements located thereon and all easements, licenses, rights and appurtenances of the Company or a Subsidiary relating to the foregoing.
“Lien” means any lien, security interest, mortgage, pledge, adverse claim, license or other encumbrance, including of the foregoing that secures the payment or performance of an obligation (other than those created under applicable securities laws).
“Merger Sub Organizational Documents” means the certificate of incorporation and bylaws of Merger Sub, as amended, modified or supplemented from time to time.
“Nasdaq” means The Nasdaq Stock Market LLC.
“Open Source Software” means any (a) Software licensed or distributed as free Software, open source Software (e.g., Linux) or under similar licensing or distribution models, (b) Software that may require as a condition of use, modification or distribution that such Software or other Software incorporated into, derived from or distributed with such Software: (i) be disclosed or distributed in source code form, (ii) be licensed for the purpose of making derivative works or (iii) be redistributable at no charge, and/or (c) Software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL), Common Public License, the Artistic License (e.g., PERL), BSD, MIT, the Mozilla Public License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Source License (SISL) and the Apache Software License, or any license approved by or designated as open source by the Open-Source Initiative or that meets the Free Software definition as promulgated by the Free Software Foundation.
“Order” means any outstanding writ, order, judgment, injunction, decision, determination, award, ruling, subpoena, verdict or decree entered, issued or rendered by any Governmental Authority.
“Outbound IP Contracts” means assignments, licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue or assert, permissions and other contracts (including any right to receive or obligation to pay royalties or any other consideration) to which the Company or any of its Subsidiaries is a party, beneficiary or otherwise bound, in each case pursuant to which any third party is granted rights (including rights of refusal and option rights) in any Company-Owned IP or any Company-Licensed IP that is exclusively licensed to the Company or one of its Subsidiaries.
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“PCAOB” means the Public Company Accounting Oversight Board and any division or subdivision thereof.
“Permitted Liens” means: (a) such imperfections of title, easements, encumbrances, Liens or restrictions that do not materially impair the current use of the Company’s or the Subsidiaries’ tangible or real assets that are subject thereto; (b) materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s, landlord’s and other similar Liens on the Company’s or the Subsidiaries’ tangible or real assets arising in the ordinary course of business, or deposits to obtain the release of such Liens; (c) Liens on the Company’s or the Subsidiaries’ tangible or real assets for Taxes not yet due and payable, or being contested in good faith; (d) zoning, entitlement, conservation restriction and other land use and environmental regulations promulgated by Governmental Authorities, (e) non-exclusive licenses to Company-Owned IP and non-exclusive sublicenses to Company-Licensed IP, in each case granted to a third party in the ordinary course of business in connection with Company’s or a Subsidiary’s sale or provision of Products that are either implied by Law or on Company’s or a Subsidiary’s standard form, (f) non-monetary Liens, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that do not materially interfere with the present uses of such real property, and (g) Liens on leases, subleases, easements, licenses, rights of use, rights to access and rights of way arising from the provisions of such agreements or benefiting or created by any superior estate, right or interest, in each case excluding Liens on Intellectual Property.
“person” means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.
“Personal Information” means (a) information related to an identified or identifiable individual (e.g., name, address telephone number, email address, financial account number, government-issued identifier), (b) any other data used or intended to be used or which allows one to identify, contact, or precisely locate an individual, including any internet protocol address or other persistent identifier, and (c) any other, similar information or data, each to the extent defined as “personal data,” “personal information,” “personally identifiable information” or similar terms by applicable Privacy/Data Security Laws.
“Principals” means Jatinder S. Bains and Dylan Monroe.
“Privacy/Data Security Laws” means any and all applicable Laws relating to the privacy, security, or Processing of any Personal Information or Business Data, including, as applicable, the Federal Trade Commission Act, the Communications Act and the rules or regulations promulgated by the Federal Communications Commission thereunder, California Consumer Privacy Act as amended by the California Privacy Rights Act (together, the CCPA), Controlling the Assault of Non-Solicited Pornography And Marketing Act (CAN-SPAM), Telephone Consumer Protection Act (TCPA), the Payment Card Industry Data Security Standard (PCI DSS), the EU General Data Protection Regulation (EU) 2016/679 (and any European Union member states’ laws and regulations implementing it) (GDPR); the EU General Data Protection Regulation as amended by the Data Protection, Privacy and Electronic Communications (Amendments, etc.) (EU Exit) Regulations 2019 and as it forms part of United Kingdom (UK) law by virtue of Section 3 of the European Union (Withdrawal) Act 2018 and any applicable implementing or supplementary legislation of the UK (including the UK Data Protection Act 2018 (DPA), (together with the DPA, the UK GDPR); and the EU e-Privacy Directive 2002/58/EC as amended by Directive 2009/136/EC (and any European Union member states’ laws and regulations implementing it), the Privacy and Electronic Communications Regulations 2003, and any and all applicable Laws relating to breach notification, the use of biometric identifiers (including the Illinois Biometric Information Privacy Act) or the use of Personal Information or Business Data for marketing purposes and the Data Protection Act (2021 Revision) and the Data Protection Regulations 2018 and the guidance and codes of practice issued by the Office of the Ombudsman of the Cayman Islands.
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“Process,” “Processing” or “Processed” means any operation or set of operations which is performed upon any data (including Personal Information and/or Business Data), by any means, such as collection, access, acquisition, recording, organization, storage, adaptation or alteration, retrieval, protection, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure, disposal, deletion, destruction or any other processing of such data, and/or is considered “processing” by any applicable Privacy/Data Security Laws.
“Product” means any product, service, product candidate or service candidate that was or is being researched, tested, developed, manufactured, licensed, sold, distributed or otherwise made available by or on behalf of the Company or a Subsidiary, from which the Company or a Subsidiary has derived previously, is currently deriving or expects to derive, revenue from the sale, lease, licensing or provisioning thereof, including products and services currently under development by the Company or its Subsidiaries. For the avoidance of doubt, Products include SaaS offerings of the Company and its Subsidiaries.
“Redemption Rights” means the redemption rights provided for in the SPAC Memorandum.
“Regulation S-K” means Regulation S-K promulgated under the Securities Act.
“Regulation S-X” means Regulation S-X promulgated under the Exchange Act.
“Requisite Approval” means the adoption of this Agreement by the affirmative vote of the holders of at least (a) a majority of the outstanding shares of Company Common Stock and (b) all of the Key Company Stockholders.
“Restricted Person” means each of Captain Jatinder S. Bains and Dylan M. Monroe.
“Sanctions Laws” means any trade, economic and/or financial sanctions Laws, list-based measures, embargoes or restrictions administered, enacted or enforced from time to time by (i) the United States (including the Department of the Treasury’s Office of Foreign Assets Control, the United States Department of Commerce or the United States Department of State), (ii) the European Union and enforced by its member states, (iii) the United Nations, (iv) His Majesty’s Treasury of the United Kingdom or (v) any other applicable sanctions authority.
“Software” means all computer software (in object code or source code format), data and databases, and related documentation and materials.
“SPAC Class A Ordinary Shares” means the Class A ordinary shares of SPAC, par value $0.0001 per share; provided that from and after the Domestication Effective Time, SPAC Class A Ordinary Shares shall refer to the shares of Class A common stock, par value $0.0001 per share, of the Domesticated SPAC.
“SPAC Class B Ordinary Shares” means the Class B ordinary shares of SPAC, par value $0.0001 per share; provided that from and after the Domestication Effective Time, SPAC Class B Ordinary Shares shall refer to the shares of Class B common stock, par value $0.0001 per share, of the Domesticated SPAC.
“SPAC Extension Proposal” means a proposal (if any) that may be submitted by SPAC pursuant to a definitive proxy statement filed by SPAC with the SEC to extend the time period for SPAC to consummate a business combination.
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“SPAC July 2026 Senior Secured Convertible Notes” means any and all senior secured convertible notes issued by SPAC in exchange for Company July 2026 Senior Secured Convertible Notes pursuant to the Company July 2026 Securities Purchase Agreement.
“SPAC July 2026 Warrants” means any and all warrants issued by SPAC in exchange for the Company July 2026 Warrants pursuant to the Company July 2026 Securities Purchase Agreement.
“SPAC Letter Agreement” means the letter agreement dated August 11, 2025, among SPAC, Sponsor LLC, Clear Street LLC, and each of the officers and directors of SPAC.
“SPAC Material Adverse Effect” means any event, circumstance, change or effect that, individually or in the aggregate with all other events, circumstances, changes and effects, (a) is or would reasonably be expected to be materially adverse to the business, condition (financial or otherwise), assets, liabilities or results of operations of SPAC; or (b) would prevent, materially delay or materially impede the performance by SPAC or Merger Sub of their respective obligations under this Agreement or the consummation of the Merger and the other Transactions; provided, however, that none of the following (or the effect of any of the following) shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be an SPAC Material Adverse Effect: (i) any change in or change in the interpretation of any Law or GAAP; (ii) events or conditions generally affecting the industries or geographic areas in which SPAC operates; (iii) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (iv) acts of war, sabotage, civil unrest or terrorism, or any escalation or worsening of any such acts of war, sabotage, civil unrest or terrorism, or changes in global, national, regional, state or local political or social conditions; (v) any hurricane, tornado, flood, earthquake, wild fire or other natural disaster, epidemic, disease outbreak, pandemic (including COVID-19 or SARS-CoV-2 virus or any mutation or variation thereof or related health condition), or acts of God, (vi) any actions taken or not taken by SPAC as required by this Agreement or any Ancillary Agreement, (vii) any effect attributable to the announcement or execution, pendency, negotiation or consummation of the Merger or any of the other Transactions, or (viii) any actions taken, or failures to take action, or such other changes or events, in each case, which the Company has requested or to which it has consented or which actions are contemplated by this Agreement, except in the cases of clauses (i) through (iii), to the extent that SPAC is materially and disproportionately affected thereby as compared with other participants in the industry in which SPAC operates.
“SPAC Memorandum” means the Amended and Restated Memorandum and Articles of Association of SPAC dated August 11, 2025, as amended through the date hereof.
“SPAC Organizational Documents” means the SPAC Memorandum and Trust Agreement of SPAC, in each case as amended, modified or supplemented from time to time.
“SPAC Right” means the right included within each SPAC Unit pursuant to the terms of the SPAC Rights Agreement that entitles the holder to receive one-tenth of one SPAC Class A Ordinary Share upon completion of an initial business combination; provided that from and after the Domestication Effective Time, SPAC Right shall refer to the corresponding rights in the Domesticated SPAC.
“SPAC Rights Agreement” means that certain rights agreement dated August 11, 2025 by and between SPAC and the Transfer Agent.
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“SPAC Unit” means a unit consisting of one SPAC Class A Ordinary Share and one SPAC Right.
“Specified Business Conduct Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and all applicable Law relating to bribery or corruption; (b) all applicable Sanctions Laws; (c) all applicable Law relating to the import, export, re-export, transfer of information, data, goods, software, and technology, including the Export Administration Regulations administered by the U.S. Department of Commerce and the International Traffic in Arms Regulations administered by the U.S. Department of State; (d) the Money Laundering Control Act, the Currency and Foreign Transactions Reporting Act, The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001; (e) Penal Code (Act No. 45 of 1907); (f) Unfair Competition Prevention Act (Act No. 47 of 1993); (g) Act on Prevention of Transfer of Criminal Proceeds (Act No. 22 of 2007); and (h) Act on Punishment of Organized Crimes and Control of Proceeds of Crime (Act No. 136 of 1999), and other applicable Law relating to money laundering and terrorist financing.
“Sponsor” means McKinley Partners, LLC, a Delaware limited liability company.
“Spyware Devices” means “spyware” or “trackware” (as such terms are commonly understood in the software industry) or any Software designed or intended to have, or capable of performing or that without user intent will cause, any of the following functions: (i) recording a user’s actions without such user’s knowledge (and, where a user’s consent is required pursuant to applicable Law, without such user’s consent), except to the extent required by applicable Law or Governmental Authority; or (ii) gathering or transmitting information regarding a user or a user’s behavior, in each case, without such user’s knowledge (and, where a user’s consent is required pursuant to applicable Law, without such user’s consent), except to the extent required by applicable Law or Governmental Authority.
“Subsidiary” or “Subsidiaries” of the Company, the Surviving Corporation, SPAC or any other person means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries.
“Supplier” means any person that supplies inventory or other materials or personal property, components, or other goods or services that are utilized in or comprise the Products of the Company.
“Tax” or “Taxes” means (a) any federal, state, local or non-United States income, gross receipts, franchise, estimated, alternative minimum, sales, use, transfer, value added, excise, stamp, customs, duties, ad valorem, real property, personal property (tangible and intangible), capital stock, social security, unemployment, payroll, wage, employment, severance, occupation, registration, environmental, communication, mortgage, profits, license, lease, service, goods and services, withholding, premium, turnover, windfall profits or other taxes of any kind whatever, whether computed on a separate or combined, unitary or consolidated basis or in any other manner, together with any interest, deficiencies, penalties, additions to tax, or additional amounts imposed by any Governmental Entity with respect thereto, whether disputed or not, and including any secondary liability for any of the aforementioned, (b) any liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law, and (c) any liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes) with, or any other express or implied agreement to indemnify, any other Person.
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“Tax Return” means any return, declaration, report, form, statement, information statement or other document filed or required to be filed with any Governmental Authority with respect to Taxes, including any claims for refunds of Taxes, any information returns and any schedules, attachments, amendments or supplements of any of the foregoing.
“Technical Documentation” means all technical and descriptive materials (including all copies in whatever form, including digital or electronic copies) relating to the acquisition, design, development, use, maintenance, support and ongoing development of Software and Products, including source code, annotations, know-how, system documentation, statements of principles of operation, schematics, programs, compilers, “workbenches,” tools and higher level (or “proprietary”) languages used for the development, maintenance and implementation of such Software and products, and all pertinent commentary or explanation that may be necessary to render such materials understandable and usable by a trained computer programmer.
“Technology” means all designs, formulas, algorithms, procedures, techniques, methods, processes, concepts, ideas, know-how, programs, Software, models, routines, databases, tools, inventions, creations, improvements and all recordings, graphs, drawings, reports, analyses, other writings and works of authorship, and any other embodiment of the above, in any form, whether or not specifically listed herein.
“Trade Secret” means any and all confidential and/or proprietary technical, business and other information, including know-how, concepts, methods, processes, formulae, inventions, discoveries, improvements, modifications, developments, algorithms, Software, databases, work product, reports, data, manufacturing and production process and techniques, customer account information, customer records and histories, research and development information, Technology, drawings, specifications, designs, plans, proposals, technical data, financial data, marketing data, business data, pricing information, cost information, business plans, marketing plans, market surveys, market research information, production materials, purchasing materials, media materials, customer lists, suppliers lists, in each case to the extent any of the foregoing derives economic value (actual or potential) from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use and is the subject of reasonable efforts to maintain such secrecy, and in each case protectable under the Laws of an applicable jurisdiction.
“Transaction Documents” means this Agreement, including all Schedules and Exhibits hereto, the Ancillary Agreements, and all other agreements, certificates and instruments executed and delivered by SPAC, Merger Sub or the Company in connection with the Transactions and specifically contemplated by this Agreement.
“Transactions” means the transactions contemplated by this Agreement and the Transaction Documents, including the Merger.
“Transfer Agent” means Odyssey Transfer and Trust Company.
“Treasury Regulations” means the United States Treasury regulations issued pursuant to the Code.
“VWAP” means the volume weighted average price of a share of Domesticated SPAC Common Stock, as reported on Nasdaq, or if the Domesticated SPAC Common Stock is not listed on Nasdaq, the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00 p.m., New York time, as reported on the principal securities exchange or securities market.
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Section 1.02 Construction.
(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (iv) the terms “Article,” “Section,” “Schedule” and “Exhibit” refer to the specified Article, Section, Schedule or Exhibit of or to this Agreement, (v) the word “including” means “including without limitation,” (vi) the word “or” shall be disjunctive but not exclusive (and, unless the context otherwise requires, shall be “and/or”), (vii) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not simply mean “if”, (viii) references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto; provided that any such amendment may be executed without the prior consent of the other parties hereto or such consent is obtained, (ix) references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation, (x) the word “will” shall be construed to have the same meaning and effect as the word “shall” and (xi) references to “dollar”, “dollars” or “$” shall be to the lawful currency of the United States.
(b) The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and no rule of strict construction shall be applied against any party.
(c) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.
(d) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
(e) Whenever this Agreement states that documents or other information have been “made available” or “provided” to SPAC (including words of similar import), such words shall mean that such documents or information referenced shall have been posted in the virtual data room managed by or on behalf of the Company or shall have been transmitted to SPAC, Merger Sub or one or more of their respective Representatives in writing or by electronic transmission, in each case, at least two (2) Business Days prior to the date hereof.
(f) When used herein with respect to the Company or a Subsidiary, “ordinary course of business” means an action taken, or omitted to be taken, in the ordinary and usual course of the Company’s and its Subsidiaries’ business, consistent with past practice.
ARTICLE
II.
DOMESTICATION
Section 2.01 Domestication.
(a) Filings; Effectiveness. Subject to receipt of the Required SPAC Shareholder Approval, and at least one (1) Business Day prior to the Effective Time, SPAC shall cause the Domestication to become effective, including by (a) filing with the Delaware Secretary of State a certificate of domestication with respect to the Domestication (the “Certificate of Domestication”), together with the SPAC Certificate of Incorporation, in each case, in accordance with the provisions thereof and Section 388 of the DGCL, (b) completing and making and procuring all those filings required to be made with the Cayman Registrar under the Companies Act (As Revised) (the “Cayman Registrar”) in connection with the Domestication, and (c) obtaining a certificate of de-registration from the Cayman Registrar. The Certificate of Domestication shall provide that at the effective time of the Domestication, by virtue of the Domestication, and without any action on the part of any shareholders of SPAC, (i) each then issued and outstanding Class A Ordinary Share and Class B Ordinary Share (a “SPAC Ordinary Share”) will convert automatically, on a one-for-one basis, into a share of Class A Common Stock par value $0.0001 (the “Domesticated SPAC Common Stock”) and Class B Common Stock par value $0.0001 (the “Domesticated Class B SPAC Common Stock”), respectively; (ii) each then issued and outstanding SPAC Right shall convert automatically into a right to receive shares of Domesticated SPAC Common Stock (a “Domesticated SPAC Right”), and (iii) each then issued and outstanding SPAC Unit shall convert automatically into a unit of SPAC, with each such unit representing one share of Domesticated SPAC Common Stock and one Domesticated SPAC Right (a “Domesticated SPAC Unit”).
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(b) Tax Treatment. For U.S. federal income tax purposes, the Domestication is intended to qualify for the Domestication Intended Tax Treatment. The Parties hereby (i) adopt this Agreement as a “plan of reorganization” within the meaning of Section 1.368-2(g) of the United States Treasury Regulations, (ii) agree to file and retain such information as shall be required under Section 1.368-3 of the United States Treasury Regulations with respect to the Domestication, and (iii) agree to file all Tax and other informational returns on a basis consistent with such characterization, except if otherwise required by a “determination” within the meaning of Section 1313 of the Code. Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the parties acknowledge and agree that no party is making any representation or warranty as to the qualification of the Domestication for the Domestication Intended Tax Treatment or as to the effect, if any, that any transaction consummated on, after or prior to the Domestication has or may have on any such reorganization status. Each of the Parties acknowledges and agrees that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement, and (ii) is responsible for any adverse Tax consequences that may result if the Domestication is determined not to qualify as a reorganization under Section 368 of the Code.
Section 2.02 Plan of Domestication. The Plan of Domestication as prepared by the SPAC and agreed by the Company shall constitute a plan of domestication for purposes of Section 388 of the DGCL and shall include the corporate acts identified therein and any act or transaction contemplated by the Merger Agreement.
Section 2.03 Unit Separation. In connection with the consummation of the Merger, at the Effective Time without any action on the part of any person, each Domesticated SPAC Unit shall separate automatically into one share of Domesticated SPAC Common Stock and one Domesticated SPAC Right.
ARTICLE III.
AGREEMENT AND PLAN OF MERGER
Section 3.01 The Merger. Upon the terms and subject to the conditions set forth in Article IX, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”) and a wholly owned subsidiary of SPAC.
Section 3.02 Effective Time; Closing.
(a) As promptly as practicable, but in no event (i) later than three (3) Business Days, after the satisfaction or, if permissible, waiver of the conditions set forth in Article IX (other than those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction or, if permissible, waiver of such conditions at the Closing) or (ii) earlier than one (1) Business Day after the consummation of the Domestication, the parties hereto shall cause the Merger to be consummated by filing of certificate of merger (the “Certificate of Merger”), in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL and mutually agreed by the parties (the date and time of the filing of such Certificate of Merger (or such later time as may be agreed by each of the parties hereto and specified in such Certificate of Merger) being the “Effective Time”).
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(b) Immediately prior to such filing of the Certificate of Merger in accordance with Section 3.02(a), a closing (the “Closing”) shall take place remotely by electronic exchange of executed documents for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article IX and to otherwise consummate the Transactions. The date on which the Closing shall occur is referred to herein as the “Closing Date.”
Section 3.03 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, (a) all the property, rights, privileges, immunities, powers, franchises, licenses and authority of the Company and Merger Sub shall vest in the Surviving Corporation, and (b) all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.
Section 3.04 Certificate of Incorporation; Bylaws.
(a) Immediately after the Effective Time, the Company Certificate of Incorporation, as in effect immediately prior to the Effective Time shall be amended and restated in the form as mutually agreed by the SPAC and the Company (the “Company A&R Certificate of Incorporation”). Upon the Effective Time of the Merger, the Company A&R Certificate of Incorporation shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended as provided by applicable Law and such certificate of incorporation.
(b) At the Effective Time, the bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended as provided by applicable Law, the Company A&R Certificate of Incorporation and such bylaws, as applicable.
(c) At the Closing, SPAC shall amend and restate, effective as of the Effective Time, the SPAC Bylaws to be as mutually agreed by SPAC and the Company.
(d) At the Closing, immediately prior to the Effective Time, SPAC shall amend and restate the SPAC Certificate of Incorporation to be as mutually agreed by SPAC and the Company (the “SPAC A&R Certificate of Incorporation”).
Section 3.05 Directors and Officers.
(a) The Persons constituting the officers and directors of the Company prior to the Effective Time shall continue to be the officers and directors of the Surviving Corporation until the earlier of their death, resignation or removal or until their respective successors are duly appointed.
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(b) SPAC shall take all requisite lawful action so that the SPAC Board as of immediately following the Effective Time shall consist of two (2) individuals designated by the Sponsor, each of whom shall be independent under the applicable listing and corporate governance rules and regulations of Nasdaq and five (5) individuals designated by the Company, three (3) of whom shall be independent under the applicable listing and corporate governance rules and regulations of Nasdaq, all of which to hold office in accordance with the SPAC A&R Certificate of Incorporation and the bylaws of SPAC until such director’s successor is duly elected or appointed and qualified, or until the earlier of his or her death, resignation or removal. SPAC shall take all requisite lawful action so that the officers of SPAC as of immediately following the Effective Time shall be comprised of the Chief Executive Officer of the Company in office at the Effective Time, the Chief Operating Officer of the Company in office at the Effective Time and such other individuals mutually determined by Sponsor and the Company.
Section 3.06 Exchange of Company July 2026 Senior Secured Convertible Notes. At the Effective Time, SPAC shall issue to each PIPE Investor (i) SPAC July 2026 Senior Secured Convertible Notes in exchange for such PIPE Investor’s Company July 2026 Senior Secured Convertible Notes in an aggregate principal amount equal to the aggregate outstanding principal amount of such Investor’s July 2026 Senior Secured Convertible Notes immediately prior to the Closing Date, which SPAC July 2026 Senior Secured Convertible Notes shall be on terms identical to the Company July 2026 Senior Secured Convertible Notes, provided that such SPAC July 2026 Senior Secured Convertible Notes shall not bear any restrictive legends; provided further that such SPAC July 2026 Senior Secured Convertible Notes have been registered on the Registration Statement.
Section 3.07 Exchange of Company July 2026 Warrants; Assumption of Company Bridge Amended and Restated Warrants.
(a)At the Effective Time, SPAC shall issue to each PIPE Investor SPAC July 2026 Warrants in exchange for the Company July 2026 Warrants pursuant to the Company July 2026 Securities Purchase Agreement that are exercisable for the same number of shares of common stock issuable upon exercise of such warrant as such Investor’s Company July 2026 Warrants were exercisable immediately prior to the Closing Date (subject to adjustment as provided in the Company July 2026 Warrants), which SPAC July 2026 Warrants shall be on terms identical to the Company July 2026 Warrants, provided that such SPAC Warrants shall not bear any restrictive legends; provided that such SPAC July 2026 Warrants shall have been registered on the Registration Statement.
(b) By virtue of the Merger and without any further action on the part of SPAC, Merger Sub, or the Company, or any holder of Company Bridge Amended and Restated Warrants, SPAC shall assume all of the obligations of the Company arising under or relating to the Company Bridge Amended and Restated Warrants issued by the Company and outstanding immediately prior to the Effective Time pursuant to the terms thereof (collectively, the “Company Warrant Documents”). From and after the Effective Time, SPAC shall be substituted for the Company as the obligor under each Company Warrant Document, and the Company shall be released from all obligations thereunder to the extent permitted by the applicable Company Warrant Document.
Section 3.08 Tax Treatment. For U.S. federal income tax purposes, the Merger is intended to qualify for the Merger Intended Tax Treatment. The Parties hereby (i) adopt this Agreement as a “plan of reorganization” within the meaning of Section 1.368-2(g) of the United States Treasury Regulations, (ii) agree to file and retain such information as shall be required under Section 1.368-3 of the United States Treasury Regulations with respect to the Merger, and (iii) agree to file all Tax and other informational returns on a basis consistent with such characterization, except if otherwise required by a “determination” within the meaning of Section 1313 of the Code. Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the parties acknowledge and agree that no party is making any representation or warranty as to the qualification of the Merger for the Merger Intended Tax Treatment or as to the effect, if any, that any transaction consummated on, after or prior to the Domestication has or may have on any such reorganization status. Each of the Parties acknowledges and agrees that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement, and (ii) is responsible for any adverse Tax consequences that may result if the Merger is determined not to qualify as a reorganization under Section 368 of the Code.
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ARTICLE IV.
CONVERSION OF SECURITIES; Exchange of certificates
Section 4.01 Conversion of Securities.
(a) At the Closing, each Company Bridge Amended and Restated Note held by the holders thereof and outstanding immediately prior to the Closing shall be converted into the right to receive Domesticated SPAC Common Stock at a conversion price per share equal to $5.50 per share, in accordance with the terms of the applicable Company Bridge Amended and Restated Note and the Company Bridge Securities Purchase Agreements.
(b) Immediately prior to the Merger, each of the then issued and outstanding shares of Domesticated Class B Common Stock will convert automatically, on a one-for-one basis, into a share of Domesticated SPAC Common Stock. At the Effective Time, by virtue of the Merger and without any action on the part of SPAC, Merger Sub, the Company or the holders of any of the following securities:
(i) each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (excluding Appraisal Shares) shall be canceled and converted into the right to receive, the number of shares of Domesticated SPAC Common Stock equal to the Exchange Ratio;
(ii) all shares of Company Common Stock held in the treasury of the Company shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto; and
(iii) each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one (1) validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation.
(c) Fractional Shares. No fraction of a share of Company Common Stock will be issued by virtue of the Merger, and any time that shares of Company Common Stock are distributed to any person pursuant to this Agreement (after aggregating all fractional shares of Company Common Stock that otherwise would be received by such person in connection with such distribution) shall be rounded to the nearest whole number (with 0.5 shares rounded up).
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(d) Cancellation of Treasury Stock. Immediately prior to the Effective Time, if there are any shares of SPAC that are owned by SPAC as treasury shares, such shares shall be canceled and extinguished without any distribution or payment in respect thereof.
Section 4.02 Exchange of Certificates.
(a) Exchange Agent. On the Closing Date, SPAC shall deposit, or shall cause to be deposited, with a bank or trust company that shall be designated by SPAC and is reasonably satisfactory to the Company (the “Exchange Agent”), it being agreed that the Transfer Agent is satisfactory to all parties, for the benefit of the holders of Company Common Stock, for exchange in accordance with this Article IV, a number of shares of Domesticated SPAC Common Stock sufficient to deliver the Aggregate Transaction Consideration payable pursuant to this Agreement (such shares of Domesticated SPAC Common Stock being hereinafter referred to as the “Exchange Fund”). SPAC shall cause the Exchange Agent pursuant to irrevocable instructions, to pay the Aggregate Transaction Consideration out of the Exchange Fund in accordance with this Agreement.
(b) Exchange Procedures. As promptly as practicable after the Effective Time, SPAC shall cause the Exchange Agent to deliver to each holder of Company Common Stock, the applicable portion of the Aggregate Transaction Consideration via book-entry issuance pursuant to the provisions of Section 4.01, subject to any adjustments pursuant to Section 4.02(d) and any Tax withholdings pursuant to Section 4.04.
(c) No Further Rights in Company Common Stock. The Aggregate Transaction Consideration payable upon conversion of the Company Common Stock in accordance with the terms hereof shall be deemed to have been paid and issued in full satisfaction of all rights pertaining to such Company Common Stock and there shall be no further registration of transfers on the records of the Surviving Corporation of the shares of Company Common Stock that were outstanding prior to the Effective Time.
(d) Adjustments to Aggregate Transaction Consideration. The Aggregate Transaction Consideration shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the SPAC Class A Ordinary Shares prior to the Domestication or the Domesticated SPAC Common Stock after the Domestication occurring on or after the date hereof and prior to the Effective Time to provide the holders of shares of Company Common Stock immediately prior to the Effective Time the same economic effect as contemplated by this Agreement prior to such event, and such items so adjusted shall, from and after the date of such event, be the relevant portion of the Aggregate Transaction Consideration.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the holders of Company Common Stock for one (1) year after the Effective Time shall be delivered to SPAC. Any holders of Company Common Stock who have not theretofore complied with this subsection (e) shall thereafter look only to SPAC for payment of the applicable portion of the Aggregate Transaction Consideration, without interest. Any portion of the Exchange Fund remaining unclaimed by holders of Company Common Stock as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Authority shall, to the fullest extent permitted by applicable Law, become the property of SPAC free and clear of any claims or interest of any person previously entitled thereto.
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(f) No Liability. None of the Exchange Agent, SPAC or the Surviving Corporation shall be liable to any holder of Company Common Stock (or dividends or distributions with respect thereto) for any such Company Common Stock or cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.
Section 4.03 Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the contrary and to the extent available under the DGCL, shares of Company Common Stock that are outstanding immediately prior to the Effective Time and that are held by stockholders of the Company who shall have neither voted in favor of the Merger nor consented thereto in writing and who shall have demanded properly in writing appraisal for such Company Common Stock in accordance with Section 262 of the DGCL and otherwise complied with all of the provisions of the DGCL relevant to the exercise and perfection of appraisal rights (collectively, the “Appraisal Shares”) shall not be converted into, and such stockholders shall have no right to receive, the applicable portion of the Aggregate Transaction Consideration unless and until such stockholder fails to perfect or withdraws or otherwise loses his, her or its right to appraisal and payment under the DGCL. Any stockholder of the Company who fails to perfect or who effectively withdraws or otherwise loses his, her or its rights to appraisal of such shares of Company Common Stock under Section 262 of the DGCL shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the applicable portion of the Aggregate Transaction Consideration, without any interest thereon, upon surrender, in the manner provided in Section 4.02(b), of the Certificate or Certificates that formerly evidenced such shares of Company Common Stock (as the case may be).
(b) Prior to the Closing, the Company shall give SPAC (i) prompt notice of any demands for appraisal received by the Company and any withdrawals of such demands, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company shall not, except with the prior written consent of SPAC (which consent shall not be unreasonably withheld), make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.
Section 4.04 Withholding Rights. Each of the Company and SPAC shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law. The Parties shall use commercially reasonable efforts to reduce or eliminate any such withholding with respect to any payment to another Party, including the payor providing such Party, as applicable, a reasonable opportunity to provide documentation establishing exemptions from or reductions of such withholdings. To the extent that amounts are so withheld by the Company or SPAC, as the case may be, and timely remitted to the appropriate taxing authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Common Stock (or intended recipients of compensatory payments) in respect of which such deduction and withholding was made by the Company or SPAC, as the case may be.
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Section 4.05 Earn-Out Shares.
(a) SPAC shall issue to the Principals in an equal amount of up to an aggregate of eight million (8,000,000) additional shares of Domesticated SPAC Common Stock (the “Earn-Out Shares”) upon the achievement of one or more of the Earn-Out Triggers during the period beginning on the date hereof and ending on the five (5) year anniversary of the Closing Date (the “Earn-Out Period”) as follows: (i) one-third of the Earn-Out Shares shall be issuable if the VWAP equals or exceeds $12.50 per share over any twenty (20) trading days within any thirty (30) consecutive trading-day period during the Earn-Out Period (the “Tranche 1 Trigger”); (ii) one-third of the Earn-Out Shares shall be issuable if such VWAP equals or exceeds $15.00 per share over any twenty (20) trading days within any thirty (30) consecutive trading-day period during the Earn-Out Period (the “Tranche 2 Trigger”); and (iii) one-third of the Earn-Out Shares shall be issuable if such VWAP equals or exceeds $17.50 per share over any twenty (20) trading days within any thirty (30) consecutive trading-day period during the Earn-Out Period (the “Tranche 3 Trigger” and, together with the Tranche 1 Trigger, the Tranche 2 Trigger, the “Earn-Out Triggers”). In the event of any stock split, reverse stock split, stock dividend, recapitalization, reclassification or similar transaction affecting the Domesticated SPAC Common Stock during the Earn-Out Period, the share counts and per-share price thresholds set forth in this Section 4.05 shall be equitably adjusted to preserve the economic intent hereof. In the event of a Change of Control of the Domesticated SPAC prior to the end of the Earn-Out Period, if the per share consideration payable to the Principals, determined by dividing the aggregate transaction consideration by the total number of outstanding shares of common stock on a fully diluted basis (including (i) all shares of common stock then outstanding, (ii) all Earn-Out Shares issuable pursuant to this Agreement, and (iii) any other potentially issuable shares of the Domesticated SPAC), equals or exceeds the per share price applicable to any then unachieved Earn-Out Trigger, such Earn-Out Trigger shall be deemed achieved immediately prior to the consummation of such Change of Control, and the corresponding Earn-Out Shares shall be issued to the Principals. Any Earn-Out Shares that have not been issued upon achievement of the applicable Earn-Out Trigger on or prior to the expiration of the Earn-Out Period shall be forfeited and no longer issuable hereunder. The Earn-Out Shares, if and when issued, shall be fully paid and nonassessable and shall not be subject to any contractual lock-up, transfer restriction or similar restriction (other than restrictions imposed by applicable securities Laws).
(b) For the avoidance of doubt, with respect to the Tranche 1 Trigger, the Tranche 2 Trigger and Tranche 3 Trigger, all lower triggers not previously met are deemed met and the correlated Earn-Out Shares are deemed earned and owed.
ARTICLE
V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company’s disclosure schedule delivered by Company in connection with this Agreement (the “Company Disclosure Schedule”), the Company hereby represents and warrants to SPAC and Merger Sub as follows:
Section 5.01 Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware and has the requisite corporate or other organizational power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of its state or country of formation and has the requisite corporate or other organizational power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. The Company and each Subsidiary is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Each jurisdiction in which the Company or its Subsidiary is so qualified or licensed is listed in Section 5.01(a) of the Company Disclosure Schedule.
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(b) Section 5.01(b) of the Company Disclosure Schedule sets forth a list of each of the Subsidiaries together with details of their respective jurisdictions of incorporation. Except as disclosed on Section 5.01(b) of the Company Disclosure Schedule, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any other corporation, partnership, joint venture or business association or other entity. The Company will not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any other corporation, partnership, joint venture or business association or other entity other than the Subsidiaries.
Section 5.02 Certificates of Incorporation and Bylaws. The Company has prior to the date of this Agreement made available to SPAC complete and correct copies of the Company Organizational Documents as amended to date and each of the organizational documents of its Subsidiaries. The Company Organizational Documents and the organizational documents of its Subsidiaries are in full force and effect. Neither the Company nor any of the Subsidiaries is in material violation of any of the provisions of their respective Company Organizational Documents.
Section 5.03 Capitalization.
(a) The authorized capital stock of the Company consists of 15,000,000 shares of Company Common Stock. As of the date hereof, 5,000,000 shares of Company Common Stock are issued and outstanding. Company Disclosure Schedule 5.03(a) sets forth the authorized and issued equity of each Subsidiary and the equity owned by the Company.
(b) Except as set forth in Section 5.03(b) of the Company Disclosure Schedule, (i) there are no options, warrants, preemptive rights, calls, convertible securities, conversion rights or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Subsidiary or obligating the Company or any Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Subsidiary, (ii) neither the Company nor any Subsidiary is a party to, or otherwise bound by, and neither the Company nor any Subsidiary has granted, any equity appreciation rights, participations, phantom equity or similar rights and (iii) there are no voting trusts, voting agreements, proxies, shareholder agreements or other agreements with respect to the voting or transfer of the Company Common Stock or any of the equity interests or other securities of the Company or any Subsidiary.
(c) There are no outstanding contractual obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares of the Company or any Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any person.
(d) The stockholders of the Company collectively own directly and beneficially and of record, all of the equity of the Company (which are represented by the issued and outstanding shares of the Company). Except for the shares of the Company Common Stock or as set forth in Section 5.03(d) of the Company Disclosure Schedule, no shares or other equity or voting interest of the Company or any Subsidiary, or options, warrants or other rights to acquire any such shares or other equity or voting interest, of the Company or any Subsidiary is authorized or issued and outstanding.
(e) All outstanding shares of Company Common Stock and the equity of each Subsidiary have been issued and granted in compliance with (A) applicable securities laws and other applicable laws and (B) any pre-emptive rights and other similar requirements set forth in applicable contracts to which the Company or any Subsidiary is a party.
Section 5.04 Authority Relative to this Agreement. The Company has all necessary corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or will be a party, to perform its obligations hereunder and, subject to receiving the Requisite Approval, to consummate the Transactions. The execution and delivery of this Agreement and the other Transaction Documents to which it is or will be a party by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the other Transaction Documents to which it is or will be a party, or to consummate the Transactions (other than, (a) with respect to the Merger, the Requisite Approval, and (b) the filing and recordation of appropriate merger documents as required by the DGCL). Each of this Agreement and the other Transaction Documents to which the Company is or will be a party has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by SPAC and Merger Sub, constitutes, or will constitute, as applicable, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, by general equitable principles (the “Remedies Exceptions”). No state takeover statute is applicable to the Merger or the other Transactions.
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Section 5.05 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company does not, and subject to receipt of the filing and recordation of appropriate merger documents as required by the DGCL and of the consents, approvals, authorizations or permits, filings and notifications contemplated by Section 5.05(b), the performance of this Agreement by the Company will not (i) conflict with or violate the Company Organizational Documents, (ii) conflict with or violate any United States or non-United States statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order (“Law”) applicable to the Company or by which any property or asset of the Company is bound or affected, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, result in any material payment or penalty under, or give to others any right of Consent, revocation, modification, termination, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than any Permitted Lien) on any material permit, property or asset of the Company pursuant to, any Material Contract, except with respect to clauses (ii) and (iii), as would not reasonably be expected to have a Company Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by the Company does not, and the performance of this Agreement or any Transaction Document by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any United States federal, state, county or local or non-United States government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body (a “Governmental Authority”), except (i) for applicable requirements, if any, of the Exchange Act, state securities or “blue sky” laws (“Blue Sky Laws”) and state takeover laws, and filing and recordation of appropriate merger documents as required by the DGCL, or (ii) where the failure to obtain such Consents, approvals, authorizations or permits, or to make such filings or notifications, would not have or would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 5.06 Permits; Compliance. The Company and each of the Subsidiaries is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for it to own, lease and operate its respective properties or to carry on its respective business as it is now being conducted (the “Company Permits”). No suspension, revocation or cancellation of any of the Company Permits is pending or threatened in writing. The Company is not in default, breach or violation of, (a) any Law applicable to the Company or by which any property or asset of the Company is bound or affected, or (b) any Material Contract or Company Permit, except, in each case, for any such conflicts, defaults, breaches or violations that would not have a Company Material Adverse Effect.
Section 5.07 Financial Statements.
(a) The Company has made available to SPAC true and complete copies of an unaudited balance sheet of the Company and the Subsidiaries for the years ended December 31, 2025 and 2024, and the related unaudited statements of operations and cash flows of the Company for each of the years then ended, (collectively, the “Financial Statements”). Each of the Financial Statements were prepared in accordance with GAAP applied on a consistent basis throughout the period indicated and fairly presents, in all material respects, the financial position, results of operations and cash flows of the Company as at the date thereof and for the period indicated therein, except as otherwise noted therein and the absence of notes and comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the date hereof (including Regulation S-X or Regulation S-K, as applicable).
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(b) The Company has made available to SPAC a true and complete copy of the unaudited balance sheet of the Company and its Subsidiaries (the “Most Recent Balance Sheet”) as of December 31, 2025 (the “Most Recent Balance Sheet Date”), and the related unaudited statements of operations and cash flows of the Company and its Subsidiaries for the 12-month period then ended. Such unaudited financial statements were prepared in accordance with GAAP applied on a consistent basis throughout the period indicated and fairly present, in all material respects, the financial position, results of operations and cash flows of the Company and its Subsidiaries as at the date thereof and for the period indicated therein, except as otherwise noted therein and subject to normal and recurring year-end adjustments and the absence of notes.
(c) Except as and to the extent set forth on the Financial Statements or the Most Recent Balance Sheet, the Company and its Subsidiaries do not have any Indebtedness, liability or obligation of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with GAAP, except for: (i) liabilities that were incurred in the ordinary course of business since the date of such Most Recent Balance Sheet, (ii) obligations for future performance under any contract to which the Company or any Subsidiary is a party or (iii) liabilities and obligations which are not, individually or in the aggregate expected to be material to the Company or any Subsidiary.
(d) The Company and each Subsidiary has established and maintained a system of internal accounting controls. Such internal controls are designed to provide, in all material respects, reasonable assurance that (i) all transactions are executed in accordance with management’s authorization, and (ii) all transactions are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with GAAP and to maintain accountability for the Company’s and its Subsidiaries’ assets. Neither the Company, any Subsidiary nor any director, officer, employee, auditor, accountant or Representative of the Company or any Subsidiary, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or, to the knowledge of the Company, oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any Subsidiary or its respective internal accounting controls, including any such complaint, allegation, assertion or claim that the Company or any Subsidiary has engaged in questionable accounting or auditing practices and there have been no internal investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, general counsel, the Company Board or any board or similar governing body of any Subsidiary or any committee thereof.
(e) To the Knowledge of the Company, no employee of the Company or any of the Subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable Law. To the Company’s Knowledge, no officer, employee or agent of the Company or any Subsidiary has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of the Company or any Subsidiary in the terms and conditions of employment because of any act of such employee described in 18 U.S.C. sec. 1514A(a).
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(f) All accounts receivable of the Company and the Subsidiaries reflected on the Most Recent Balance Sheet or arising thereafter have arisen from bona fide transactions in the ordinary course of business consistent with past practices and in accordance with GAAP. Such accounts receivable are not subject to valid defenses, setoffs or counterclaims, other than routine credits granted for errors in ordering, shipping, pricing, discounts, rebates, returns in the ordinary course of business and other similar matters. The Company’s reserve for contractual allowances and doubtful accounts is adequate in all material respects and has been calculated in a manner consistent with past practices. Since the Most Recent Balance Sheet Date, the Company has not modified or changed in any material respect its sales practices or methods including such practices or methods in accordance with which the Company or any Subsidiary sells goods, fills orders or records sales.
(g) All accounts payable of the Company or any Subsidiary reflected on the Most Recent Balance Sheet or arising thereafter are the result of bona fide transactions in the ordinary course of business and have been paid or are not yet due or payable. Since the Most Recent Balance Sheet Date, neither the Company nor any Subsidiary has altered in any material respects its practices for the payment of such accounts payable, including the timing of such payment.
(h) The PCAOB 2025 Audited Financials, when delivered by the Company, shall (i) be true and complete, (ii) be prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (iii) fairly present, in all material respects, the financial position, results of operations and cash flows of the Company and its Subsidiaries as at the date thereof and for the period indicated therein, except as otherwise noted therein.
(i) There are no outstanding loans or other extensions of credit made by the Company or any Subsidiary to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company or any Subsidiary. Neither the Company nor any Subsidiary has taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
Section 5.08 Absence of Certain Changes or Events. Since the Most Recent Balance Sheet Date, except as set forth in Section 5.08 of the Company Disclosure Schedule or as expressly contemplated by this Agreement, (a) the Company and each of the Subsidiaries has conducted its respective businesses in all material respects in the ordinary course and in a manner consistent with past practice, (b) neither the Company nor any of the Subsidiaries has sold, assigned or otherwise transferred any right, title, or interest in or to any of its material assets (including Intellectual Property and Business Systems) other than non-exclusive licenses or assignments or transfers in the ordinary course of business, (c) there has not been any Company Material Adverse Effect, and (d) neither the Company nor any Subsidiary has taken any action that, if taken after the date of this Agreement, would constitute a material breach of any of the covenants set forth in Section 7.01.
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Section 5.09 Absence of Litigation. There is no material litigation, suit, claim, action, proceeding or investigation by or before any Governmental Authority (an “Action”) pending or, to the Knowledge of the Company, threatened against the Company or any of the Company’s Subsidiaries, or any property or asset of the Company or any of the Company’s Subsidiaries, before any Governmental Authority. Neither the Company, any of the Company’s Subsidiaries nor any material property or asset of the Company or any of the Company’s Subsidiaries is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or to the Knowledge of the Company, continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority.
Section 5.10 Employee Benefit Plans.
(a) Section 5.10(a) of the Company Disclosure Schedule lists all written or oral material “employee benefit plans” (as defined in Section 3(3) of ERISA) and all bonus, equity compensation, incentive, deferred compensation, phantom equity, retiree medical or life insurance, supplemental retirement, severance, change in control, retention, fringe benefit, sick, paid time off, and vacation and other employee benefit plans, policies, programs or arrangements, whether or not subject to ERISA, whether formal or informal, oral or written, in each case, which are maintained, contributed to or sponsored by the Company or any of the Subsidiaries for the benefit of any current or former employee, officer, director and/or consultant, or under which the Company or any of the Subsidiaries has or could reasonably be expected to incur any liability (contingent or otherwise) (collectively, the “Plans”). In addition, all employment and consulting contracts or agreements to which the Company or any of the Subsidiaries is a party, with respect to which the Company or any of the Subsidiaries has any severance obligation have been made available to SPAC (each, a “Service Agreement”) and set forth on Section 5.10(a) of the Company Disclosure Schedule.
(b) With respect to each Plan, the Company has made available to SPAC, if applicable, (i) a true and complete copy of the current plan document and all material amendments thereto and each trust or other funding arrangement, (ii) copies of the most recent summary plan description and any summaries of material modifications, (iii) copies of the Form 5500 annual report and accompanying schedules and nondiscrimination testing results, in each case, for the two (2) most recent plan years, (iv) copies of the most recently received Internal Revenue Service (“IRS”) determination, opinion or advisory letter for each such Plan, and (v) any material non-routine correspondence from any Governmental Authority with respect to any Plan within the past three (3) years with respect to which any material liability remains outstanding.
(c) Neither the Company nor any ERISA Affiliate currently sponsors, maintains or contributes to, nor has, within the past six (6) years, sponsored, maintained or been required to contribute to, nor has any liability or obligation (contingent or otherwise) under (i) a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA), (ii) a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) subject to Section 412 of the Code and/or Title IV of ERISA, (iii) a multiple employer plan subject to Section 413(c) of the Code, or (iv) a multiple employer welfare arrangement under ERISA.
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(d) Except as set forth in Section 5.10(d) of the Company Disclosure Schedule, the Company is not and will not be obligated, whether under any Plan, Service Agreement or otherwise, to pay separation, severance or termination pay or any transaction or change in control bonus to any current or former employee, director and/or independent contractor directly as a result of any Transaction contemplated by this Agreement (either alone or in combination with another event), nor will any such Transaction accelerate the time of payment or vesting, or increase the amount, of any material benefit or other compensation due to any individual. The Transactions shall not be the direct or indirect cause of any amount paid or payable by the Company or any of Subsidiary of the Company being classified as an “excess parachute payment” under Section 280G of the Code.
(e) None of the Plans nor Service Agreements provides, nor does the Company or any Subsidiary have or reasonably expect to have any obligation to provide retiree medical benefits to any current or former employee, officer, director or consultant of the Company or any Subsidiary after termination of employment or service except as may be required under Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA and the regulations thereunder, or other applicable Law.
(f) Each Plan has been established, administered and funded in accordance with its terms, and each Plan and Service Agreement is in compliance, in all material respects, in accordance with its terms and the requirements of all applicable Laws including, without limitation, ERISA, the Code and the Patient Protection and Affordable Care Act of 2010. No Action is pending or, to the knowledge of the Company, threatened with respect to any Plan (other than claims for benefits in the ordinary course) or Service Agreement and, to the knowledge of the Company, no fact or event exists that could reasonably be expected to give rise to any such Action.
(g) Each Plan that is intended to be qualified under Section 401(a) of the Code or Section 401(k) of the Code has (i) timely received a favorable determination letter from the IRS covering all of the provisions applicable to the Plan for which determination letters are currently available that the Plan is so qualified and each trust established in connection with such Plan is exempt from federal income taxation under Section 501(a) of the Code or (ii) is entitled to rely on a favorable opinion letter from the IRS, and, to the knowledge of the Company, no fact or event has occurred since the date of such determination or opinion letter or letters from the IRS that could reasonably be expected to result in the loss of the qualified status of any such Plan or the exempt status of any such trust.
(h) There has not been any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) nor any reportable events (within the meaning of Section 4043 of ERISA) with respect to any Plan that could reasonably be expected to result in material liability to the Company.
(i) All contributions, premiums or payments required to be made with respect to any Plan have been timely made to the extent due or properly accrued on the consolidated financial statements of the Company.
(j) Each Plan and each Service Agreement that constitutes a nonqualified deferred compensation plan subject to Section 409A of the Code has been administered and operated, in all material respects, in compliance with the provisions of Section 409A of the Code and the Treasury Regulations thereunder.
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Section 5.11 Labor and Employment Matters.
(a) Except as set forth in Section 5.11(a) of the Company Disclosure Schedule, the Company and each of the Subsidiaries is and during the past four (4) years has been in compliance, with all applicable Laws governing the employment of labor, including all such laws relating to discrimination or harassment in employment; terms and conditions of employment; termination of employment; wages; overtime classification; hours; meal and rest breaks; occupational safety and health; plant closings; employee whistle-blowing; immigration and employment eligibility verification; employee privacy; defamation; background checks and other consumer reports regarding employees and applicants; employment practices; negligent hiring or retention; affirmative action and other employment-related obligations on federal contractors and subcontractors, as applicable; classification of employees, consultants and independent contractors; labor relations; collective bargaining; unemployment insurance; the collection and payment of withholding and/or social security taxes and any similar tax; employee benefits; and workers’ compensation (collectively, “Employment Matters”).
(b) The Company and each of the Subsidiaries (i) have properly classified and treated all of its employees as “employees” and independent contractors as “independent contractors”; (ii) have properly classified and treated all of its employees as “exempt” or “nonexempt” from overtime requirements under applicable Law; (iii) has maintained legally adequate records regarding the service of all of their employees, including, where required by applicable law, records of hours worked; (iv) is not delinquent in any material payments to, or on behalf of, any current employees or independent contractors for any services or amounts required to be reimbursed or otherwise paid; (v) has withheld, remitted, and reported all amounts required by law or by agreement to be withheld, remitted, and reported with respect to wages, salaries and other payments to any current independent contractors or employees; and (vi) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations, as applicable, for any current or former independent contractors or employees (other than routine payments to be made in the ordinary course of business and consistent with past practice).
(c) Except as set forth in Section 5.11(c) of the Company Disclosure Schedule, there are no, and in the past three (3) years there have been no pending or, to the knowledge of the Company, threatened lawsuits, arbitrations, administrative charges, controversies, grievances or claims brought by or on behalf of any current or former employees, contractors or other service providers against the Company or any of the Subsidiaries before the National Labor Relations Board, the Equal Employment Opportunity Commission or any other Governmental Authority or arbitration board or panel relating to any Employment Matters.
(d) Except as set forth in Section 5.11(d) of the Company Disclosure Schedule, there are no, and in the past three (3) years there have been no, pending, or to the knowledge of the Company, threatened investigations or audits by any Governmental Authority relating to any Employment Matters of the Company. The Company is not a party to, and it not otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to any Employment Matters.
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(e) Except as set forth in Section 5.11(e) of the Company Disclosure Schedule, neither the Company nor any of the Subsidiaries is, and has not been for the past three (3) years, a party to, or bound by, any labor agreement, collective bargaining agreement, work rules or practices, or any other labor-related agreement or arrangement with any labor union, trade union or labor organization. To the knowledge of the Company, there are not any activities of any labor union to organize any such employees. No labor union, trade union, labor organization or group of employees of the Company or any Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. In the past six (6) years, there has not been, nor, to the knowledge of the Company, has there been any threat of any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute against the Company or any of the Subsidiaries.
(f) Neither the Company nor any of the Subsidiaries has (i) any outstanding liability under the Worker Adjustment and Retraining Notification Act of 1988 (or any similar state or local statute, rule or regulation), (ii) experienced or implemented a “mass layoff” or “plant closing” (within the meaning of the Worker Adjustment and Retraining Notification Act of 1988 or any similar state or local statute, rule or regulation) in violation of the Workers Adjustment and Retraining Notification Act of 1988 or any similar state or local statute, rule or regulation and (iii) incurred any liability under such statutes during the past three (3) years.
(g) Each employee of the Company or any of the Subsidiaries that works in the United States is authorized to work in the United States. For each employee of the Company or any of the Subsidiaries that works in the United States, the Company or the respective Subsidiary has completed a Form I-9 (Employment Eligibility Verification) for each employee hired after November 6, 1986 and each such Form I-9, to the knowledge of the Company, is correct and complete.
(h) Section 5.11(h) of the Company Disclosure Schedule sets forth a true, correct and complete listing, as of the date specified therein, of the name of each individual employed by the Company or any of the Subsidiaries, together with such employee’s position or function; annual base salary or wage; status as “exempt” or “nonexempt” for employment classification purposes; accrued leave as of the date specified therein; any incentive or bonus arrangements with respect to such employee; and any severance potentially payable to such employee upon termination of employment. Section 5.11(h) of the Company Disclosure Schedule also sets forth a true, correct and complete listing, as of the date specified therein, of the name of each individual engaged by the Company or any of the Subsidiaries as an independent contractor, together with such individual’s compensation arrangement with the Company or the Subsidiary and whether such individual has entered into a written agreement regarding his or her contractor engagement. Except as set forth in Section 5.11(h) of the Company Disclosure Schedule, the employment of each employee of the Company or the Subsidiary and the engagement of each independent contractor of the Company or the Subsidiary is terminable at will by the Company without any penalty, liability or severance obligation incurred by the Company. No employee of the Company or any Subsidiary has informed the Company (whether orally or in writing) of any plan to terminate employment with or services for the Company or any Subsidiary, and, to the knowledge of the Company, no such person has any plans to terminate their employment or services.
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Section 5.12 Real Property; Title to Assets.
(a) The Company and the Subsidiaries have not owned and do not presently own any real property.
(b) Section 5.12(b) of the Company Disclosure Schedule lists the street address of each parcel of Leased Real Property, and sets forth a list of each lease, sublease, and license pursuant to which the Company or the Subsidiaries leases, subleases or licenses and real property (each, a “Lease”), with the name of the lessor and the date of the Lease in connection therewith and each material amendment to any of the foregoing (collectively, the “Lease Documents”). True, correct and complete copies of all Lease Documents have been made available to SPAC. There are no leases, subleases, concessions or other contracts granting to any person other than the Company or the Subsidiaries has the right to use or occupy any real property, and all such Leases are in full force and effect, are valid and enforceable in accordance with their respective terms, and there is not, under any of such Leases, any existing material default or event of default (or event which, with notice or lapse of time, or both, would constitute a default) by the Company or, to the Company’s knowledge, by the other party to such Leases. The Company and the Subsidiaries have not subleased, sublicensed or otherwise granted to any person any right to use, occupy or possess any portion of the Leased Real Property.
(c) There are no contractual or legal restrictions that preclude or restrict the ability of the Company or the Subsidiaries to use any Leased Real Property by such party for the purposes for which it is currently being used. There are no material latent defects or adverse physical conditions affecting the Leased Real Property or the improvements thereon.
(d) The Company or the Subsidiaries has legal and valid title to, or, in the case of Leased Real Property and assets, valid leasehold or subleasehold interests in, all of its properties and assets, tangible and intangible, real, personal and mixed, used or held for use in its business, free and clear of all Liens other than Permitted Liens.
Section 5.13 Intellectual Property.
(a) Section 5.13(a) of the Company Disclosure Schedule contains a true, correct and complete list of all of the following: (i) any Company-Owned IP that constitutes registered Patents, Trademarks, or Copyrights and applications for any of the foregoing that have been filed with an applicable Governmental Authority (indicating in each case, as applicable, the filing date, application number, date of issuance, registration or issue number, country and the owner); (ii) any Company-Owned IP that constitutes a material unregistered Trademark, indicating in each case, as applicable, the country or countries of use and the owner; (iii) any Company-Owned IP that constitutes a material Trade Secret, provided, that such identification shall only be a general description of such Trade Secret; and (iv) any social media handles owned or controlled by the Company or its Subsidiaries and their corresponding social media platforms; (vi) all domain names within the Company-Owned IP together with the applicable registrar and the owner of such domain name.
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(b) Without limiting the scope of the representation in the second sentence of Section 5.13(f), the Company solely and exclusively owns and possesses, free and clear of all Liens (other than Permitted Liens), all right, title and interest in and to the Company-Owned IP and has the right to use, pursuant to a valid and enforceable license, all material Company-Licensed IP in the manner currently used by the Company or any of the Subsidiaries. All Company-Owned IP is valid, subsisting and enforceable, and, to the knowledge of the Company, there are no facts or circumstances that would adversely affect such validity and enforceability. No issuance or registration obtained and no application filed by the Company or any of its Subsidiaries for any Intellectual Property has been cancelled, abandoned, allowed to lapse or not renewed, except where the Company has, in its reasonable business judgment, decided to cancel, abandon, allow to lapse or not renew such issuance, registration or application. No loss or expiration of any Company-Owned IP is threatened or pending. The Company IP constitutes all Intellectual Property used in or necessary for the operation of the business of the Company and its Subsidiaries and is sufficient for the conduct of such business as currently conducted.
(c) The Company has taken and takes commercially reasonable actions to maintain, preserve, and protect its and its Subsidiaries’ Trade Secrets and other Confidential Information. Without limiting the scope of any other representation in this Section 5.13, to the Company’s knowledge, none of the Company’s or its Subsidiaries’ Trade Secrets or Confidential Information material to the Company’s or any of its Subsidiary’s business included in the non-public Company-Owned IP has been disclosed or made available to any other person other than pursuant to a written confidentiality agreement under which such other person agrees to maintain the confidentiality and protect such Trade Secret or other such Confidential Information. To the Company’s knowledge, there has not been any unauthorized access, theft, disclosure, use or misappropriation of any Trade Secrets included in the Company-Owned IP or any of Company’s Confidential Information owed by Company or any breach of any obligations owned with respect to Trade Secrets within the Company-Licensed IP or owed with respect to third party Confidential Information.
(d) No funding, grant, facility, resource or personnel of any Governmental Authority or university, academic or educational institution or research institute was used in the development or creation, in whole or in part, of any Company-Owned IP, and no Governmental Authority or university, academic or educational institution or research institute has any ownership rights, use rights, Liens or other interest in or to any Company-Owned IP.
(e) Neither the Company and its Subsidiaries nor any Person who contributed to the discovery, conception, development, creation, or reduction to practice of any Company-Owned IP has ever been a member of, or a contributor to, any industry standards body that requires its members or contributors to grant or offer to any other Person any license or right to any technology or Intellectual Property owned by such members or contributors.
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(f) There have been no actions and no claims filed with a Governmental Authority and served on the Company or any of the Subsidiaries, or threatened in writing (including email), against the Company or any of the Company’s Subsidiaries, by any person (A) contesting the validity, use, ownership, enforceability, patentability or registrability of any of the Company-Owned IP, or (B) alleging any infringement or misappropriation of, or other conflict with, any Intellectual Property of other persons (including any demands or offers to license any Intellectual Property from any other person), or (C) claims that any default exists under any license to Company-Licensed IP. The operation of the business of the Company and the Subsidiaries as previously conducted and as currently conducted and the Products, have not infringed, misappropriated or violated and do not infringe, misappropriate or violate, any Intellectual Property of other persons, and have not constituted and do not constitute unfair competition or trade practices, and Company has not received any notice from any person asserting or claiming any such infringement, misappropriation or violation, or any such unfair competition or trade practices. To the Company’s knowledge, no other person has infringed, misappropriated or violated any of the Company-Owned IP. Neither the Company nor any of the Subsidiaries have issued any notice asserting or claim any such infringement, misappropriation or violation of any of the Company-Owned IP. None of the Company-Owned IP and, to the knowledge of the Company, none of the Company Licensed IP, is subject to any outstanding Order that restricts in any manner the use, sale, transfer, licensing or exploitation thereof by the Company or affects the validity, use or enforceability of any such Company-Owned IP.
(g) All founders and all current and former officers, management, employees, consultants, and contractors who have independently or jointly contributed, developed, conceived, contributed to or otherwise participated in the conception, authorship, creation, improvement, modification, reduction to practice, or development of any Technology or other Intellectual Property for or on behalf of the Company or its Subsidiaries have executed valid, written agreements with the Company or one of its Subsidiaries, pursuant to which such persons (i) agreed to maintain in confidence all confidential or proprietary information acquired or learned by them in the course of their relationship with the Company or a Subsidiary, (ii) have irrevocably assigned to the Company or the Subsidiary, to the maximum extent provided for by, and in accordance with, applicable Laws, all of their entire rights, title, and interest in and to any and all Technology or other Intellectual Property created, conceived or otherwise developed by such person in the course of and related to their relationship with the Company to the extent such Technology or Intellectual Property is not automatically owned by the Company by operation of law, and (iii) waived their non-assignable rights (including moral rights) to any such Technology and Intellectual Property.
(h) The consummation of the Transactions shall not result in (i) any assignment, forfeiture, termination, or placement of any Lien on, or any other restriction, limitation, loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other person in respect of, the Company’s or any of its Subsidiaries’ right to own, use or hold for use any Company IP, (ii) the Company or any of its Subsidiaries being in breach of any Inbound IP Contracts or Outbound IP Agreements; (iii) the modification, cancellation, termination, suspension or acceleration of, any payment with respect to any Inbound IP Contracts or Outbound IP Agreements; or (iv) SPAC or its Affiliates, or the Company or its Subsidiaries (each being “that person” within the meaning of this subsection) being (A) bound by or subject to any noncompete or licensing obligation, covenant not to sue, or other restriction on or modification of the operation or scope of the current business of the Company or any of its Subsidiaries, which that person was not bound by or subject to prior to the Closing, or (B) obligated to (1) pay any royalties, honoraria, fees or other payments to any person in excess of those payable by the Company and its Subsidiaries (taken as a whole) prior to the Closing, or (2) provide or offer any discounts or other reduced payment obligations to any person in excess of those provided by the Company and its Subsidiaries (taken as a whole) to such person prior to the Closing.
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(i) The Company owns, leases, licenses, or otherwise has the legal right to use all Business Systems, and such Business Systems are sufficient for the needs of the business of the Company and its Subsidiaries as currently conducted. The Company maintains commercially reasonable data security disaster recovery and business continuity plans, procedures and facilities concerning its and its Subsidiaries’ business operations, and there has not been any material failure or any disruptions or any unauthorized access with respect to any of the Business Systems that has not been remedied or replaced in all material respects. The Company has purchased a sufficient number of seat licenses for its Business Systems, and is not in material breach of any such licenses.
(j) The Company is in actual possession and control of (i) the applicable source code, object code, and user manuals for all Software within the Company-Owned IP that is currently, or was in the past five (5) years, incorporated or employed in or used in any Products licensed, sold, distributed or otherwise made available by or on behalf of the Company or a Subsidiary, and (ii) Technical Documentation sufficient to allow for the continuation of the use, distribution, maintenance and support of each item of such Software within the Company-Owned IP that is currently, or was in the past five (5) years, incorporated or employed in or used in any Products licensed, sold, distributed or otherwise made available by or on behalf of the Company or a Subsidiary. The source code for all current versions of Products can be compiled without material error into object code by a trained computer programmer. None of the source code or materials described in (i) and (ii) above has been licensed or provided to any person other than employees, consultants and contractors of the Company or its Subsidiaries, in each case, who or that have a “need to know” such source code and materials in connection with the performance of their duties to the Company or its Subsidiaries, and have a written confidentiality obligation to the Company or one of its Subsidiaries, as applicable, with respect to such source code or related materials. Neither the Company nor its Subsidiaries are obligated to provide to any person the source code for any Software within the Company-Owned IP. None of the source code or related materials for any Software within the Company-Owned IP is in escrow or under any obligation, conditional or otherwise, to be deposited in escrow.
(k) All Software within the Company-Owned IP is free of any exposed keys or credentials that permit unauthorized access or the unauthorized disruption, impairment, disablement or erasure of such Software, and to the Company’s knowledge, is free from any defect, bug, virus, design or documentation error or corruptant that would have a material effect on the operation or use of such Software and that cannot be remedied or fixed in accordance with standard software development practices. No Software within the Company-Owned IP contains any Disabling Device or Spyware Device.
(l) The Company and the Company’s Subsidiaries are in material compliance with all the terms and conditions of all agreements for all Open Source Software licensed by the Company or any of its Subsidiaries. The Company and its Subsidiaries have not used and do not use any Open Source Software or any modification or derivative thereof in a manner that, with respect to any of the Products or Company-Owned IP, would (A) grant to any person any rights to or immunities for use of any Company-Owned IP, (B) require the disclosure or distribution of any Company-Owned IP in source code form, (C) require licensing of any Company-Owned IP for the purpose of making derivative works of such Company-Owned IP, (D) require that the Company-Owned IP be reverse engineerable or (E) impose any restriction on the consideration to be charged for the distribution of any Company-Owned IP or Product or otherwise obligate the Company or one of its Subsidiaries to make any Company-Owned IP or Product available free of charge. To the extent third party Software is marketed or distributed to customers of the Company or any Subsidiaries together with the Company-Owned IP, the third party rights have been identified in Section 5.13(l) of the Disclosure Schedule, all necessary licenses have been obtained and complied with, no royalties or payments are due now or in the future and there are no obligations to provide access to any third party to, or permit any third party to copy, modify or distribute, any Company-Owned IP.
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(m) The Company currently and previously has complied in all material respects with (i) all applicable Privacy/Data Security Laws, (ii) industry standards to which the Company is legally bound with respect to privacy and/or data security of Personal Information and/or Business Data held or processed by or on behalf of the Company, and (iii) all contractual commitments that the Company has entered into or is otherwise bound with respect to privacy and/or data security of Personal Information and/or Business Data held or processed by or on behalf of the Company (collectively, the “Data Security Requirements”). The Company and each of their Subsidiaries have implemented reasonable data security safeguards designed to protect the security and integrity of the Business Systems and any Personal Information or Business Data held or processed by, including via contractual commitments, or on behalf of the Company or its Subsidiaries, including implementing commercially reasonable procedures designed to prevent unauthorized access and the introduction of Disabling Devices and Spyware Devices. Neither the Company nor any of its Subsidiaries have inserted and, to the knowledge of the Company, no other person has inserted or alleged to have inserted any Disabling Device or Spyware Device in any of the Business Systems. Neither the Company nor any of the Subsidiaries has been subject to or received written notice of any audits, proceedings or investigations by any Governmental Authority or any customer, or received any material claims or complaints regarding the collection, dissemination, storage or use of Personal Information, or the violation of any applicable Data Security Requirements.
Section 5.14 Taxes.
(a) The Company and each of the Company’s Subsidiaries: (i) has timely filed (taking into account any extension of time within which to file) all income Tax Returns and other material Tax Returns required to be filed by it as of the date hereof and all such filed Tax Returns are complete and accurate in all material respects; (ii) has paid all income Taxes and any other material Taxes that the Company or the Company’s Subsidiaries is otherwise obligated to pay (whether or not shown on any Tax Return), except with respect to Taxes not yet due or payable or otherwise that are being contested in good faith and are disclosed in Section 5.14 of the Company Disclosure Schedule, and no material penalties or charges are due with respect to the late filing of any Tax Return required to be filed by or with respect to it on or before the Effective Time; (iii) with respect to all Tax Returns filed by it, has not waived any statute of limitations or agreed to any extension of time with respect to a Tax assessment or deficiency; and (iv) does not have any deficiency, audit, examination, investigation or other proceeding in respect of Taxes or Tax matters pending or proposed or threatened in writing, for a Tax period which the statute of limitations for assessments remains open.
(b) Neither the Company nor any of the Company’s Subsidiaries is a party to, is bound by, or has any obligation under any Tax sharing agreement, Tax indemnification agreement, Tax allocation agreement or similar contract or arrangement (including any agreement, contract or arrangement providing for the sharing or ceding of credits or losses) and has no a potential liability or obligation to any person as a result of or pursuant to any such (i) agreement, contract, arrangement or commitment other than an agreement, contract, arrangement or commitment the primary purpose of which does not relate to Taxes and (ii) which is not entered into with any affiliate or direct or indirect owner of the Company or any Subsidiary of the Company.
(c) The Company and each of the Company’s Subsidiaries will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing Date; or (iii) installment sale made on or prior to the Closing Date.
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(d) The Company and each of the Subsidiaries has withheld and paid to the appropriate Tax authority all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any current or former employee, independent contractor, creditor, shareholder or other third party and has complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes.
(e) Neither the Company nor any of the Subsidiaries has been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or foreign income Tax Return (other than a group of which the Company was the common parent).
(f) Neither the Company nor any of the Company’s Subsidiaries has any liability for the Taxes of any person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), or as a transferee or successor.
(g) The Company and each of the Company’s Subsidiaries has no request for a ruling in respect of Taxes pending between the Company and any Tax authority.
(h) The Company and each of the Company’s Subsidiaries (i) has not within the last two years distributed stock of another person, or has had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code, (ii) is or has ever been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code, (iii) is a “controlled foreign corporation” as defined in Section 957 of the Code, (iv) is a “passive foreign investment company” within the meaning of Section 1297 of the Code, or (v) has a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has an office or fixed place of business in a country other than the country in which it is organized.
(i) Neither the Company nor any of the Subsidiaries has engaged in or entered into a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b).
(j) To the knowledge of the Company and each of the Company’s Subsidiaries, neither the Company nor any of the Company’s Subsidiaries has taken any action, or are there any facts or circumstances, that would reasonably be expected to prevent the Domestication from qualifying for the Domestication Intended Tax Treatment or prevent the Merger from qualifying for the Merger Intended Tax Treatment.
(k) There are no Tax Liens upon any assets of the Company or any of the Company’s Subsidiaries except for Permitted Liens.
(l) None of the Company or any Company Subsidiary has taken any action, nor to the knowledge of the Company or any Company Subsidiary are there any facts or circumstances, that would reasonably be expected to prevent the Merger from qualifying for the Merger Intended Tax Treatment.
(m) To the knowledge of the Company and each of the Company’s Subsidiaries, the Company and each of its Subsidiaries been in compliance in all material respects with all applicable transfer pricing laws and legal requirements.
(n) The Company and each of the Company’s Subsidiaries is classified for U.S. federal income tax purposes as set forth in Section 5.14(n) of the Company Disclosure Schedule and no such entity has made an inconsistent or contrary entity classification election.
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(o) Less than 50 percent of the value of the Company’s total assets (after excluding cash, cash items (including receivables), and government securities for purposes of computing total assets)) consists of stock or securities (within the meaning of Section 368(a)(2)(F)(vii) of the Code). For purposes of this representation, any stock and securities of any subsidiary of the Company is disregarded and the Company is deemed to own its ratable share of such subsidiary’s assets. The Company has not been, is not, and immediately prior to the Effective Time will not be, an “investment company” within the meaning of Section 368(a)(2)(F)(iii) of the Code.
(p) No written claim has been made (or written notification delivered in any form) by any Governmental Authority where the Company or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.
Section 5.15 Environmental Matters. Except as set forth in (a) of the Company Disclosure Schedule, (a) neither the Company nor any of the Company’s Subsidiaries is, or has been in the prior three (3) years, in violation in any material respect of any applicable Environmental Law; (b) neither the Company nor any of the Company’s Subsidiaries has released or caused any release of Hazardous Substances on or from any property currently or formerly owned, leased or operated by it (including, without limitation, soils and surface and ground waters) in violation in any material respect of any Environmental Law or in a manner or quantity which requires reporting, investigation, remediation, monitoring or other response action by the Company or the Company’s Subsidiaries pursuant to applicable Environmental Laws; (c) neither the Company nor any of the Company’s subsidiaries has transported or disposed of, or arranged for the transportation or disposal of, Hazardous Substances at any real property not owned, operated or leased by it, in violation in any material respect of any Environmental Law or otherwise in a manner or quantity that has resulted or would reasonably be expected to result in a material liability to the Company under any Environmental Law; (d) the Company and each of the Subsidiaries has all material permits, licenses and other authorizations required of the Company under applicable Environmental Law (“Environmental Permits”); (e) the Company and each of the Subsidiaries is in compliance in all material respects with the terms and conditions of its Environmental Permits; and (f) the Company has delivered to SPAC true and complete copies of (x) all environmental Phase I reports and other material investigations, studies, audits, tests, reviews or other analyses commenced or conducted by or on behalf of the Company (or by a third-party of which the Company has knowledge) in relation to the current or prior business of the Company, any of the Subsidiaries or any real property presently or formerly owned, leased, or operated by them (or its or their respective predecessors) that are in possession, custody or control of the Company and (y) any written reports, notices of violation, orders, decrees, injunctions or other arrangements with any Governmental Authority, in the possession, custody or control of the Company, relating to environmental conditions in, on or about, properties currently leased or operated by the Company or any of the Subsidiaries, or otherwise related to the Company’s compliance with Environmental Laws.
Section 5.16 Material Contracts.
(a) Section 5.16(a) of the Company Disclosure Schedule lists, as of the date of this Agreement, the following types of contracts and agreements to which the Company or any of the Subsidiaries is a party, excluding for this purpose, any purchase orders submitted by customers (such contracts and agreements as are set forth on Section 5.16(a) of the Company Disclosure Schedule being the “Material Contracts”):
(i) each contract and agreement with consideration paid or payable of more than $500,000, in the aggregate, over the 12-month period ended December 31, 2025;
(ii) each contract and agreement with suppliers for expenditures paid or payable by the Company of more than $500,000, in the aggregate, over the 12-month period ended December 31, 2025;
(iii) each contract and agreement with customers that involves consideration payable to the Company of more than $500,000, in the aggregate, over the 12-month period ended December 31, 2025;
(iv) all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising contracts and agreements that are material to the business of the Company;
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(v) all Service Agreements and management contracts, including any contracts involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company or the respective Subsidiary or income or revenues related to any Product of the Company or a Subsidiary;
(vi) all contracts and agreements evidencing Indebtedness (or any guaranty therefor) for borrowed money;
(vii) any guaranty, direct or indirect, of any obligation of a third party (other than the Company);
(viii) any change in control, retention, sale bonus or similar agreements;
(ix) any employment or consulting agreements to which the Company or any Subsidiary is a party and which provides for annual base cash compensation in excess of $200,000;
(x) any contract (x) providing for the grant of any preferential rights of first offer or first refusal to purchase or lease any material asset of the Company or any Subsidiary or (y) providing for any exclusive right to sell or distribute, or otherwise relating to the sale or distribution of, any Product or service of the Company or any Subsidiary;
(xi) any obligation to make payments, contingent or otherwise, arising out of the prior acquisition of the business, all or substantially all of the assets or stock of other persons;
(xii) all partnership, joint venture or similar agreements that are material to the business of the Company or a Subsidiary;
(xiii) all contracts and agreements with any Governmental Authority to which the Company or any Subsidiary is a party, other than any Company Permits;
(xiv) all contracts and agreements that limit, or purport to limit, the ability of the Company or any Subsidiary to compete in any line of business or with any person or entity or in any geographic area or during any period of time or to hire or retain any person,
(xv) all leases or master leases of personal property reasonably likely to result in annual payments of $500,000 or more in a 12-month period;
(xvi) all Inbound IP Contracts;
(xvii) all Outbound IP Contracts; and
(xviii) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K) or any other contract that is material to the Company, taken as a whole; and
(xix) any collective bargaining or other agreement with a labor union or labor organization.
(b) (i) each Material Contract is a legal, valid and binding obligation of the Company and, to the knowledge of the Company, the other parties thereto, and is enforceable in accordance with its terms and the Company is not in material breach or violation of, or material default under, any Material Contract nor has any Material Contract been canceled by the other party; (ii) to the Company’s knowledge, no other party is in material breach or violation of, or material default under, any Material Contract; (iii) the Company has not received any claim of default under any such Material Contract; and (iv) no party to any Material Contract has exercised termination rights with respect thereto or has indicated in writing that it intends to terminate or materially modify its relationship with the Company. The Company has furnished or made available to SPAC or its legal advisors true and complete copies of all Material Contracts without redaction, including amendments thereto that are material in nature.
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Section 5.17 Government Contracts; Bids.
(a) Section 5.17(a) of the Company Disclosure Schedules sets forth a true, correct and complete list of each Government Contract that is currently in effect or which was in effect at any time during the three-year period prior to the date hereof and indicates: (i) the contract name and/or number; (ii) the effective date; (iii) the contact parties; (iv) the period of performance; and (v) each modification thereto to which the Company or any Subsidiary is a party. Each such Government Contract is a legal, valid and binding obligation of the applicable party thereto and is in full force and effect as of the date hereof and was awarded in compliance with all applicable laws. there is, There has been, no cancellation, termination for convenience, termination for default, suspension, stop work order, cure notice, or show cause notice pending or in effect or, to the Company’s knowledge, threatened, in each case, pertaining to any such Government Contract, nor has there been any dispute between any of the Company or any of its Subsidiaries and any Governmental Authority or between the Company or any of its Subsidiaries and any prime contractor, subcontractor, vendor or other Person where the ultimate contracting party is a Governmental Authority, arising under or relating to any such Government Contract or Government Bid, and the neither the Company or any of its Subsidiaries has received written notice of any adverse or negative government past performance evaluations or ratings in connection with any Government Contract, and each of the Company or any of its Subsidiaries has complied in all material respects with applicable limitations on sub-contracting in connection with every Government Contract.
(b) Section 5.17(b) of the Company Disclosure Schedules sets forth a true, correct and complete list of each Government Bid which the Company has submitted or participated in within the past twelve (12) months that the Company reasonably anticipates will involve annual payments or consideration furnished by or to the Company Group and indicates: (i) the bid submission date; (ii) the expected award date; and (iii) the anticipated contract value.
(c) (i) The Company has complied in all material respects with all laws pertaining to the Government Contracts and Government Bids (and in any material certificate, statement, list, schedule or other document submitted or furnished in connection with the foregoing), (ii) all disclosures, representations, warranties and certifications made by the Company in such Government Contracts and Government Bids were complete and correct as of their effective date, (iii) no prime contractor, subcontractor or other Person has notified the Company in writing that the Company has breached or violated any law pertaining to such Government Contracts and Government Bids, (iv) no termination for convenience, termination for default, cure notice or show cause notice is currently in effect, has been issued or made, or has been threatened, with respect to any Government Contract or Government Bid, and (v) no cost incurred or invoice rendered by the Company pertaining to any Government Contract is currently being questioned or has been withheld or disallowed by any Governmental Authority or has been or now is, the subject of an investigation.
(d) There has been no finding of fraud or any claim of any liability as a result of defective pricing, labor mischarging or improper payments on the part of the Company or any Subsidiary in connection with any Government Contracts or Government Bids.
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(e) Neither the Company nor any Subsidiary using or providing to any third party any Intellectual Property developed under any Government Contract for purposes other than those allowed under such Government Contract without having obtained the necessary and appropriate prior permission of the Governmental Authority or prime contractor (as the case may be) involved.
(f) Section 5.17(f) of the Company Disclosure Schedules sets forth a true, correct and complete list of (i) all facility and other security clearances and access authorizations held by the Company and its Subsidiaries and (ii) all personnel security clearances and access authorizations held by the Company’s and its Subsidiaries employees, to the extent such clearances are required in connection with any Government Contracts or Government Bids. The Company possesses all facility security clearances and other clearances and access authorizations and other authorizations necessary to perform its Government Contracts and the Company’s subcontractor(s) and independent contractor(s) under such Government Contracts possess all necessary security clearances to perform such Government Contracts. All requisite personal security clearances held by any continuing employee, and all facility and other security clearances held by the Company and its Subsidiaries, are valid and in full force and effect, and the Company and each Subsidiary is in compliance with all United States national security obligations and requirements. Neither the Company nor any of its Subsidiaries nor any of their employees, officers or directors has had a personal security clearance revoked. The Company and each of its Subsidiaries has complied in all material respects with all applicable requirements under each Government Contract or Government Bid relating to the safeguarding of and access to classified or sensitive information. No facts currently exist that would reasonably be expected to give rise to the revocation of any security clearance of the any of the Company or any Subsidiary or any of their employees, officers, managers or directors.
(g) Neither the Company nor any Subsidiary has (i) received any payment of money or provision of value to a third party, or any receipt of money or value from a third party, in each case, that constitutes, or could reasonably be viewed or interpreted to be, a fee or compensation for the referral of a Contract, customer, business or business opportunity, (ii) assigned, granted a secured interest in, conveyed or transferred any material account receivable or other material rights arising under any Government Contracts.
(h) Neither the Company nor any Subsidiary is (i) in receipt or possession of any competitor (as to any Government Contract or Government Bid) or Governmental Authority’s proprietary or procurement sensitive information under circumstances where there is reason to believe that such receipt or possession is unlawful or unauthorized; (ii) subject to any active administrative agreement pertaining to its eligibility for the award of Government Contracts or stop work order relating to any Government Contract that is still in effect; (iii) or has been debarred, suspended or similarly disqualified from participation in the award of Contracts with any other Governmental Authority; and (iv) aware of any facts or circumstances that would warrant the institution of suspension, debarment or other disqualification proceedings or the finding of non-responsibility or ineligibility on the part of the Company or any Subsidiary or any director, officer, or employee thereof.
(i) None of the Company, its Subsidiaries or their respective directors, officers, employees or other Representatives is, or has during the past three (3) years been, under administrative, civil or criminal investigation or indictment by any Governmental Authority or subject to any audit or investigation by the Company with respect to any alleged act or omission arising under or relating to any Government Contract or Government Bid, and (ii) during the past three (3) years, neither the Company nor any Subsidiary has conducted or initiated any internal investigation or made a voluntary or mandatory disclosure to any Governmental Authority with respect to any alleged irregularity, act, misstatement or omission arising under or relating to a Government Contract or Government Bid.
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Section 5.18 Insurance.
(a) Section 5.18(a) of the Company Disclosure Schedule sets forth, with respect to each insurance policy under which the Company or a Subsidiary is an insured, a named insured or otherwise the principal beneficiary of coverage as of the date of this Agreement (i) the names of the insurer, and the principal insured, (ii) the policy number, (iii) the period, scope and amount of coverage and (iv) the premium most recently charged.
(b) With respect to each such insurance policy: (i) the policy is legal, valid, binding and enforceable in accordance with its terms and, except for policies that have expired under their terms in the ordinary course, is in full force and effect; (ii) the Company or the respective Subsidiary is not in material breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, under the policy; and (iii) to the knowledge of the Company, no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation.
Section 5.19 Board Approval; Vote Required. The Company Board, by resolutions duly adopted by unanimous vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way, or by unanimous written consent, has duly (a) determined that this Agreement and the Merger are fair to and in the best interests of the Company and its stockholders, (b) approved this Agreement and the Merger and declared their advisability, and (c) recommended that the stockholders of the Company approve and adopt this Agreement and approve the Merger and directed that this Agreement and the Transactions (including the Merger) be submitted for consideration by the Company’s stockholders. The Requisite Approval is the only vote of the holders of any class or series of capital stock of the Company necessary to adopt this Agreement and approve the Transactions. The Written Consent, if executed and delivered, will qualify as the Requisite Approval and no additional approval or vote from any holders of any class or series of capital stock of the Company will then be necessary to adopt this Agreement and consummate the Transactions.
Section 5.20 Certain Business Practices. None of the Company or any Subsidiary nor, to the Knowledge of the Company, any directors or officers, agents or employees of the Company or any Subsidiary, has: (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity; (b) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (c) made any payment in the nature of criminal bribery.
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Section 5.21 Artificial Intelligence.
(a) Section 5.21(a) of the Company Disclosure Schedule identifies all Company AI currently incorporated or employed in or used in any Products currently licensed, sold, distributed or otherwise made available by or on behalf of the Company or a Subsidiary. The Company or one of its Subsidiaries either (i) exclusively owns full right, title and interest in and to the Company AI currently used by the Company or any of its Subsidiaries (including all Intellectual Property rights therein); or (ii) has a current, fully paid up right and license to use, maintain, reproduce, modify or create derivative works of such Company AI currently used by the Company or any of its Subsidiaries, in each case, solely to the extent necessary for the current use of such Company AI for the purpose of carrying on the business of the Company and its Subsidiaries in all relevant jurisdictions, including use in Products to the extent such Company AI is currently used in Products, and, to the knowledge of the Company, no facts or circumstances exist that would reasonably be expected to prevent, impair or impede the Company’s or one of its Subsidiaries’ ability to renew such license(s) on substantially similar terms. The Company or one of its Subsidiaries either (i) exclusively owns all right, title and interest in and to all outputs from all Company AI; or (ii) has a license to use, maintain, reproduce, modify or create derivative works of outputs of all Company AI, including use in Products, in each case consistent with Company’s previous and current use of such outputs. The Company and its Subsidiaries have not: (i) used any Company AI in a manner that has adversely affected, or would reasonably be expected to adversely affect (A) the ownership, validity, enforceability, registrability, copyrightability or patentability of any Company-Owned IP that constitutes a registered Patent, Trademark, or Copyright and any application for any of the foregoing that has been filed with an applicable Governmental Authority or (B) the ownership, validity, or enforceability of any other material output created by such Company AI that the Company or any of its Subsidiaries intended to maintain as proprietary; or (ii) used any Company AI in a manner that does not materially comply with the applicable license or other Contract terms.
(b) The Company owns or has all necessary licenses to use all AI Inputs used by the Company for the Company AI or otherwise incorporated into or used in connection with any Product, and all such AI Inputs (whether proprietary to, or licensed by, the Company or its Subsidiaries) have been obtained and used in accordance with the applicable terms and Laws governing such use (including each end user license agreement, terms of use, privacy policies, consents, or other terms that govern the collection and use of third party data) and in compliance with all required consent and notification obligations. Neither the Company nor any of its Subsidiaries have permitted any Personal Information or Confidential Information of the Company or its Subsidiaries or their customers to be used as AI Inputs for the benefit of third party AI Technology or any third-party AI model or system. The Company owns all Intellectual Property in and to any developments, modifications, updates or improvements made to the Products resulting from the use of the AI Inputs and there are no restrictions on the Company’s exploitation or commercialization of the Products as a result of the use of the AI Inputs.
(c) The Company, its Subsidiaries and the Company AI or used in any Product, are, and have at all times been, materially compliant with all applicable Laws relating to the Company’s development, use, deployment, and sale of AI Technology, including the Colorado AI Act and the European Union Artificial Intelligence Act (collectively, “AI Laws”). The Company AI included in the Company-Owned IP or used in any Product materially satisfies all requirements under AI Laws, including, without limitation, requirements for risk assessment, transparency, and accuracy. The Company has in place appropriate data governance policies to ensure the lawful collection, use, and processing of data used by the Company AI. No investigations, claims, or enforcement actions against the Company or its Subsidiaries related to compliance with AI Laws or otherwise are pending or threatened by any Governmental Authority or person. To the knowledge of the Company, there are no investigations, claims or enforcement actions against any user of any Company AI included in the Company-Owned IP or used in any Product related to compliance with AI Laws or otherwise that are pending or threatened by any Governmental Authority or person.
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(d) The Company, its Subsidiaries and the Company AI, adhere to industry standard policies and procedures relating to the development, use, deployment, and sale of AI Technology, including policies, protocols and procedures for: (i) adhering to the recommendations set forth in the Artificial Intelligence Risk Management Framework (AI RMF 1.0, as revised from time to time) promulgated by the National Institute of Standards and Technology (NIST) for designing, developing, and deploying AI Technology; (ii) designing, developing, and deploying AI Technology in a manner that promotes transparency, accountability, and human interpretability; (iii) identifying and mitigating bias in AI Inputs and harmful behavior in the Company AI, including, without limitation, bias and harmful behavior relating to race, gender, or ideology; and (iv) ensuring consistent accuracy, reliability, and quality in the predictions, results, data, information, or other outputs from the Company AI. No Person has made any claim or complaint that the predictions, results, data, information, or other outputs from the Company AI are biased, harmful, inaccurate, unreliable, or poor quality.
(e) Section 5.21(e) of the Company Disclosure Schedule identifies each third-party foundation model, large language model, model API, model-hosting service and model-fine-tuning service used in or in connection with any Product currently licensed, sold, distributed or otherwise made available by or on behalf of the Company or a Subsidiary (collectively, “Third-Party AI Services”), and the contract, terms of service, acceptable use policy and license governing the Company’s and its Subsidiaries’ use thereof. The Company and each Subsidiary is in material compliance with each such contract, terms of service, acceptable use policy and license, including any field-of-use, end-user, output-use, retraining, derivative-work and attribution restrictions, and neither the Company nor any Subsidiary has received any written notice of breach, suspension, termination or deprecation with respect thereto. Neither the Company nor any Subsidiary has used any Third-Party AI Service in any manner that would, under the applicable terms, grant the provider any ownership of, or any right to use for the provider’s own purposes (including model training or service improvement), the Company’s or its Subsidiaries’ prompts, inputs, outputs, fine-tuned models, embeddings, model weights or Confidential Information.
Section 5.22 Interested Party Transactions. Except for employment relationships and the payment of compensation, benefits and expense reimbursements and advances in the ordinary course of business, no director, officer or other affiliate of the Company or any Subsidiary has, directly or indirectly: (a) an economic interest in any person that has furnished or sold, or furnishes or sells, services or Products that the Company or any Subsidiary furnishes or sells, or proposes to furnish or sell; (b) an economic interest in any person that purchases from or sells or furnishes to, the Company or any Subsidiary, any goods or services; (c) a beneficial interest in any contract or agreement disclosed in Section 5.16(a) of the Company Disclosure Schedule; or (d) any contractual or other arrangement with the Company or a Subsidiary, other than customary indemnity arrangements and customary employment-related agreements and arrangements; provided, however, that ownership of no more than five percent (5%) of the outstanding voting stock of a publicly traded corporation shall not be deemed an “economic interest in any person” for purposes of this Section 5.22. Neither the Company nor any Subsidiary has (i) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of the Company or a Subsidiary, or (ii) materially modified any term of any such extension or maintenance of credit.
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Section 5.23 Exchange Act. The Company is not currently (or has not previously been) subject to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Section 5.24 Brokers. Except for fees payable to Alexander Capital, L.P. and Clear Street LLC, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.
Section 5.25 Equipment and Other Tangible Property. The Company and its Subsidiaries owns and has good title to, and has the legal and beneficial ownership of or a valid leasehold interest in or right to use by license or otherwise, all material machinery, equipment and other tangible property reflected on the books of the Company as owned by the Company and its Subsidiaries, free and clear of all Liens other than Permitted Liens. All material personal property and leased personal property assets of the Company and its Subsidiaries are structurally sound and in good operating condition and repair (ordinary wear and tear expected) and are suitable for their present use.
Section 5.26 Top Customers and Top Vendors.
(a) Section 5.26(a) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, the top ten (10) customers (the “Top Customers”) and the top ten (10) vendors (the “Top Vendors”) of the Company and its Subsidiaries, in each case, based on the aggregate value of their transaction volume with such counterparty during the trailing twelve (12) months for the period ending December 31, 2025.
(b) None of the Top Customers or Top Vendors has informed in writing any of the Group that it will, or to the knowledge of the Company, has threatened to, terminate, cancel or materially limit or adversely modify any of its existing business with the Company and its Subsidiaries (other than due to the expiration of an existing contractual arrangement), and to the knowledge of the Company, none of the Top Customers or Top Vendors is otherwise involved in or threatening a material dispute against the Company and its Subsidiaries or its businesses.
Section 5.27 Absence of Certain Business Practices and Anti-corruption Compliance.
(a) The Company and its Subsidiaries and its directors and executive officers, are and have been in compliance with all applicable Specified Business Conduct Laws in all respects and are not engaged nor have they engaged in any activity that would reasonably be expected to result in the Company or any of its Subsidiaries becoming the subject or target of any Sanctions Laws; and neither the Company or any Subsidiary has: (i) received written notice of, or made a voluntary, mandatory or directed disclosure to any Governmental Authority relating to, any actual or potential violation of any Specified Business Conduct Law; or (ii) been a party to or the subject of any pending or, to the knowledge of the Company, threatened, actions, proceedings or any investigation by or before any Governmental Authority related to any violation of any Specified Business Conduct Law. As of the date hereof and during the three (3) years prior to the date of this Agreement, none of the Company, any Subsidiary, nor any of its directors and executive officers: (x) is the subject or target of any Sanctions Law; or (y) has used any funds, loaned, contributed or otherwise facilitated the activities of any Person that is the target of or controlled by a target of an applicable Sanctions Law.
(b) Neither the Company, any of its Subsidiaries nor any of their directors or executive officers, has offered or given anything of value to (i) any official, executive, officer employee, or any other person acting in an official capacity for or on behalf of a Governmental Authority (including, but not limited to, any director, officer, employee, or agent of a wholly or partially government-owned or government-controlled enterprise) or public international organization, any political party or official thereof, or any candidate for political office or (ii) any other Person, in any such case while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any official, executive, officer, employee, or any other person acting in an official capacity for or on behalf of a Governmental Authority (including, but not limited to, any director, officer, employee, or agent of a wholly or partially government-owned or government-controlled enterprise) or public international organization, any political party or official thereof, or any candidate for political office, in each case, in violation of the Specified Business Conduct Laws.
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(c) The Company and its Subsidiaries have instituted and maintain policies, procedures, and controls reasonably designed to ensure compliance in all material respects with the Specified Business Conduct Laws.
(d) The operations of the Company and its Subsidiaries have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements, applicable money laundering and terrorism financing statutes in all relevant jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority.
(e) To the knowledge of the Company, there are no current or pending internal investigations, third-party investigations (including by any Governmental Authority), or internal or external audits that address any material allegations or information concerning possible material violations of the Specified Business Conduct Laws related to the Company or any of its Subsidiaries.
(f) To the knowledge of the Company, there are no whistleblower reports, allegations, or any other information concerning possible material violations of the Specified Business Conduct Laws related to the Company or any of its Subsidiaries.
Section 5.28 Exclusivity of Representations and Warranties. Except as otherwise expressly provided in this Article V (as modified by the Company Disclosure Schedule), the Company hereby expressly disclaims and negates, any other express or implied representation or warranty whatsoever (whether at Law or in equity) with respect to the Company, its affiliates, and any matter relating to any of them, including their affairs, the condition, value or quality of the assets, liabilities, financial condition or results of operations, or with respect to the accuracy or completeness of any other information made available to SPAC, its affiliates or any of their respective Representatives by, or on behalf of, Company, and any such representations or warranties are expressly disclaimed. Without limiting the generality of the foregoing, except as expressly set forth in this Agreement, neither Company nor any other person on behalf of Company has made or makes, any representation or warranty, whether express or implied, with respect to any projections, forecasts, estimates or budgets made available to SPAC, its affiliates or any of their respective Representatives of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company (including the reasonableness of the assumptions underlying any of the foregoing), whether or not included in any management presentation or in any other information made available to SPAC, its affiliates or any of their respective Representatives or any other person, and that any such representations or warranties are expressly disclaimed.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF SPAC AND MERGER SUB
Except as set forth in (a) in SPAC’s disclosure schedule delivered by SPAC in connection with this Agreement (the “SPAC Disclosure Schedule”), or (b) any SPAC SEC Reports filed with or furnished to the SEC prior to the date of this Agreement that are publicly available on the SEC’s Electronic Data Gathering, Analysis and Retrieval system (excluding any risk factor or similar disclosure under the headings “Risk Factors”, “Forward-Looking Statements” or any similar cautionary, predictive or forward-looking sections or statements), SPAC hereby represents and warrants to the Company as follows:
Section 6.01 Corporate Organization.
(a) SPAC is an exempted company limited by shares duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware. Each of SPAC and Merger Sub has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted.
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(b) Merger Sub is the only subsidiary of SPAC. Except for Merger Sub, SPAC does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or business association or other person.
Section 6.02 Memorandum, Certificate of Incorporation and Bylaws. Each of SPAC and Merger Sub has heretofore furnished to the Company complete and correct copies of the SPAC Organizational Documents and the Merger Sub Organizational Documents. The SPAC Organizational Documents and the Merger Sub Organizational Documents are in full force and effect. Neither SPAC nor Merger Sub is in material violation of any of the provisions of the SPAC Organizational Documents and the Merger Sub Organizational Documents.
Section 6.03 Capitalization.
(a) The authorized share capital of SPAC is US$25,000 divided into (i) 239,000,000 SPAC Class A Ordinary Shares, par value $0.0001 per share (ii) 10,000,000 SPAC Class B Ordinary Shares, par value $0.0001 per share and (iii) 1,000,000 preference shares, par value $0.0001 per share (“SPAC Preferred Stock”). There are (A) 17,801,250 SPAC Class A Ordinary Shares and 6,543,103 SPAC Class B Ordinary Shares that are issued and outstanding, all of which are validly issued, fully paid and non-assessable and not subject to any preemptive rights, (B) no SPAC Class A Ordinary Shares or SPAC Class B Ordinary Shares are held in the treasury by the SPAC, (C) 1,771,500 SPAC Class A Ordinary Shares are reserved for future issuance in connection with the SPAC Rights. There are (x) no shares of SPAC Preferred Stock issued and outstanding, and (y) 17,715,000 SPAC Rights issued and outstanding. Each SPAC Right entitles the holder to receive one-tenth of one SPAC Class A Ordinary Share upon the consummation of the initial business combination.
(b) The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.001 per share (the “Merger Sub Common Stock”) of which 100 shares of Merger Sub Common Stock are issued and outstanding. All outstanding shares of Merger Sub Common Stock have been duly authorized, validly issued, fully paid and are non-assessable and are not subject to preemptive rights, and are held by SPAC free and clear of all Liens, other than transfer restrictions under applicable securities laws and the Merger Sub Organizational Documents.
(c) All outstanding SPAC Units, SPAC Class A Ordinary Shares, SPAC Class B Ordinary Shares, and SPAC Rights have been issued and granted in compliance with all applicable securities laws and other applicable Laws and were issued free and clear of all Liens other than transfer restrictions under applicable securities laws and the SPAC Organizational Documents.
(d) The Aggregate Transaction Consideration being delivered by SPAC hereunder shall be duly and validly issued, fully paid and nonassessable, and each such share or other security shall be issued free and clear of preemptive rights and all Liens, other than transfer restrictions under applicable securities laws, any of the Ancillary Agreements and the SPAC Organizational Documents. The Aggregate Transaction Consideration will be issued in compliance with all applicable securities Laws and other applicable Laws and without contravention of any other person’s rights therein or with respect thereto.
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(e) Except for securities issued by SPAC as permitted by this Agreement and the SPAC Rights (including with respect to the SPAC Units), SPAC has not issued any options, warrants, preemptive rights, calls, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued shares of SPAC or obligating SPAC to issue or sell any shares, or other equity interests in, SPAC. All SPAC Class A Ordinary Shares and SPAC Class B Ordinary Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. Neither SPAC nor any subsidiary of SPAC is a party to, or otherwise bound by, and neither SPAC nor any subsidiary of SPAC has granted, any equity appreciation rights, participations, phantom equity or similar rights. Except pursuant to the SPAC Letter Agreement and the Sponsor Support Agreement, SPAC is not a party to any voting trusts, voting agreements, proxies, shareholder agreements or other agreements with respect to the voting or transfer of any SPAC Class A Ordinary Shares or any of the equity interests or other securities of SPAC or any of its subsidiaries. Except as set forth in the SPAC Organizational Documents, there are no outstanding contractual obligations of SPAC to repurchase, redeem or otherwise acquire any SPAC Ordinary Shares. There are no outstanding contractual obligations of SPAC to make any investment (in the form of a loan, capital contribution or otherwise) in, any person.
Section 6.04 Authority Relative to this Agreement. Each of SPAC and Merger Sub have all necessary power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or will be a party, to perform its obligations hereunder and thereunder and, subject to SPAC’s adoption of this Agreement (as the sole stockholder of Merger Sub) after the execution hereof, to consummate the Transactions. The execution and delivery of this Agreement and the other Transaction Documents to which SPAC or Merger Sub is or will be a party by SPAC or Merger Sub, as applicable, and the consummation by each of SPAC and Merger Sub of the Transactions, have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of SPAC or Merger Sub are necessary to authorize this Agreement and the other Transaction Documents to which it is or will be a party, or to consummate the Transactions (other than (a) with respect to the Merger, SPAC’s adoption of this Agreement (as the sole stockholder of Merger Sub) after the execution hereof and the approval and adoption of this Agreement by the holders of two-thirds of the then-outstanding shares of SPAC Ordinary Shares (the “Required SPAC Shareholder Approval”) and by the holder of a majority of the then-outstanding shares of Merger Sub Common Stock, and the filing and recordation of appropriate merger documents as required by the DGCL, and (b) with respect to the issuance of Domesticated SPAC Common Stock and the amendment and restatement of the SPAC Memorandum pursuant to this Agreement, the approval of majority of the then-outstanding SPAC Ordinary Shares). Each of this Agreement and the other Transaction Documents to which SPAC or Merger Sub is or will be a party has been, or will be, has been duly and validly executed and delivered by SPAC and Merger Sub and, assuming due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of SPAC or Merger Sub, enforceable against SPAC or Merger Sub in accordance with its terms subject to the Remedies Exceptions.
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Section 6.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of SPAC and Merger Sub do not, and the performance of this Agreement by each of SPAC and Merger Sub will not, (i) conflict with or violate the SPAC Organizational Documents or the Merger Sub Organizational Documents, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 6.04 have been obtained and all filings and obligations described in Section 6.05(b) have been made, conflict with or violate any Law, rule, regulation, order, judgment or decree applicable to each of SPAC or Merger Sub or by which any of their property or assets is bound or affected, or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any property or asset of each of SPAC or Merger Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which each of SPAC or Merger Sub is a party or by which each of SPAC or Merger Sub or any of their properties or assets is bound or affected, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a SPAC Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of SPAC and Merger Sub do not, and the performance of this Agreement by each of SPAC and Merger Sub will not, require any Consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for applicable requirements, if any, of the Companies Act (As Revised) of the Cayman Islands in respect of the Domestication, the Exchange Act, Blue Sky Laws and state takeover laws and filing and recordation of appropriate merger documents as required by the DGCL and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, prevent or materially delay consummation of any of the Transactions or otherwise prevent SPAC or Merger Sub from performing its material obligations under this Agreement.
Section 6.06 Compliance. Neither SPAC nor Merger Sub is or has been in conflict with, or in default, breach or violation of, (a) any Law applicable to SPAC or Merger Sub or by which any property or asset of SPAC or Merger Sub is bound or affected, or (b) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which SPAC or Merger Sub is a party or by which SPAC or Merger Sub or any property or asset of SPAC or Merger Sub is bound, except, in each case, for any such conflicts, defaults, breaches or violations that would not have or reasonably be expected to have an SPAC Material Adverse Effect. Each of SPAC and Merger Sub is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for SPAC or Merger Sub to own, lease and operate its properties or to carry on its business as it is now being conducted.
Section 6.07 SEC Filings; Financial Statements; Sarbanes-Oxley.
(a) SPAC has filed or furnished, as applicable all forms, reports, schedules, statements and other documents, including any exhibits thereto, required to be filed or furnished by it with or to the Securities and Exchange Commission (the “SEC”) since March 27, 2025, together with any amendments, restatements or supplements thereto (collectively, the “SPAC SEC Reports”). SPAC has heretofore furnished to the Company true and correct copies of all amendments and modifications that have not been filed by SPAC with the SEC to all agreements, documents and other instruments that previously had been filed by SPAC with the SEC and are currently in effect. As of their respective dates, the SPAC SEC Reports (i) complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act” ), the Exchange Act and the Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
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(b) To SPAC’s knowledge, each director and executive officer of SPAC has filed with the SEC on a timely basis all documents required with respect to SPAC by Section 16(a) of the Exchange Act and the rules and regulations thereunder.
(c) Each of the financial statements (including, in each case, any notes thereto) contained in the SPAC SEC Reports was prepared in accordance with GAAP (applied on a consistent basis) and Regulation S-X and Regulation S-K, as applicable, throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by Form 10-Q of the SEC) and each fairly presents, in all material respects, the financial position, results of operations, changes in stockholders equity and cash flows of SPAC as at the respective dates thereof and for the respective periods indicated therein, (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which have not had, and would not reasonably be expected to individually or in the aggregate be material). SPAC has no off-balance sheet arrangements that are not disclosed in the SPAC SEC Reports. No financial statements other than those of SPAC are required by GAAP to be included in the consolidated financial statements of SPAC.
(d) Except as and to the extent set forth in the SPAC SEC Reports, neither SPAC nor Merger Sub has any liability or obligation of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with GAAP, except for liabilities and obligations arising in the ordinary course of SPAC’s and Merger Sub’s business.
(e) SPAC is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of Nasdaq.
(f) SPAC has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to SPAC and other material information required to be disclosed by SPAC in the reports and other documents that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to SPAC’s principal executive officer and its principal financial officer as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Such disclosure controls and procedures are effective in timely alerting SPAC’s principal executive officer and principal financial officer to material information required to be included in SPAC’s periodic reports required under the Exchange Act.
(g) SPAC maintains systems of internal control over financial reporting that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance: (i) that SPAC maintains records that in reasonable detail accurately and fairly reflect, in all material respects, its transactions and dispositions of assets; (ii) that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP; (iii) that receipts and expenditures are being made only in accordance with authorizations of management and its board of directors; and (iv) regarding prevention or timely detection of unauthorized acquisition, use or disposition of its assets that could have a material effect on its financial statements. SPAC has delivered to the Company a true and complete copy of any disclosure (or, if unwritten, a summary thereof) by any Representative of SPAC to SPAC’s independent auditors relating to any material weaknesses in internal controls and any significant deficiencies in the design or operation of internal controls that would adversely affect the ability of SPAC to record, process, summarize and report financial data. SPAC has no knowledge of any fraud or whistle-blower allegations, whether or not material, that involve management or other employees or consultants who have or had a significant role in the internal control over financial reporting of SPAC. Since December 31, 2025, there have been no material changes in SPAC internal control over financial reporting.
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(h) There are no outstanding loans or other extensions of credit made by SPAC to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of SPAC. SPAC has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(i) Neither SPAC (including any employee thereof) nor SPAC’s independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by SPAC, (ii) any fraud, whether or not material, that involves SPAC’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by SPAC or (iii) any claim or allegation regarding any of the foregoing.
(j) As of the date hereof, there are no outstanding SEC comments from the SEC with respect to the SPAC SEC Reports. To the knowledge of SPAC, none of the SPAC SEC Reports filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.
Section 6.08 Absence of Certain Changes or Events. Since the completion of its initial public offering, except as expressly contemplated by this Agreement, (a) SPAC has conducted its business in the ordinary course and in a manner consistent with past practice, and (b) there has not been any SPAC Material Adverse Effect.
Section 6.09 Absence of Litigation. There is no Action pending or, to the knowledge of SPAC, threatened against SPAC, or any property or asset of SPAC or any of its officers and directors, before any Governmental Authority. Neither SPAC nor any material property or asset of SPAC is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of SPAC, continuing investigation by, any Governmental Authority.
Section 6.10 Board Approval; Vote Required.
(a) The SPAC Board, by resolutions duly adopted by a majority vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way, has duly (i) determined that this Agreement and the Transactions are fair to and in the best interests of SPAC and its stockholders, (ii) approved this Agreement, the Transactions and the other SPAC Proposals, (iii) recommended that the shareholders of SPAC approve and adopt this Agreement and Merger and the other SPAC Proposals, and directed that this Agreement and the Merger and the other SPAC Proposals, be submitted for consideration by the shareholders of SPAC at the SPAC Shareholders’ Meeting.
(b) The only vote of the holders of any class or series of shares of capital stock of the SPAC necessary to approve the Transactions is the affirmative vote of a majority of the outstanding shares of the SPAC voted by the shareholders at a duly held stockholders meeting.
(c) The Merger Sub Board, by resolutions duly adopted by written consent and not subsequently rescinded or modified in any way, has duly (i) determined that this Agreement and the Merger are fair to and in the best interests of Merger Sub and its sole stockholder, (ii) approved this Agreement and the Merger and declared their advisability, (iii) recommended that the sole stockholder of Merger Sub approve and adopt this Agreement and approve the Merger and directed that this Agreement and the Transactions be submitted for consideration by the sole stockholder of Merger Sub.
(d) The only vote of the holders of any class or series of capital stock of Merger Sub necessary to approve this Agreement, the Merger and the other Transactions is the affirmative vote of the holders of a majority of the outstanding shares of Merger Sub Common Stock.
Section 6.11 No Prior Operations of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions and has not engaged in any business activities or conducted any operations or incurred any obligation or liability, other than as contemplated by this Agreement.
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Section 6.12 Brokers. Except with respect to Clear Street LLC, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of SPAC or Merger Sub.
Section 6.13 SPAC Trust Fund. As of the date of this Agreement, SPAC has no less than $172,500,000 in the trust fund established by SPAC for the benefit of its public stockholders and underwriters of its initial public offering (the “Trust Fund”) maintained in a trust account at the Transfer Agent (the “Trust Account”). The monies of such Trust Account are invested in United States Government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, and held in trust by the Transfer Agent (the “Trustee”) pursuant to the Investment Management Trust Agreement, dated as of August 11, 2025, between SPAC and the Trustee (the “Trust Agreement”). The Trust Agreement has not been amended or modified and is valid and in full force and effect and is enforceable in accordance with its terms, subject to the Remedies Exceptions, and no termination, repudiation, rescission, amendment, supplement or modification is contemplated. SPAC has complied in all material respects with the terms of the Trust Agreement and is not in breach thereof or default thereunder and there does not exist under the Trust Agreement any event which, with the giving of notice or the lapse of time, would constitute such a breach or default by SPAC or the Trustee. There are no separate contracts, agreements, side letters or other understandings (whether written or unwritten, express or implied): (i) between SPAC and the Trustee that would cause the description of the Trust Agreement in the SPAC SEC Reports to be inaccurate in any material respect; or (ii) to the knowledge of SPAC, that would entitle any person (other than shareholders of SPAC who shall have elected to redeem their shares of Domesticated SPAC Common Stock pursuant to the SPAC Organizational Documents) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released except: (A) to pay income and franchise Taxes from any interest income earned in the Trust Account; and (B) upon the exercise of Redemption Rights in accordance with the provisions of the SPAC Organizational Documents. As of the date hereof, there are no Actions pending or, to the knowledge of SPAC, threatened in writing with respect to the Trust Account. Upon consummation of the Merger and notice thereof to the Trustee pursuant to the Trust Agreement, SPAC shall cause the Trustee to, and the Trustee shall thereupon be obligated to, release to SPAC as promptly as practicable, the Trust Funds in accordance with the Trust Agreement at which point the Trust Account shall terminate; provided, however that the liabilities and obligations of SPAC due and owing or incurred at or prior to the Effective Time shall be paid as and when due, including all amounts payable (a) to shareholders of SPAC who shall have exercised their Redemption Rights, (b) with respect to filings, applications and/or other actions taken pursuant to this Agreement required under Law, (c) to the Trustee for fees and costs incurred in accordance with the Trust Agreement; and (d) to third parties (e.g., professionals, printers, etc.) who have rendered services to SPAC in connection with its efforts to effect the Merger (including fees owed by SPAC to Clear Street LLC, pursuant to that certain Underwriting Agreement, dated August 11, 2025, between Clear Street LLC and SPAC).
Section 6.14 Employees. Other than any officers as described in the SPAC SEC Reports, SPAC and Merger Sub have never employed any employees. SPAC has no unsatisfied material liability with respect to any employee, officer or director. SPAC and Merger Sub have never and do not currently maintain, sponsor, contribute to or have any direct or indirect liability under any employee benefit plan (as defined in Section 3(3) of ERISA), nonqualified deferred compensation plan subject to Section 409A of the Code, bonus, stock option, stock purchase, restricted stock, phantom equity, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, change in control, fringe benefit, sick pay and vacation plans, policies or arrangements, written or oral, or other employee benefit plans, programs or arrangements. Neither the execution and delivery of this Agreement nor the other Ancillary Agreements nor the consummation of the Transactions will (i) result in any payment or provision of any benefit (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director, officer or employee of SPAC, or (ii) result in the acceleration of the time of payment or vesting of any such benefits. The Transactions shall not be the direct or indirect cause of any amount paid or payable by SPAC, Merger Sub or any affiliate being classified as an “excess parachute payment” under Section 280G of the Code or the imposition of any additional Tax under Section 409A(a)(1)(B) of the Code. There is no contract, agreement, plan or arrangement to which SPAC or Merger Sub is a party which requires payment by any party of a Tax gross-up or Tax reimbursement payment to any person.
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Section 6.15 Taxes.
(a) SPAC and Merger Sub (i) have duly and timely filed (taking into account any extension of time within which to file) all income Tax Returns and other material Tax Returns required to be filed by any of them as of the date hereof and all such filed Tax Returns are complete and accurate in all material respects; (ii) have timely paid all income Taxes and other material Taxes that are shown as due on such filed Tax Returns and any other material Taxes that SPAC or Merger Sub are otherwise obligated to pay, except with respect to current Taxes not yet due and payable or otherwise being contested in good faith or that are described in clause (a)(v) below; (iii) with respect to all material Tax Returns filed by or with respect to any of them, have not waived any statute of limitations with respect to material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency; and (iv) do not have any deficiency, audit, examination, investigation or other proceeding in respect of a material amount of Taxes or material Tax matters pending or threatened in writing, for a Tax period which the statute of limitations for assessments remains open.
(b) Neither SPAC nor Merger Sub is a party to, is bound by or has an obligation under any Tax sharing agreement, Tax indemnification agreement, Tax allocation agreement or similar contract or arrangement (including any agreement, contract or arrangement providing for the sharing or ceding of credits or losses) or has a potential liability or obligation to any person as a result of or pursuant to any such agreement, contract, arrangement or commitment other than an agreement, contract, arrangement or commitment the primary purpose of which does not relate to Taxes and which is not entered into with any affiliate or direct or indirect owner of SPAC.
(c) None of SPAC or Merger Sub will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing Date; or (iii) installment sale made on or prior to the Closing Date.
(d) Each of SPAC and Merger Sub has withheld and paid to the appropriate Tax authority all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any current or former employee, independent contractor, creditor, shareholder or other third party and has complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes.
(e) Neither SPAC nor Merger Sub has been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or foreign income Tax Return (other than a group of which SPAC is or was the common parent corporation).
(f) Neither SPAC nor Merger Sub has any material liability for the Taxes of any person under Treasury Regulation section 1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract, or otherwise.
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(g) Neither SPAC nor Merger Sub has any request for a material ruling in respect of Taxes pending between SPAC and/or Merger Sub, on the one hand, and any Tax authority, on the other hand.
(h) Neither SPAC nor Merger Sub (i) has within the last two years distributed stock of another person, or has had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code, or (ii) is or has ever been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code.
(i) Neither SPAC nor Merger Sub has engaged in or entered into a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(j) SPAC and Merger Sub have not taken any action, nor to the knowledge of SPAC are there any facts or circumstances, that would reasonably be expected to prevent the Domestication from qualifying for the Domestication Intended Tax Treatment.
(k) There are no Tax Liens upon any assets of SPAC and Merger Sub except for Permitted Liens.
(l) No written claim has been made (or written notification delivered in any form) by any Governmental Authority where SPAC and Merger Sub does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.
Section 6.16 Listing. The issued and outstanding SPAC Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “MKLYU.” The issued and outstanding SPAC Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “MKLY”. The issued and outstanding SPAC Rights are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “MKLYR.” In each case, the securities were listed pursuant to Nasdaq Rule 5405. There is no Action pending or threatened in writing against SPAC by Nasdaq or the SEC with respect to any intention by such entity to deregister the SPAC Units, the SPAC Class A Ordinary Shares or SPAC Rights or terminate the listing of SPAC on Nasdaq nor is SPAC aware of any circumstance that might result in such an action. None of SPAC or any of its affiliates has taken any action in an attempt to terminate the registration of the SPAC Units, the SPAC Class A Ordinary Shares or the SPAC Rights under the Exchange Act.
Section 6.17 Investment Company Act. Neither SPAC nor Merger Sub is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
Section 6.18 Takeover Statutes and Charter Provisions. The SPAC Board has taken all action necessary so that this Agreement, the Merger and the Transactions are exempt from any applicable anti-takeover provision of the SPAC Memorandum or any other applicable law.
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Section 6.19 Exclusivity of Representations and Warranties. Except as otherwise expressly provided in this Article VI (as modified by the SPAC Disclosure Schedule), SPAC hereby expressly disclaims and negates, any other express or implied representation or warranty whatsoever (whether at Law or in equity) with respect to SPAC, its affiliates, and any matter relating to any of them, including their affairs, the condition, value or quality of the assets, liabilities, financial condition or results of operations, or with respect to the accuracy or completeness of any other information made available to the Company, its affiliates or any of their respective Representatives by, or on behalf of, SPAC, and any such representations or warranties are expressly disclaimed. Without limiting the generality of the foregoing, except as expressly set forth in this Agreement, neither SPAC nor any other person on behalf of SPAC has made or makes, any representation or warranty, whether express or implied, with respect to any projections, forecasts, estimates or budgets made available to the Company, its affiliates or any of their respective Representatives of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of SPAC (including the reasonableness of the assumptions underlying any of the foregoing), whether or not included in any management presentation or in any other information made available to the Company, its affiliates or any of their respective Representatives or any other person, and that any such representations or warranties are expressly disclaimed.
ARTICLE
VII.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.01 Conduct of Business by the Company Pending the Merger.
(a) The Company agrees that, between the date of this Agreement and the Effective Time or the earlier termination of this Agreement, except as (1) expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) set forth in Section 7.01(b) of the Company Disclosure Schedule, or (3) required by applicable, unless SPAC shall otherwise consent in writing (which consent shall not be unreasonably conditioned, withheld or delayed):
(i) the Company and the Subsidiaries shall conduct their respective businesses in the ordinary course of business and in a manner consistent with past practice, including payment of accounts payable and collection of accounts receivable; and
(ii) the Company and the Subsidiaries shall use their respective commercially reasonable efforts to preserve substantially intact their respective current business organization of the Company, to keep available the services of their respective current officers, key employees and consultants and to preserve the respective current relationships of the Company or the Subsidiaries with customers, suppliers and other persons with which the Company or the Subsidiaries have significant business relations.
(b) By way of amplification and not limitation, except as (1) expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) set forth in Section 7.01 of the Company Disclosure Schedule, or (3) required by applicable Law, the Company and the Subsidiaries shall not, between the date of this Agreement and the Effective Time or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of SPAC (which consent shall not be unreasonably conditioned, withheld or delayed):
(i) amend or otherwise change their respective governing documents;
(ii) form or create any subsidiaries;
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(iii) issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any shares of any class of capital stock of the Company or the Subsidiaries, or any options, warrants, convertible notes, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including any phantom interest), of the Company or the Subsidiaries other than the exercise or settlement of any Company Warrants or Company Notes; or (B) any material assets of the Company or the Subsidiaries;
(iv) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of their respective capital stock;
(v) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of their respective capital stock, other than redemptions of equity securities from former employees upon the terms set forth in the underlying agreements governing such equity securities;
(vi) (A) acquire (including by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof in an amount in excess of $2,500,000; or (B) incur any Indebtedness in excess of $2,500,000 or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any person, or make any loans or advances, or intentionally grant any security interest in any of its assets, in each case, except in the ordinary course of business and consistent with past practice;
(vii) (A) enter into any new or materially amend any existing employment, consulting or severance agreement or arrangement with or terminate any director, officer, employee or consultant of the Company whose compensation would exceed $350,000, (B) enter into or amend any collective bargaining agreement or other labor agreements covering the Company’s employees, or (C) make any change to employee compensation, incentives or benefits after the filing of the Registration Statement that would reasonably be expected to require an amendment or supplement to the Registration Statement under Law;
(viii) other than as required by Law or pursuant to the terms of an agreement entered into prior to the date of this Agreement and reflected on Section 5.10(a) of the Company Disclosure Schedule, grant any severance or termination pay to, any director or officer of the Company or the Subsidiaries;
(ix) adopt, amend and/or terminate any Plan except (x) as may be required by applicable Law or is necessary in order to consummate the Transactions, (y) as required by the terms of any existing Plan or (z) in the event of annual renewals of health and welfare programs;
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(x) (A) make or change any material election in respect of Taxes, (B) amend, modify or otherwise change any filed material Tax Return, (C) adopt or request permission of any Tax authority to change any accounting method in respect of material Taxes, (D) enter into any closing agreement, private letter ruling, or other binding written agreement in respect of material Taxes or enter into any Tax sharing or similar agreement, (E) settle any claim or assessment in respect of material Taxes, (F) surrender or allow to expire any right to claim a refund of material Taxes, (G) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect to any Tax attribute that would give rise to any claim or assessment of Taxes, (H) settle any claim, Action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or (I) file any amended Tax Return or claim for refund;
(xi) materially amend, or modify or consent to the termination (excluding any expiration in accordance with its terms) of any Material Contract or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of the Company’s or the Subsidiaries’ material rights thereunder, in each case in a manner that is adverse to the Company, taken as a whole, except in the ordinary course of business, or waive, delay the exercise of, release or assign any material rights or claims thereunder;
(xii) transfer or exclusively license to any person Company-Owned IP or enter into grants to transfer or license to any person future patent rights, other than in the ordinary course of business consistent with past practices;
(xiii) intentionally permit any material item of Company-Owned IP to lapse or to be abandoned, invalidated, dedicated to the public, or disclaimed, or otherwise become unenforceable or fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in each and every material item of Company-Owned IP;
(xiv) except as required by law or GAAP, revalue any of the assets of the Company or any Subsidiary in any material manner or make any material change in accounting methods, principles or practices;
(xv) make capital expenditures outside of the ordinary course of business consistent with past practice in excess of $500,000 (individually for any project) or $2,500,000 in the aggregate;
(xvi) make any material change to the Company’s business or enter into any new line of business outside of the Company’s existing line of business as of the date hereof; or
(xvii) enter into any agreement or otherwise make a binding commitment to do any of the foregoing.
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Section 7.02 Conduct of Business by SPAC and Merger Sub Pending the Merger. Except as (1) expressly contemplated by any other provision of this Agreement or any Ancillary Agreement (including entering into any subscription agreement in connection with, and the consummation of, the Financing) or in connection with the Financing or Domestication, (2) set forth on Section 7.02 of the SPAC Disclosure Schedule or (3) required by applicable Law, SPAC agrees that from the date of this Agreement until the earlier of the termination of this Agreement and the Effective Time, unless the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the businesses of SPAC and Merger Sub shall be conducted in the ordinary course of business and in a manner consistent with past practice. By way of amplification and not limitation, except as (A) expressly contemplated by any other provision of this Agreement or any Ancillary Agreement (including entering into any subscription agreement in connection with, and the consummation of, the Financing), (B) set forth on Section 7.02 of the SPAC Disclosure Schedule, or (C) required by applicable Law, neither SPAC nor Merger Sub shall, between the date of this Agreement and the Effective Time or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned:
(a) amend or otherwise change the SPAC Organizational Documents (other than in connection with a SPAC Extension Proposal, if any) or the Merger Sub Organizational Documents or form any subsidiary of SPAC other than Merger Sub that would materially and adversely affect the Transactions;
(b) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, other than redemptions from the Trust Fund that are required pursuant to the SPAC Organizational Documents;
(c) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of the Domesticated SPAC Common Stock except for redemptions from the Trust Fund that are required pursuant to the SPAC Organizational Documents;
(d) issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any shares of any class of capital stock or other securities of SPAC or Merger Sub, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of SPAC or Merger Sub, except for the Financing;
(e) acquire (including by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or enter into any strategic joint ventures, partnerships or alliances with any other person;
(f) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person or persons, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of SPAC, as applicable, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, in each case, except (i) in the ordinary course of business consistent with past practice, (ii) for loans from Sponsor to SPAC to pay any required extension fees, and (iii) for working capital loans from Sponsor to SPAC in the aggregate amount of up to $500,000;
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(g) (A) make or change any material election in respect of Taxes, (B) amend, modify or otherwise change any filed material Tax Return, (C) adopt or request permission of any Tax authority to change any accounting method in respect of material Taxes, (D) enter into any closing agreement, private letter ruling, or other binding written agreement in respect of material Taxes or enter into any Tax sharing or similar agreement, (E) settle any claim or assessment in respect of material Taxes, (F) surrender or allow to expire any right to claim a refund of material Taxes, (G) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect to any Tax attribute that would give rise to any claim or assessment of Taxes, (H) settle any claim, Action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or (I) file any amended Tax Return or claim for refund;
(h) liquidate, dissolve, reorganize or otherwise wind up the business and operations of SPAC or Merger Sub;
(i) amend the Trust Agreement or any other agreement related to the Trust Account that would materially adversely affect the Transactions;
(j) enter into, renew or amend in any material respect any transaction, agreement arrangement or understanding with any (i) present or former executive officer or director of SPAC or Merger Sub, (ii) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or equity interests of SPAC or (iii) affiliate, “associate” or member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing; or
(k) enter into any agreement or otherwise make a binding commitment to do any of the foregoing.
Section 7.03 Claims Against Trust Account. The Company agrees that, notwithstanding any other provision contained in this Agreement, neither the Company nor any of its affiliates has, and shall not at any time prior to the Effective Time have, any claim to, or make any claim against, the Trust Fund, regardless of whether such claim arises as a result of, in connection with or relating in any way to, the business relationship between the Company on the one hand, and SPAC on the other hand, this Agreement, or any other agreement or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to in this Section 7.03 as the “Claims”). Notwithstanding any other provision contained in this Agreement, the Company hereby irrevocably waives any Claim they may have, now or in the future and will not seek recourse against the Trust Fund for any reason whatsoever in respect thereof; provided, however, that the foregoing waiver will not limit or prohibit the Company from pursuing a claim against SPAC, Merger Sub or any other person (a) for legal relief against monies or other assets of SPAC or Merger Sub held outside of the Trust Account or for specific performance or other equitable relief in connection with the Transactions or (b) for damages for breach of this Agreement against SPAC (or any successor entity) or Merger Sub in the event this Agreement is terminated for any reason and SPAC consummates a business combination transaction with another party. In the event that the Company commences any action or proceeding against or involving the Trust Fund in violation of the foregoing, SPAC shall be entitled to recover from the Company the associated reasonable legal fees and costs in connection with any such action, in the event SPAC prevails in such action or proceeding.
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ARTICLE VIII.
ADDITIONAL AGREEMENTS
Section 8.01 Proxy Statement; Registration Statement.
(a) As promptly as practicable after the execution of this Agreement and the delivery of the PCAOB 2025 Audited Financials from the Company to SPAC, (i) SPAC and the Company shall prepare and file with the SEC a registration statement on Form S-4 (together with all amendments thereto and including the proxy statement/prospectus included therein, the “Registration Statement”) in connection with the registration under the Securities Act of the shares of Domesticated SPAC Common Stock (A) to be issued to the stockholders of the Company pursuant to this Agreement, (B) the Domesticated SPAC Common Stock, the Domesticated SPAC Units and the Domesticated SPAC Rights to be issued upon the conversion of the issued and outstanding SPAC Ordinary Shares, SPAC Units and SPAC Rights, respectively, pursuant to the Domestication, (C) the Domesticated SPAC Common Stock to be issued upon conversion of the outstanding Company Bridge Amended and Restated Convertible Notes and the SPAC July 2026 Senior Secured Convertible Notes issued in exchange for the Company July 2026 Senior Secured Convertible Notes pursuant to Section 3.06, (D) the Domesticated SPAC Common Stock to be issued upon exercise of the outstanding Company Bridge Amended and Restated Warrants, (E) the SPAC July 2026 Senior Secured Convertible Notes issued in exchange for the Company July 2026 Senior Secured Convertible Notes pursuant to Section 3.06 and the SPAC July 2026 Warrants issued in exchange for the Company July 2026 Warrants pursuant to Section 3.07(a), (F) the shares of Domesticated SPAC Common Stock issued in exchange for the Space-Eyes Subsequent Closing Shares (as defined in the Company July 2026 Securities Purchase Agreement) pursuant to the Company July 2026 Securities Purchase Agreement, and (G) the Domesticated SPAC Common Stock to be issued upon exercise of the SPAC July 2026 Warrants. The Registration Statement shall include a proxy statement/prospectus (as amended or supplemented, the “Proxy Statement”) to be sent to the shareholders of SPAC relating to with respect to SPAC’s shareholders, the special meeting of SPAC’s stockholders (the “SPAC Shareholders’ Meeting”) to be held to consider approval and adoption of (1) this Agreement and the Merger, (2) the Domestication, (3) the issuance of Domesticated SPAC Common Stock as contemplated by this Agreement pursuant to the requirements of Nasdaq, (4) the SPAC A&R Certificate of Incorporation, (5) the Stock Incentive Plan, (6) the election of directors as contemplated by Section 3.05 and (7) any other proposals the parties deem necessary to effectuate the Transactions (collectively, the “SPAC Proposals”). SPAC and the Company each shall use their reasonable best efforts to (i) cause the Registration Statement when filed with the SEC to comply in all material respects with all legal requirements applicable thereto, (ii) respond as promptly as reasonably practicable to and resolve all comments received from the SEC concerning the Proxy Statement and the Registration Statement, (iii) cause the Registration Statement to be declared effective under the Securities Act as promptly as practicable and iv) to keep the Registration Statement effective as long as is necessary to consummate the Transactions. Prior to the effective date of the Registration Statement, SPAC shall take all or any action required under any applicable federal or state securities laws in connection with the issuance of shares of Domesticated SPAC Common Stock, in each case to be issued or issuable to the stockholders of the Company pursuant to this Agreement. As promptly as practicable after finalization of the Proxy Statement, each of the Company and SPAC shall mail the Proxy Statement to their respective stockholders. Each of SPAC and the Company shall furnish all information concerning it as may reasonably be requested by the other party in connection with such actions and the preparation of the Registration Statement and the Proxy Statement. Additionally, SPAC shall, promptly following the Effective Time, file with the SEC a registration statement on Form S-1 covering the resale of such shares of Domesticated SPAC issuable under the Company Amended and Restated Bridge Warrants and Company July 2026 Warrants, and shall use commercially reasonable efforts to cause such registration statement to be declared effective under the Securities Act as promptly as practicable thereafter, and shall use commercially reasonable efforts to keep such registration statement continuously effective until the earlier of (x) the date all such shares have been resold and (y) the date such shares are eligible for resale without volume or manner-of-sale restrictions and without current public information requirements pursuant to Rule 144 under the Securities.
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(b) No filing of, or amendment or supplement to the Proxy Statement or the Registration Statement will be made by SPAC or the Company without the approval of the other party (such approval not to be unreasonably withheld, conditioned or delayed). For the avoidance of doubt, prior to filing with the SEC, SPAC will make available to the Company drafts of the Registration Statements, Proxy Statement and any other documents to be filed with the SEC, both preliminary and final, and drafts of any amendment or supplement to the Registration Statement, Proxy Statement or such other document and will provide the Company with a reasonable opportunity to comment on such drafts and shall consider such comments in good faith. SPAC and the Company each will advise the other, promptly after they receive notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order, of the suspension of the qualification of the Domesticated SPAC Common Stock to be issued or issuable to the stockholders of the Company in connection with this Agreement for offering or sale in any jurisdiction, or of any request by the SEC for amendment of the Proxy Statement or the Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information. Each of SPAC and the Company shall cooperate and mutually agree upon (such agreement not to be unreasonably withheld or delayed), any response to comments of the SEC or its staff with respect to the Proxy Statement or the Registration Statement and any amendment to the Proxy Statement or the Registration Statement filed in response thereto.
(c) SPAC represents that the information supplied by SPAC for inclusion in the Registration Statement and the Proxy Statement shall not, at (i) the time the Registration Statement is declared effective, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the shareholders of SPAC and the Company, (iii) the time of the SPAC Shareholders’ Meeting, and (iv) the Effective Time, contain any untrue statement of a material fact or fail to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If, at any time prior to the Effective Time, any event or circumstance relating to SPAC or Merger Sub, or their respective officers or directors, should be discovered by SPAC which should be set forth in an amendment or a supplement to the Registration Statement or the Proxy Statement, SPAC shall promptly inform the Company. All documents that SPAC is responsible for filing with the SEC in connection with the Merger or the other Transactions will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the rules and regulations thereunder and the Exchange Act and the rules and regulations thereunder.
(d) The Company represents that the information supplied by the Company for inclusion in the Registration Statement and the Proxy Statement shall not, at (i) the time the Registration Statement is declared effective, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the shareholders of SPAC and the Company, (iii) the time of the SPAC Shareholders’ Meeting, and (iv) the Effective Time, contain any untrue statement of a material fact or fail to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If, at any time prior to the Effective Time, any event or circumstance relating to the Company, or its officers or directors, should be discovered by the Company which should be set forth in an amendment or a supplement to the Registration Statement or the Proxy Statement, the Company shall promptly inform SPAC.
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Section 8.02 SPAC Shareholders’ Meeting; and Merger Sub Stockholder’s Approval.
(a) SPAC shall use its reasonable best efforts to hold the SPAC Shareholders’ Meeting as soon as practicable after the date on which the Registration Statement becomes effective for the purpose of voting solely upon the SPAC Proposals (but in any event no later than 30 days after the date on which the Proxy Statement is mailed to shareholders of SPAC). SPAC shall use its reasonable best efforts to obtain the approval of the SPAC Proposals at the SPAC Shareholders’ Meeting, including by soliciting from its stockholders proxies as promptly as possible in favor of the SPAC Proposals, and shall take all other action necessary or advisable to secure the required vote or consent of its stockholders. The SPAC Board shall recommend to its stockholders that they approve the SPAC Proposals and shall include such recommendation in the Proxy Statement.
(b) Promptly following the execution of this Agreement, SPAC shall approve and adopt this Agreement and approve the Merger and the other Transactions, as the sole stockholder of Merger Sub.
Section 8.03 Company Stockholders’ Written Consent. Within five (5) Business Days following the Registration Statement being declared effective, the Company shall deliver to SPAC a written consent, in form and substance reasonably acceptable to SPAC, containing the Requisite Approval in favor of the approval and adoption of this Agreement, the Merger and all other Transactions (the “Written Consent”).
Section 8.04 Access to Information; Confidentiality.
(a) From the date of this Agreement until the Effective Time or the earlier termination of this Agreement, the Company and SPAC shall (and shall cause their respective subsidiaries and instruct their respective Representatives to): (i) provide to the other party (and the other party’s officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives, collectively, “Representatives”) reasonable access during normal business hours and upon reasonable prior notice to the officers, employees, agents, properties, offices and other facilities of such party and its subsidiaries and to the books and records thereof; and (ii) furnish promptly to the other party and allow access to and all information concerning, the business, properties, contracts, assets, liabilities, personnel and other aspects of such party and its subsidiaries as the other party or its Representatives may reasonably request, including financial statements, records, internal and external audit reports, regulatory reports and all other documents requested. Notwithstanding the foregoing, but without limiting the Company’s obligations under Section 8.07, neither the Company nor SPAC shall be required to provide access to or disclose information to the extent such party has been advised by legal counsel that the access or disclosure would (x) violate its obligations of confidentiality with respect to such information, (y) jeopardize the protection of attorney-client privilege or (z) contravene applicable Law (it being agreed that the parties shall use their commercially reasonable efforts to cause such information to be provided in a manner that would not result in such inconsistency, conflict, jeopardy or contravention).
(b) All information obtained by the parties pursuant to this Section 8.04 shall be kept confidential in accordance with the confidentiality and non-disclosure agreement, dated February 28, 2026 (the “Confidentiality Agreement”), between SPAC and the Company.
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(c) Notwithstanding anything in this Agreement to the contrary, each party (and its Representatives) may consult any tax advisor regarding the tax treatment and tax structure of the Transactions and may disclose to any other person, without limitation of any kind, the tax treatment and tax structure of the Transactions and all materials (including opinions or other tax analyses) that are provided relating to such treatment or structure, in each case in accordance with the Confidentiality Agreement.
Section 8.05 Directors’ and Officers’ Indemnification; D&O Tail.
(a) The certificate of incorporation and bylaws of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification, advancement or expense reimbursement than are set forth in the Company Certificate of Incorporation and the bylaws of the Company, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of the Company, unless such modification shall be required by applicable Law.
(b) All rights to indemnification, advancement or exculpation now existing in favor of the directors and officers of SPAC, as provided in the SPAC Organizational Documents or indemnification agreements as of immediately prior to the Effective Time, in either case, solely with respect to any matters occurring on or prior to the Effective Time shall survive the transactions contemplated by this Agreement and shall continue in full force and effect from and after the Effective Time for a period of six (6) years. SPAC will perform and discharge, or cause to be performed and discharged, all obligations to provide such indemnity, advancement and exculpation during such six (6)-year period. To the maximum extent permitted by applicable Law, during such six (6)-year period, SPAC shall advance, or caused to be advanced, expenses incurred in connection with such indemnification as provided in the SPAC Organizational Documents or other applicable agreements as in effect immediately prior to the Effective Time. The indemnification, advancement and liability limitation or exculpation provisions of the SPAC Organizational Documents shall not, during such six (6)-year period, be amended, repealed or otherwise modified after the Effective Time in any manner that would materially and adversely affect the rights thereunder of individuals who, as of immediately prior to the Effective Time, or at any time prior to such time, were directors or officers of SPAC entitled to be so indemnified, have their liability limited or be exculpated with respect to any matters occurring on or prior to the Effective Time and relating to the fact that such person was a director or officer of SPAC immediately prior to the Effective Time, unless such amendment, repeal or other modification is required by applicable Law.
(c) Each of SPAC and the Surviving Corporation shall purchase (which shall be paid for in full by the Surviving Corporation) and have in place at the Closing a “tail” or “runoff” policy (the “D&O Tail”) providing directors’ and officers’ liability insurance coverage for the benefit of those persons who are covered by the directors’ and officers’ liability insurance policies maintained by the Company or SPAC as of the Closing with respect to matters occurring prior to the Effective Time. The D&O Tail shall provide for terms with respect to coverage, deductibles and amounts that are no less favorable than those of the policy in effect immediately prior to the Effective Time for the benefit of the SPAC’s directors and officers, and shall remain in effect for the six-year period following the Closing.
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(d) If SPAC or any of its successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of their respective properties and assets as an entity in one or a series of related transactions to any person, then in each such case, proper provisions shall be made so that the successors or assigns of SPAC shall assume all of the obligations set forth in this Section 8.05.
(e) On the Closing Date, the SPAC shall enter into customary indemnification agreements reasonably satisfactory to each of the Company and the SPAC with the post-Closing directors and officers of the SPAC and the Surviving Corporation, which indemnification agreements shall continue to be effective following the Closing.
(f) The persons entitled to the indemnification, liability limitation, exculpation and insurance set forth in this Section 8.05 are intended to be third-party beneficiaries of this Section 8.05. This Section 8.05 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of SPAC.
Section 8.06 Notification of Certain Matters.
(a) The Company shall give prompt notice to SPAC, and SPAC shall give prompt notice to the Company, of any event which a party becomes aware of between the date of this Agreement and the Closing (or the earlier termination of this Agreement in accordance with Article X), the occurrence, or non-occurrence of which causes or would reasonably be expected to cause any of the conditions set forth in Article IX to fail.
(b) No notification given by the Company under this Section 8.06 shall limit or otherwise affect any of the representations, warranties, covenants or obligations of the Company contained in this Agreement.
Section 8.07 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions of this Agreement, each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, appropriate action, and to do, or cause to be done, such things as are necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective the Transactions, including using its reasonable best efforts to obtain all permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and parties to contracts with the Company necessary for the consummation of the Transactions and to fulfill the conditions to the Merger. In case, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party shall use their reasonable best efforts to take all such action.
(b) Each of the parties shall keep each other apprised of the status of matters relating to the Transactions, including promptly notifying the other parties of any communication it or any of its affiliates receives from any Governmental Authority relating to the matters that are the subject of this Agreement and permitting the other parties to review in advance, and to the extent practicable consult about, any proposed communication by such party to any Governmental Authority in connection with the Transactions. No party to this Agreement shall agree to participate in any meeting with any Governmental Authority in respect of any filings, investigation or other inquiry unless it consults with the other parties in advance and, to the extent permitted by such Governmental Authority, gives the other parties the opportunity to attend and participate at such meeting. Subject to the terms of the Confidentiality Agreement, the parties will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other parties may reasonably request in connection with the foregoing. Subject to the terms of the Confidentiality Agreement, the parties will provide each other with copies of all material correspondence, filings or communications, including any documents, information and data contained therewith, between them or any of their Representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to this Agreement and the Transactions. No party shall take or cause to be taken any action before any Governmental Authority that is inconsistent with or intended to delay its action on requests for a consent or the consummation of the Transactions.
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Section 8.08 Public Announcements. The initial press release relating to this Agreement shall be a joint press release the text of which has been agreed to by each of SPAC and the Company. Thereafter, between the date of this Agreement and the Closing Date (or the earlier termination of this Agreement in accordance with Article X) unless otherwise prohibited by applicable Law or the requirements of Nasdaq, each of SPAC and the Company shall each use its reasonable best efforts to consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement, the Merger or any of the other Transactions, and shall not issue any such press release or make any such public statement without the prior written consent of the other party; provided, however, that each of SPAC and the Company may make any such announcement or other communication if such announcement or other communication is required by applicable Law or the rules of any stock exchange, in which case the disclosing party shall, to the fullest extent permitted by applicable Law, first allow the other party to review such announcement or communication and the opportunity to comment thereon and the disclosing party shall consider such comments in good faith. Furthermore, nothing contained in this Section 8.08 shall prevent SPAC or the Company and/or its respective affiliates from furnishing customary or other reasonable information concerning the Transactions to their investors and prospective investors.
Section 8.09 Tax Matters. Any and all transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees (including any associated penalties and interest) (“Transfer Taxes”) incurred in connection with or arising out of the transactions contemplated by this Agreement shall be borne and paid by the legally responsible party as required by applicable Law. The parties shall cooperate in the execution and delivery of any and all instruments and certificates reasonably necessary to minimize the amount of any Transfer Taxes and to enable any of the foregoing to comply with any Tax Return filing requirements for such Transfer Taxes. The person(s) required by applicable Law to file any necessary Tax Returns and other documentation with respect to any Transfer Taxes shall timely file, or shall cause to be timely filed, with the relevant Governmental Authority each such Tax Return and shall timely pay to the relevant Governmental Authority all Transfer Taxes due and payable thereon (subject to reimbursement in accordance with this Section 8.09). The cost and expense of preparing and filing such Tax Returns and documentation shall be borne by the person(s) required by applicable Law to file any necessary Tax Returns and other documentation.
(a) If, in connection with the preparation and filing of the Registration Statement and Proxy Statement, the SEC requests or requires a tax opinion be prepared and submitted regarding (i) the qualification of the Domestication for the Domestication Intended Tax Treatment, SPAC will use its reasonable best efforts to cause U.S. tax counsel engaged by SPAC to deliver such tax opinion to SPAC, or (ii) the qualification of the Merger for the Merger Intended Tax Treatment, the Company will use its reasonable best efforts to cause U.S. tax counsel engaged by the Company to deliver such tax opinion to the Company. In each such case, each of the Parties shall use reasonable best efforts to execute and deliver customary Tax representation letters to the applicable tax counsel in form and substance reasonably satisfactory to such counsel. Notwithstanding anything to the contrary in this Agreement, Loeb & Loeb LLP shall not be required to provide any opinion to any party regarding the tax consequences to the Company or its shareholders of any of the Transactions.
Section 8.10 Stock Exchange Listing. SPAC will use its reasonable best efforts to cause the Aggregate Transaction Consideration issued in connection with the Transactions to be approved for listing on Nasdaq at Closing. During the period from the date hereof until the Closing, SPAC shall use its reasonable best efforts to keep the SPAC Units, SPAC Class A Ordinary Shares and SPAC Rights listed for trading on Nasdaq.
Section 8.11 PCAOB Audited Financials; Unaudited 2026 Financials. The Company shall use reasonable best efforts to deliver true and complete copies of the audited consolidated balance sheet of the Company as of December 31, 2025 and December 31, 2024, and the related audited consolidated statements of income and cash flows of the Company for the years then ended, each audited in accordance with the auditing standards of the PCAOB, together with an unqualified (except with respect to material weaknesses) audit report thereon from the auditor (collectively, the “PCAOB 2025 Audited Financials”) not later than August 15, 2026. The Company shall make available to SPAC a true and complete copy of the unaudited balance sheet of the Company and its Subsidiaries as of March 31, 2026 and the related unaudited statements of operations and cash flows of the Company and its Subsidiaries for the 3-month period then ended no later than August 30, 2026.
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Section 8.12 Exclusivity.
(a) From and after the date hereof until the Effective Time or, if earlier, the valid termination of this Agreement in accordance with Section 10.01, SPAC shall not take, nor shall it permit any of its affiliates or Representatives to take, whether directly or indirectly, any action to (i) solicit, initiate, continue or engage in discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information to or commence due diligence with respect to, any Person (other than the Company, its stockholders and/or any of their affiliates or Representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to any business combination transaction (a “Business Combination Proposal”), (ii) enter into any agreement regarding, continue or otherwise knowingly participate in any discussions regarding, or furnish to any person any information with respect to, or cooperate in any way that would otherwise reasonably be expected to lead to, any Business Combination Proposal, or (iii) commence, continue or renew any due diligence investigation regarding any Business Combination Proposal, in each case, other than with the Company, its stockholders and its affiliates and Representatives. SPAC shall, and shall cause its affiliates and Representatives to, immediately cease any and all existing discussions or negotiations with any person conducted prior to the date hereof with respect to, or which is reasonably likely to give rise to or result in, a Business Combination Proposal. If the SPAC or any of its affiliates or its or their respective Representatives receives any inquiry or proposal with respect to a Business Combination Proposal at any time prior to the Closing, then the SPAC shall promptly (and in no event later than two (2) Business Days after the SPAC becomes aware of such inquiry or proposal) notify such person in writing that the SPAC is subject to an exclusivity agreement with respect to the Transaction that prohibits the SPAC or any of its affiliates or its or their respective Representatives from considering such inquiry or proposal.
(b) Except as expressly permitted by the terms of this Agreement, from the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall not, and shall cause it and its Representatives not to, directly or indirectly: (i) solicit, initiate, knowingly encourage (including by means of furnishing or disclosing non-public information), knowingly facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer (written or oral) with respect to a Company Acquisition Proposal; (ii) furnish or disclose any non-public information to any person in connection with, or that could reasonably be expected to lead to, a Company Acquisition Proposal; (iii) enter into any contract or other arrangement or understanding regarding a Company Acquisition Proposal, (iv) prepare or take any steps in connection with a public offering of any equity securities of the Company or any of the Subsidiaries; (v) prepare or take any steps in connection with a public offering of any equity securities of the Company, or a newly formed holding company of the Company, or (vi) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any person to do or seek to do any of the foregoing. The Company agrees to (A) notify SPAC promptly upon receipt of any Company Acquisition Proposal by the Company (but in any event within two (2) Business Days after the Company becomes aware of such proposal), and to describe the material terms and conditions of any such Company Acquisition Proposal in reasonable detail (including the identity of the persons making such Company Acquisition Proposal) and (B) keep SPAC reasonably informed on a current basis of any modifications to such offer or information. The Company shall immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any persons (other than SPAC) conducted prior to or as of the date hereof by the Company, and will cause its Representatives to cease and cause to be terminated any and all existing activities, discussions or negotiations, that would reasonably be expected to lead to a Company Acquisition Proposal, and shall, as promptly as practicable, terminate access by each such person and its Representatives to any online or other data rooms containing any non-public information in respect of the Company or any of the Subsidiaries for the purpose of permitting such persons to evaluate a potential Company Acquisition Proposal.
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Section 8.13 Trust Account. As of the Effective Time, the obligations of SPAC to dissolve or liquidate within a specified time period as contained in SPAC’s Certificate of Incorporation will be terminated and SPAC shall have no obligation whatsoever to dissolve and liquidate the assets of SPAC by reason of the consummation of the Merger or otherwise, and no stockholder of SPAC shall be entitled to receive any amount from the Trust Account. At least 48 hours prior to the Effective Time, SPAC shall provide notice to the Trustee in accordance with the Trust Agreement and shall deliver any other documents, opinions or notices required to be delivered to the Trustee pursuant to the Trust Agreement and cause the Trustee prior to the Effective Time to, and the Trustee shall thereupon be obligated to, transfer all funds held in the Trust Account to SPAC (to be held as available cash on the balance sheet of SPAC, and to be used for working capital and other general corporate purposes of the business following the Closing) and thereafter shall cause the Trust Account and the Trust Agreement to terminate.
Section 8.14 Stock Incentive Plan. SPAC shall, prior to the Effective Time, approve and adopt a new equity incentive plan (the “Stock Incentive Plan”) to be effective in connection with the Closing, which shall be in such form as the Company and SPAC shall mutually determine and which shall provide for an aggregate share reserve thereunder equal to ten percent (10%) of the number of shares of Domesticated SPAC Common Stock outstanding on a fully diluted basis.
Section 8.15 Financing. Notwithstanding anything to the contrary in this Agreement, SPAC and the Company shall be permitted to enter into PIPE Securities Purchase Agreements and related documents with the PIPE Investors with respect to, and to consummate, the Financing.
Section 8.16 HSR Act.
(a) To the extent required under any Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade, including the HSR Act (“Antitrust Laws”), each party hereto agrees to promptly (and in connection with any required filings under the HSR Act, no later than ten (10) Business Days after the date of this Agreement) make any required filing or application under Antitrust Laws, as applicable. The parties hereto agree to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to Antitrust Laws and to take all other actions necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods or obtain required approvals, as applicable under Antitrust Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the HSR Act.
(b) Each party hereto shall, in connection with its efforts to obtain all requisite approvals and authorizations for the transactions contemplated hereby under any Antitrust Law, use its reasonable best efforts to: (i) cooperate in all respects with each other party or its affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any Action initiated by a private person; (ii) keep the other parties reasonably informed of any communication received by such party or its Representatives from, or given by such party or its Representatives to, any Governmental Authority and of any communication received or given in connection with any Action by a private person, in each case regarding any of the transactions contemplated hereby; (iii) permit a Representative of the other parties and their respective outside counsel to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any Action by a private person, with any other person, and to the extent permitted by such Governmental Authority or other person, give a Representative or Representatives of the other parties the opportunity to attend and participate in such meetings and conferences; (iv) in the event a party’s Representative is prohibited from participating in or attending any meetings or conferences, the other parties shall keep such party promptly and reasonably apprised with respect thereto; and (v) use reasonable best efforts to cooperate in the filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the transactions contemplated hereby, articulating any regulatory or competitive argument or responding to requests or objections made by any Governmental Authority.
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(c) Each party hereto shall take any action that could reasonably be expected to adversely affect or materially delay the approval of any Governmental Authority of any required filings or applications under Antitrust Laws. The parties hereto further covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of the parties hereto to consummate the transactions contemplated hereby, to use reasonable best efforts to prevent or lift the entry, enactment or promulgation thereof, as the case may be.
Section 8.17 Section 16 Matters. Prior to the Effective Time, SPAC’s Board, or an appropriate committee of “non-employee directors” (as defined in Rule 16b-3 under the Exchange Act) thereof, shall adopt a resolution consistent with the interpretive guidance of the SEC so that the acquisition of Domesticated SPAC Common Stock (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) pursuant to this Agreement (and the other agreements contemplated hereby), by any person owning securities of the Company who is expected to become a director or officer (as defined under Rule 16a-1(f) under the Exchange Act) of SPAC following the Closing shall be an exempt transaction for purposes of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 thereunder.
Section 8.18 SPAC Public Filings. From the date hereof through the Effective Time, the SPAC will use its commercially reasonable efforts to keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable laws.
Section 8.19 Executive Compensation Arrangements. Effective at the Closing, SPAC shall cause the Surviving Corporation to enter into an Employment Agreement with each of Captain Jatinder S. Bains and Mr. Dylan M. Monroe in the form reasonably acceptable to SPAC (the “Executive Employment Agreements”).
ARTICLE IX.
CONDITIONS TO THE MERGER
Section 9.01 Conditions to the Obligations of Each Party. The obligations of the Company, SPAC and Merger Sub to consummate the Transactions, including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following conditions:
(a) Written Consent. The Written Consent shall have been delivered to SPAC.
(b) SPAC Shareholders’ Approval. The SPAC Proposals shall have been approved and adopted by the requisite affirmative vote of the shareholders of SPAC in accordance with the Proxy Statement, the SPAC Organizational Documents, applicable Law and the rules and regulations of Nasdaq.
(c) No Order. No Governmental Authority shall have been enacted, issued, promulgated, enforced or entered any Law, rule, regulation, judgment, decree, executive order or award which is then in effect and has the effect of making the Transactions, including the Merger, illegal or otherwise prohibiting consummation of the Transactions, including the Merger.
(d) Registration Statement. The Registration Statement shall have been declared effective under the Securities Act, and shall remain effective as of the Closing. No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for purposes of suspending the effectiveness of the Registration Statement shall have been initiated or be threatened by the SEC and not withdrawn.
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(e) HSR Act. All required filings under the HSR Act, and any other applicable anti-trust laws, shall have been completed and any applicable waiting period, any extensions thereof, and any commitments by the parties not to close before a certain date under a timing agreement entered into with any Governmental Authority shall have expired or otherwise been terminated.
(f) Stock Exchange Listing. The Domesticated SPAC Common Stock comprising the Aggregate Transaction Consideration to be issued pursuant to this Agreement shall have been approved for listing on Nasdaq, subject only to official notice of issuance thereof.
(g) Domestication. The Domestication shall have been completed as provided in Section 2.01 and a time-stamped copy of the certificate issued by the Secretary of State of the State of Delaware in relation thereto shall have been delivered to the Company.
Section 9.02 Conditions to the Obligations of SPAC and Merger Sub. The obligations of SPAC and Merger Sub to consummate the Transactions, including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following additional conditions:
(a) Representations and Warranties. The representations and warranties of the Company contained in Section 5.01 (Organization and Qualification; Subsidiaries), Section 5.04 (Authority Relative to this Agreement), Section 5.08 (Absence of Certain Changes or Events) and Section 5.24 (Brokers) shall each be true and correct (without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all material respects as of the Closing Date as though made on the Closing Date, except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date. The representations and warranties of the Company contained in Section 5.03 (Capitalization), shall each be true and correct in all respects other than de minimis inaccuracies as of the Closing Date as though made on the Closing Date, except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date. All other representations and warranties of the Company contained in this Agreement shall be true and correct (without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the Closing Date, as though made on and as of the Closing Date, except (i) to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date and (ii) where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Company Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time, including the transfer to the Company of all of the equity interests in the subsidiaries listed on Company Disclosure Schedule 5.03(a), except to the extent prohibited by applicable law.
(c) Company Bridge Amended and Restated Warrants. The Company shall have received Company Bridge Amended and Restated Warrants covering all outstanding Company Warrants as of immediately prior to the Effective Time, each duly executed by the holders party thereto and in full force and effect as of the Effective Time.
(d) Company Bridge Amended and Restated Notes. The Company shall have received Company Bridge Amended and Restated Notes as of immediately prior to the Effective Time, each duly executed by the holders party thereto and in full force and effect as of the Effective Time.
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(e) Material Adverse Effect. No Company Material Adverse Effect shall have occurred between the date of this Agreement and the Closing Date.
(f) Restrictive Covenant Agreements. Each Restricted Person shall have executed and delivered to the SPAC a restrictive covenant agreement (“Restrictive Covenant Agreement”) as reasonably acceptable to SPAC.
(g) Officer Certificate. The Company shall have delivered to SPAC a certificate, dated the date of the Closing, signed by an officer of the Company, certifying as to the satisfaction of the conditions specified in Section 9.02(a), Section 9.02(b), Section 9.02(c), Section 9.02(d), Section 9.02(e), Section 9.02(f), and Section 9.02(g).
(h) Registration Rights and Lock-Up Agreement. All parties to the Registration Rights and Lock-Up Agreement (other than SPAC and the holders of equity securities of SPAC prior to the Closing contemplated to be party thereto) shall have delivered, or cause to be delivered, to SPAC a copy of the Registration Rights and Lock-Up Agreement duly executed by all such parties.
(i) FIRPTA Certificate. The Company shall have delivered to SPAC a duly executed certificate conforming to the requirements of Treasury Regulation Sections 1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i), and a notice to be delivered to the United States Internal Revenue Service as required under Treasury Regulation Section 1.897-2(h)(2) together with written authorization for SPAC to deliver such notice to the IRS on behalf of the Company following the Closing, each dated no more than thirty (30) days prior to the Closing Date and in form and substance as reasonably agreed upon by SPAC and the Company.
Section 9.03 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Transactions, including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to Closing of the following additional conditions:
(a) Representations and Warranties. The representations and warranties of SPAC and Merger Sub contained in Section 6.01 (Corporation Organization), Section 6.04 (Authority Relative to this Agreement), Section 6.08 (Absence of Certain Changes or Events) and Section 6.12 (Brokers) shall each be true and correct (without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all material respects as of the Closing Date as though made on the Closing Date, except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date. The representations and warranties of SPAC and Merger Sub contained in Section 6.03 (Capitalization) shall each be true and correct in all respects other than de minimis inaccuracies as of the Closing Date as though made on the Closing Date, except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date. All other representations and warranties of SPAC and Merger Sub contained in this Agreement shall be true and correct (without giving any effect to any limitation as to “materiality” or “SPAC Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the Closing Date, as though made on and as of the Closing Date, except (i) to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date and (ii) where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in an SPAC Material Adverse Effect.
(b) Agreements and Covenants. SPAC and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.
(c) Material Adverse Effect. No SPAC Material Adverse Effect shall have occurred between the date of this Agreement and the Closing Date.
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(d) Officer Certificate. SPAC shall have delivered to the Company a certificate, dated the date of the Closing, signed by an officer of SPAC, certifying as to the satisfaction of the conditions specified in Section 9.03(a), Section 9.03(b) and Section 9.03(c)
(e) Registration Rights and Lock-Up Agreement. SPAC and the holders of equity securities of SPAC prior to the Closing contemplated to be party thereto shall have delivered a copy of the Registration Rights and Lock-Up Agreement duly executed by SPAC and the holders of equity securities of SPAC prior to the Closing contemplated to be party thereto.
ARTICLE X.
TERMINATION, AMENDMENT AND WAIVER
Section 10.01 Termination. This Agreement may be terminated and the Merger and the other Transactions may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the Transactions by the stockholders of the Company or SPAC, as follows:
(a) by mutual written consent of SPAC and the Company;
(b) by either SPAC or the Company if the Effective Time shall not have occurred prior to April 30 2027 (the “Outside Date”); provided, further, that this Agreement may not be terminated under this Section 10.01(b) by or on behalf of any party that either directly or indirectly through its affiliates is in breach or violation of any representation, warranty, covenant, agreement or obligation contained herein and such breach or violation is the principal cause of the failure of a condition set forth in Article IX on or prior to the Outside Date;
(c) by either SPAC or the Company if any Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary, preliminary or permanent) which has become final and nonappealable and has the effect of making consummation of the Transactions, including the Merger, illegal or otherwise preventing or prohibiting consummation of the Transactions, the Merger;
(d) by either SPAC or the Company if any of the SPAC Proposals shall fail to receive the requisite vote for approval at the SPAC Shareholders’ Meeting or any adjournment thereof;
(e) by SPAC upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in Sections 9.02(a) and 9.02(b) would not be satisfied (“Terminating Company Breach”); provided that SPAC has not waived such Terminating Company Breach and SPAC and Merger Sub are not then in material breach of their representations, warranties, covenants or agreements in this Agreement; provided further that, if such Terminating Company Breach is curable by the Company, SPAC may not terminate this Agreement under this Section 10.01(e) for so long as the Company continues to exercise its reasonable efforts to cure such breach, unless such breach is not cured within thirty (30) days after notice of such breach is provided by SPAC to the Company;
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(f) by the Company upon a breach of any representation, warranty, covenant or agreement on the part of SPAC and Merger Sub set forth in this Agreement, or if any representation or warranty of SPAC and Merger Sub shall have become untrue, in either case such that the conditions set forth in Sections 9.03(a) and 9.03(b) would not be satisfied (“Terminating SPAC Breach”); provided that the Company has not waived such Terminating SPAC Breach and the Company is not then in material breach of their representations, warranties, covenants or agreements in this Agreement; provided, however, that, if such Terminating SPAC Breach is curable by SPAC and Merger Sub, the Company may not terminate this Agreement under this Section 10.01(f) for so long as SPAC and Merger Sub continue to exercise their reasonable efforts to cure such breach, unless such breach is not cured within thirty (30) days after notice of such breach is provided by the Company to SPAC;
(g) by the Company if the SPAC Board shall have publicly withdrawn, modified or changed, in a manner that is adverse to the Company, its recommendation to its stockholders to approve the SPAC Proposals;
(h) by the Company if SPAC has suffered or there is a SPAC Material Adverse Effect following the date of this Agreement and such SPAC Material Adverse Effect is uncured and continuing;
(i) by SPAC, if the Company has suffered or there is a Company Material Adverse Effect following the date of this Agreement and such Company Material Adverse Effect is uncured and continuing;
(j) by SPAC, if the Company has fails to deliver the Written Consent; or
(k) by SPAC if the PCAOB 2025 Audited Financials have not been delivered to SPAC, in form and substance reasonably satisfactory to the SPAC, on or before August 30, 2026.
Section 10.02 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 10.01, this Agreement shall forthwith become void and the Merger shall be abandoned, except for and subject to the following: (i) Section 7.03 and Article XI shall survive termination of this Agreement, and (ii) there shall be no liability under this Agreement on the part of any party hereto, except as set forth in this Section 10.02, Article XI, and any corresponding definitions set forth in Article I, or in the case of termination subsequent to a willful material breach of this Agreement by a party hereto.
Section 10.03 Expenses. All Expenses incurred in connection with this Agreement, the Ancillary Agreements and the Transactions contemplated hereby and thereby shall be paid by the party incurring such fees or expenses. “Expenses” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a party hereto or any of its Affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this Agreement. With respect to SPAC, Expenses shall include any and all deferred expenses (including fees or commissions payable to the underwriters and any legal fees) of its initial public offering upon consummation of a Business Combination and any Extension Expenses. If the Merger and the other Transactions shall not be consummated, all expenses (including the fees and expenses of any outside counsel, agents, advisors, consultants, experts, financial advisors and other service providers) incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, provided that the Company shall reimburse SPAC in the amount of $75,000 with respect to the SPAC’s engagement of CFGI. Notwithstanding the foregoing, SPAC and the Company shall each pay one-half of (a) the filing fee to be paid to the SEC in connection with the Registration Statement, (b) any filing fees in connection with the filings pursuant to the HSR Act and (c) any filing fees from the submission to Nasdaq of a listing application for the shares of Domesticated SPAC Common Stock, the Domesticated SPAC Units and the Domesticated SPAC Rights or regulatory filing fees required to be made in connection with the transactions contemplated hereby.
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Section 10.04 Amendment. This Agreement may be amended in writing by the parties hereto at any time prior to the Effective Time. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.
Section 10.05 Waiver. At any time prior to the Effective Time, (a) SPAC may (i) extend the time for the performance of any obligation or other act of the Company, (ii) waive any inaccuracy in the representations and warranties of the Company contained herein or in any document delivered by the Company pursuant hereto and (iii) waive compliance with any agreement of the Company or any condition to SPAC’s obligations contained herein and (b) the Company may (i) extend the time for the performance of any obligation or other act of SPAC or Merger Sub, (ii) waive any inaccuracy in the representations and warranties of SPAC or Merger Sub contained herein or in any document delivered by SPAC and/or Merger pursuant hereto and (iii) waive compliance with any agreement of SPAC or Merger Sub or any condition to the Company’s obligations contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.
Section 10.06 Trust Account Waiver. The Company acknowledges that SPAC is a blank check company with the powers and privileges to effect the Transactions. The Company further acknowledges that, as described in its final prospectus filed with the SEC (the “Prospectus”), substantially all of SPAC’s assets consist of the cash proceeds of SPAC’s initial public offering and private placements of its securities and substantially all of those proceeds have been deposited in the Trust Account. The Company acknowledges that it has been advised by SPAC that, except with respect to interest earned on the funds held in the Trust Account that may be released to SPAC to pay its income Taxes, the Trust Agreement provides that cash in the Trust Account may be disbursed only (i) if SPAC completes the transactions which constitute a business combination, as defined therein (a “Business Combination”), then to those Persons and in such amounts as described in the Prospectus; (ii) if SPAC fails to complete a Business Combination within the allotted time period and liquidates, subject to the terms of the Trust Agreement, to SPAC in limited amounts to permit SPAC to pay the costs and expenses of its liquidation and dissolution, and then to SPAC’s public stockholders; and (iii) if SPAC holds a stockholder vote to amend SPAC’s amended and restated memorandum and articles of association to modify the substance or timing of the obligation to redeem 100% of the shares of SPAC Common Stock if SPAC fails to complete a Business Combination within the allotted time period, then for the redemption of any shares of SPAC Common Stock properly tendered in connection with such vote. For and in consideration of SPAC entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company hereby irrevocably waives any right, title, interest or claim of any kind it has or may have in the future in or to any monies in the Trust Account and agrees not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with SPAC; provided that (x) nothing herein shall serve to limit or prohibit the Company’s right to pursue a claim against SPAC for legal relief against monies or other assets held outside the Trust Account, for specific performance or other equitable relief in connection with the consummation of the transactions (including a claim for SPAC to specifically perform its obligations under this Agreement and cause the disbursement of the balance of the cash remaining in the Trust Account (after giving effect to the Redemption Rights) to the Company in accordance with the terms of this Agreement and the Trust Agreement) so long as such claim would not affect SPAC’s ability to fulfill its obligation to effectuate the Redemption Rights and (y) nothing herein shall serve to limit or prohibit any claims that the Company may have in the future against SPAC’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds).
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ARTICLE XI.
GENERAL PROVISIONS
Section 11.01 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.01):
if to SPAC or Merger Sub:
McKinley Acquisition Corporation
75 Second Ave., Suite 605
Needham, MA 02494
Attention: Peter Wright
Email: [email protected]
with a copy to:
Loeb & Loeb LLP
345 Park Ave.
New York, NY 10154
Attention: Giovanni Caruso
Email: [email protected]
if to the Company:
Space-Eyes, Inc.
1200 Brickell Avenue
Penthouse 2010
Miami, FL 33131
Attention: Jatinder S. Bains
E-Mail: [email protected]
with a copy to:
Troutman Pepper Locke LLP
400 Berwyn Park Rd
Berwyn, PA 19312
Attention: Thomas Dwyer
E-Mail: [email protected]
Section 11.02 Nonsurvival of Representations, Warranties and Covenants. None of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closing and all such representations, warranties, covenants, obligations or other agreements shall terminate and expire upon the occurrence of the Closing (and there shall be no liability after the Closing in respect thereof), except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing and then only with respect to any breaches occurring after the Closing, (b) this Article XI and (c) any corresponding definitions set forth in Article I.
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Section 11.03 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.
Section 11.04 Entire Agreement; Assignment. This Agreement and the Ancillary Agreements and all exhibits, annexes an schedules or documents expressly incorporated into this Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede, except as set forth in Section 8.04(b), all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof, except for the Confidentiality Agreement. This Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise) by any party without the prior express written consent of the other parties hereto.
Section 11.05 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Section 8.05 (which is intended to be for the benefit of the persons covered thereby and may be enforced by such persons).
Section 11.06 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York applicable to contracts executed in and to be performed in that State. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any New York state or federal court. The parties hereto hereby (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) agree not to commence any Action relating thereto except in the courts described above in Delaware, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the Transactions, (a) any claim that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the Action in any such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 11.07 Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Transactions. Each of the parties hereto (a) certifies that no Representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other party hereto have been induced to enter into this Agreement and the Transactions, as applicable, by, among other things, the mutual waivers and certifications in this Section 11.07.
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Section 11.08 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 11.09 Counterparts. This Agreement may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
Section 11.10 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger) in the Court of Chancery of the State of Delaware or, if that court does not have jurisdiction, any court of the United States located in the State of Delaware without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at law or in equity as expressly permitted in this Agreement. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.
Section 11.11 Arm’s Length Bargaining; No Presumption Against Drafter. This Agreement has been negotiated at arm’s-length by parties of equal bargaining strength, each represented by counsel or having had but declined the opportunity to be represented by counsel and having participated in the drafting of this Agreement. This Agreement creates no fiduciary or other special relationship between the parties, and no such relationship otherwise exists. No presumption in favor of or against any party in the construction or interpretation of this Agreement or any provision hereof shall be made based upon which person might have drafted this Agreement or such provision.
[Signature Page Follows.]
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IN WITNESS WHEREOF, SPAC, Merger Sub, and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| MCKINLEY ACQUISITION CORPORATION | ||
| By | /s/ Peter Wright |
|
| Name: | Peter Wright | |
| Title: | Chief Executive Officer | |
| MCKINLEY ACQUISITION MERGER SUB INC. | ||
| By | /s/ Peter Wright |
|
| Name: | Peter Wright | |
| Title: | Chief Executive Officer | |
| SPACE-EYES, INC. | ||
| By | /s/ Jatin Bains | |
| Name: | Jatinder Bains | |
| Title: | Chief Executive Officer | |
[Signature Page to Business Combination Agreement]
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EXHIBIT A
Stockholder Support Agreement
A-1
EXHIBIT B
Sponsor Support Agreement
B-1
EXHIBIT C
Registration Rights and Lock-Up Agreement
C-1
SCHEDULE A
Company Knowledge Parties
Jatinder S. Bains
Dylan M. Monroe
SCHEDULE B
Key Company Stockholders
Jatinder S. Bains
Dylan M. Monroe
SCHEDULE C
SPAC Knowledge Parties
Peter Wright
Adam Dooley
Exhibit 10.1
STOCKHOLDER SUPPORT AGREEMENT
This Stockholder Support Agreement (this “Agreement”), dated as of July 30, 2026, is being entered into by and among the persons set forth on Schedule I hereto (each, a “Company Stockholder” and, collectively, the “Company Stockholders”), McKinley Acquisition Corporation, a Cayman Islands exempted company (“SPAC”), and Space-Eyes, Inc., a Delaware corporation, together with its subsidiaries, affiliates and divisions (the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined below).
RECITALS
WHEREAS, as of the date hereof, the Company Stockholders are the holders of record and the “beneficial owners” (within the meaning of Rule 13d-3 under the Exchange Act) of such number of shares of Company Common Stock as are indicated opposite each of their names on Schedule I (all such shares of Company Common Stock, together with any shares of Company Common Stock of which ownership of record or the power to vote (including, without limitation, by proxy or power of attorney) is hereafter acquired by any such Company Stockholder during the period from the date hereof through the Expiration Time (as defined below) are referred to herein as the “Subject Shares”);
WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, SPAC and McKinley Acquisition Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of SPAC (“Merger Sub”), have entered into that certain Business Combination Agreement (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), dated as of the date hereof, pursuant to which, on the terms and conditions set forth therein, among other transactions, (i) prior to the Effective Time, SPAC will migrate to, and domesticate as, a Delaware corporation in accordance with Section 388 of the DGCL and the Cayman Islands Companies Act (as revised) (the “Domestication”) and (ii) following the Domestication, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of SPAC; and
WHEREAS, as an inducement to SPAC and the Company to enter into the Business Combination Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1
STOCKHOLDER SUPPORT AGREEMENT; COVENANTS AGREEMENT
1.1. Binding Effect of Business Combination Agreement. Each Company Stockholder hereby acknowledges that he, she or it has read the Business Combination Agreement and this Agreement and has had the opportunity to consult with his, her or its tax and legal advisors. Each Company Stockholder shall be bound by and comply with Sections 8.12 (Exclusivity) in respect of Company Acquisition Proposals and 8.08 (Public Announcements) of the Business Combination Agreement (and any relevant definitions contained in any such Sections) as if (a) such Company Stockholder was an original signatory to the Business Combination Agreement with respect to such provisions, and (b) each reference to the “Company” contained in Section 8.12 of the Business Combination Agreement also referred to each such Company Stockholder.
1.2. No Transfer. During the period commencing on the date hereof and ending on the earlier of (a) the Effective Time and (b) such date and time as the Business Combination Agreement shall be terminated in accordance with Section 10.01 thereof (the earlier of clauses (a) and (b), the “Expiration Time”), each Company Stockholder shall not (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase (or Lien on), deposit into a voting trust or otherwise dispose of or agree to dispose of, directly or indirectly, file (or participate in the filing of) a registration statement with the SEC (other than the Registration Statement) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Subject Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Subject Shares (clauses (i) and (ii) collectively, a “Transfer”) or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).
1.3. New Shares. In the event that (a) any Subject Shares are issued to a Company Stockholder after the date of this Agreement pursuant to any stock dividend, stock split or sub-division, recapitalization, reclassification, combination or exchange of Subject Shares or otherwise, (b) a Company Stockholder purchases or otherwise acquires beneficial ownership of any Subject Shares after the date of this Agreement (including pursuant to the exercise of any option or other applicable equity award), or (c) a Company Stockholder acquires the right to vote or share in the voting of any Subject Shares after the date of this Agreement (collectively, the “New Securities”), then such New Securities acquired or purchased by such Company Stockholder shall be subject to the terms of this Agreement to the same extent as if they constituted the Subject Shares owned by such Company Stockholder as of the date hereof and shall be required to update Schedule I and deliver such updated Schedule I to SPAC within two (2) Business Days.
1.4. Company Stockholder Agreements.
(a) From the date hereof until the Expiration Time, each Company Stockholder hereby unconditionally and irrevocably agrees that, at any meeting of the stockholders of the Company (or any adjournment or postponement thereof), and in any action by written consent of the stockholders of the Company distributed by the Board of Directors of the Company or otherwise undertaken in connection with or as contemplated by the Business Combination Agreement or the transactions contemplated thereby (which written consent shall be delivered as promptly as reasonably practicable, and in any event within five (5) Business Days following the date that the Registration Statement (as contemplated by the Business Combination Agreement) becomes effective), such Company Stockholder shall, if a meeting is held, appear at the meeting (or any adjournment or postponement thereof), in person or by proxy, or otherwise cause its Subject Shares (to the extent such Subject Shares are entitled to vote on or provide consent with respect to such matter) to be counted as present thereat for purposes of establishing a quorum, and such Company Stockholder shall vote or provide consent (or cause to be voted or consented), in person or by proxy, all of its Subject Shares (to the extent such Subject Shares are entitled to vote on or provide consent with respect to such matter):
(i) to approve and adopt the Business Combination Agreement, the Ancillary Agreements to which the Company or SPAC is or will be a party and the transactions contemplated thereby, including the Merger, and any other matters necessary or reasonably requested by the Company or SPAC for the consummation thereof;
(ii) in any other circumstances upon which a consent, waiver or other approval may be required under agreement binding the Company in order to implement the Business Combination Agreement or any Ancillary Agreement or any of the transactions contemplated thereby, to vote, consent, waive or approve (or cause to be voted, consented, waived or approved) all of the Subject Shares held by such Company Stockholder in favor thereof;
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(iii) against any merger agreement, merger, consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or SPAC (other than the Business Combination Agreement and the transactions contemplated thereby, including the Merger), including any Company Acquisition Proposal; and
(iv) against any proposal, action or agreement that would (A) impede, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby, including the Merger, (B) result in a breach or inaccuracy in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company or SPAC under the Business Combination Agreement or any Ancillary Agreement, (C) result in a breach or inaccuracy of any covenant, representation, warranty or any other obligation or agreement of any SPAC Holder Party under this Agreement, (D) result in any of the conditions set forth in Article IX of the Business Combination Agreement not being fulfilled.
(b) Each Company Stockholder hereby agrees that it shall not commit, agree or publicly propose any intention to take any action inconsistent with the provisions of Section 1.4(a) of this Agreement.
(c) The obligations of each Company Stockholder hereunder shall apply whether or not the Board of Directors of the Company recommends the adoption of the Business Combination Agreement and the transactions contemplated thereby, including the Merger, and whether or not the Board of Directors of the Company changes, withdraws, withholds, qualifies or modifies, or publicly proposes to change, withdraw, withhold, qualify or modify, any such recommendation.
1.5. Further Assurances. Each Company Stockholder shall take, or cause to be taken, all such further actions and do, or cause to be done, all things reasonably necessary (including under applicable Laws) to effect the actions required to consummate the Merger and the other transactions contemplated by this Agreement and the Business Combination Agreement, in each case, on the terms and subject to the conditions set forth herein and therein, as applicable.
1.6. No Inconsistent Agreement. Each Company Stockholder hereby represents and covenants that such Company Stockholder has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of such Company Stockholder’s obligations hereunder.
1.7. No Challenges. Each Company Stockholder agrees not to (a) exercise any appraisal rights or any dissenters’ rights that such Company Stockholder may have (whether under applicable Law or otherwise) or could potentially have or acquire in connection with the Business Combination Agreement and the transactions contemplated by the Business Combination Agreement, including the Merger, or (b) voluntarily commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against SPAC, the Company or Merger Sub or any of their respective successors, directors, sponsors or managers, (i) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or the Business Combination Agreement or (ii) alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation or entry into the Business Combination Agreement or any of the Ancillary Agreements (including this Agreement) or the Merger.
1.8. Consent to Disclosure. Each Company Stockholder hereby consents to the publication and disclosure of such Company Stockholder’s identity and beneficial ownership of Subject Shares in the Registration Statement and any other documents or communications filed with the SEC or provided by SPAC or the Company to any Governmental Authority or to securityholders of the Company or SPAC. Each Company Stockholder will promptly provide any information reasonably requested by SPAC or the Company for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including filings with the SEC).
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1.9. No Agreement as Director or Officer. Notwithstanding anything to the contrary herein, each Company Stockholder is entering into this Agreement solely in the Company Stockholder’s capacity as record or beneficial owner of Subject Shares and nothing herein is intended to or shall limit or affect any actions taken by any employee, officer, director (or person performing similar functions), partner or other Affiliate of the Company Stockholder, solely in his or her capacity as a director or officer of the Company or other fiduciary capacity for the Company Stockholders.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of the Company Stockholders. Each Company Stockholder represents and warrants as of the date hereof to SPAC and the Company (severally and not jointly, and solely with respect to itself, himself or herself and not with respect to any other Company Stockholder) as follows:
(a) Organization; Due Authorization. If such Company Stockholder is not an individual, it is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby are within such Company Stockholder’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of such Company Stockholder. If such Company Stockholder is an individual, such Company Stockholder has full legal capacity, right and authority to execute and deliver this Agreement and to perform his or her obligations hereunder. This Agreement has been duly executed and delivered by such Company Stockholder and, assuming due authorization, execution and delivery by the other parties to this Agreement, this Agreement constitutes a legally valid and binding obligation of such Company Stockholder, enforceable against such Company Stockholder in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Agreement is being executed in a representative or fiduciary capacity, the Person signing this Agreement has full power and authority to enter into this Agreement on behalf of the applicable Company Stockholder.
(b) Ownership. Such Company Stockholder is the record and beneficial owner (as defined in the Securities Act) of, and has good title to, all of such Company Stockholder’s Subject Shares, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subject Shares (other than transfer restrictions under the Securities Act)) affecting any such Subject Shares, other than Liens (a) pursuant to (i) this Agreement, (ii) the Company’s organization documents, (iii) the Business Combination Agreement, or (iv) any applicable securities Laws or (b) that would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of the Company Stockholder to perform its obligations under this Agreement or the consummation of the transactions contemplated by this Agreement or the Business Combination Agreement. Such Subject Shares of such Company Stockholder are the only shares of Company Common Stock owned of record or beneficially by such Company Stockholder on the date of this Agreement, and none of such Company Stockholder’s Subject Shares are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Shares. Other than as set forth opposite such Company Stockholder’s name on Schedule I, such Company Stockholder does not hold or own any rights to acquire (directly or indirectly) any equity securities of the Company or any equity securities convertible into, or which can be exchanged for, equity securities of the Company.
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(c) No Conflicts. The execution and delivery of this Agreement by such Company Stockholder does not, and the performance by such Company Stockholder of his, her or its obligations hereunder will not, (i) if such Company Stockholder is not an individual, conflict with or result in a violation of the organizational documents of such Company Stockholder or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any contract binding upon such Company Stockholder or such Company Stockholder’s Subject Shares), in each case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by such Company Stockholder of its, his or her obligations under this Agreement.
(d) Litigation. There are no Actions pending against such Company Stockholder, or to the knowledge of such Company Stockholder threatened against such Company Stockholder, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by such Company Stockholder of its, his or her obligations under this Agreement.
(e) Adequate Information. Such Company Stockholder is a sophisticated stockholder and has adequate information concerning the business and financial condition of the Company, Merger Sub and SPAC to make an informed decision regarding this Agreement and the transactions contemplated by the Business Combination Agreement and has independently and without reliance upon the Company, Merger Sub or SPAC and based on such information as such Company Stockholder has deemed appropriate, made its own analysis and decision to enter into this Agreement. Such Company Stockholder acknowledges that none of the Company, Merger Sub or SPAC have made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. Such Company Stockholder acknowledges that the agreements contained herein with respect to the Subject Shares held by such Company Stockholder are irrevocable.
(f) Brokerage Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement based upon arrangements made by such Company Stockholder, for which the Company or any of its Affiliates (including SPAC) may become liable.
(g) Acknowledgment. Such Company Stockholder understands and acknowledges that each of SPAC, Merger Sub and the Company is entering into the Business Combination Agreement in reliance upon such Company Stockholder’s execution and delivery of this Agreement.
2.2. No Other Representations or Warranties. Except for the representations and warranties made by each Company Stockholder in this ARTICLE 2, no Company Stockholder makes any express or implied representation or warranty to SPAC or Merger Sub in connection with this Agreement or the transactions contemplated by this Agreement, and each Company Stockholder expressly disclaims any such other representations or warranties.
ARTICLE 3
MISCELLANEOUS
3.1. Termination. This Agreement and all of its provisions shall terminate and be of no further force or effect upon the earlier of (a) the Expiration Time and (b) the written agreement of the Company, SPAC and each Company Stockholder. Upon such termination of this Agreement, all obligations of the parties under this Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Agreement prior to such termination. This ARTICLE 3 shall survive the termination of this Agreement.
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3.2. Governing Law and Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware Chancery Court; provided, that if jurisdiction is not then available in the Delaware Chancery Court, then any such legal Action may be brought in any federal court located in the State of Delaware or any other Delaware state court. The parties hereto hereby (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) agree not to commence any Action relating thereto except in the courts described above in Delaware, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the Transactions, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the Action in any such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
3.3. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.3.
3.4. Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned (including by operation of law) without the prior written consent of all of the other parties hereto. Any attempted assignment of this Agreement not in accordance with the terms of this Section 3.4 shall be void.
3.5. Specific Performance. The parties hereto agree that irreparable damage, for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties hereto do not perform their respective obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions contemplated by this Agreement) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case, without posting a bond or undertaking and without proof of damages, and this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that (a) the other parties hereto have an adequate remedy at law, or (b) an award of specific performance is not an appropriate remedy for any reason at law or in equity.
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3.6. Amendment; Waiver.
(a) This Agreement may not be amended, modified or terminated (other than as provided in Section 3.1), except upon a written agreement executed and delivered by the Company, SPAC and each of the Company Stockholders. Any waiver of any breach of this Agreement extended by SPAC and the Company to a Company Stockholder shall not be construed as a waiver of any rights or remedies of SPAC or the Company with respect to any other Company Stockholder or with respect to any subsequent breach of such Company Stockholder or any other such Company Stockholder. Any waiver of any provisions hereof by any party to this Agreement shall not be deemed a waiver of any other provisions hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.
(b) Notwithstanding the foregoing, Schedule I hereto may be amended by the Company from time to time to add transferees of any Subject Shares in compliance with the terms of this Agreement without the consent of the other parties.
3.7. Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, then all other provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
3.8. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 3.8):
(a) if to SPAC or Merger Sub:
McKinley Acquisition Corporation
75 Second Ave., Suite 605
Needham, MA 02494
Attention: Peter Wright
Email: [email protected]
with a copy to:
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attention: Mitchell Nussbaum
Email: [email protected]
(b) if to the Company:
Space-Eyes, Inc.
1200 Brickell Avenue, Penthouse 2010
Miami, FL 33131
Attn: Capt. Jatin Bains
Email:
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with a copy to:
Troutman Pepper Locke LLP
400 Berwyn Park Rd
Berwyn, PA 19312
Attention: Thomas Dwyer
E-Mail: [email protected]
(c) If to a Company Stockholder:
To such Company Stockholder’s address set forth in Schedule I.
3.9. Counterparts. This Agreement may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
3.10. Several Liability. The liability of any Company Stockholder hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Company Stockholder be liable for any other Company Stockholder’s breach of such other Company Stockholder’s representations, warranties, covenants, or agreements contained in this Agreement.
3.11. Entire Agreement. This Agreement and the agreements referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior understandings, agreements, representations or other arrangements, both written and oral, by or among the parties hereto with respect to the subject matter hereof.
3.12. Trust Account Waiver. Each of the Company Stockholders and the Company, on behalf of themselves and each of their respective subsidiaries, and each of their respective agents, representatives and any other person or entity acting on its and their behalf (collectively, “Related Parties”), hereby acknowledges that SPAC has established a trust account (the “Trust Account”) to hold the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (in each case, including any interest accrued from time to time thereon) for the benefit of SPAC’s public shareholders and certain other parties. For and in consideration of SPAC entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Company Stockholders, the Company and SPAC, on behalf of itself and its Related Parties, hereby agrees that it shall not, in connection with this Agreement, seek to enforce any right, title or interest in or to, or initiate any action, claim, suit or proceeding of any kind against, the assets held in the Trust Account or the trustee thereof. SPAC hereby acknowledges that any such claim that any of the Company Stockholders, the Company or their Affiliates may have arising at any time prior to the consummation of the Merger is not waived or released pursuant to this paragraph but may be preserved and initiated against SPAC at any time after the consummation of the Merger, and that nothing in this paragraph shall preclude any claims by any of the Company Stockholders, the Company or any of their Related Parties against (a) SPAC seeking recourse against any assets of SPAC other than the Trust Account, or (b) assets released to SPAC from the Trust Account upon the consummation of the Merger. This Section 3.12 shall survive any expiration or termination of this Agreement.
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IN WITNESS WHEREOF, the Company Stockholders, SPAC and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.
| COMPANY STOCKHOLDERS: | ||
| /s/ Jatin Bains | ||
| Jatinder Bains | ||
| THE MONROE TRUST | ||
| By: | /s/ Dylan Monroe | |
| Name: | Dylan Monroe | |
| Title: | Trustee | |
| COMPANY: | ||
| SPACE-EYES, INC. | ||
| By: | /s/ Jatin Bains | |
| Name: | Jatinder Bains | |
| Title: | Chief Executive Officer/s/ Peter | |
| SPAC: | ||
| MCKINLEY ACQUISITION CORPORATION | ||
| By: | /s/ Peter Wright | |
| Name: | Peter Wright | |
| Title: | Chief Executive Officer | |
[Signature Page to Stockholder Support Agreement]
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Schedule I
Company Stockholder Subject Shares
| Company Stockholder | Address | Common Stock | |||
| The SSSB Revocable Trust |
The SSSB Revocable Trust c/o Space-Eyes, Inc. 1200 Brickell Ave, PH 2010 Miami, FL 33131 (856) 397-6438 |
2,881,840 | |||
| The Monroe Trust |
The Monroe Trust c/o Space-Eyes, Inc. 1200 Brickell Ave, PH 2010 Miami, FL 33131 (305) 394-0523 |
947,500 |
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Exhibit 10.2
SPONSOR SUPPORT AGREEMENT
This Sponsor Support Agreement (this “Agreement”), dated as of July 30, 2026, is being entered into by and among McKinley Partners LLC, a Delaware limited liability company (the “Sponsor”), the other persons set forth on Schedule I hereto (together with the Sponsor, each, a “SPAC Holder Party” and, collectively, the “SPAC Holder Parties”), McKinley Acquisition Corporation, a Cayman Islands exempted company (“SPAC”), and Space-Eyes, Inc., a Delaware corporation, together with its subsidiaries, affiliates and divisions (the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined below).
RECITALS
WHEREAS, as of the date hereof, the SPAC Holder Parties collectively are the holders of record and the “beneficial owners” (within the meaning of Rule 13d-3 under the Exchange Act) of 6,543,103 SPAC Class B Ordinary Shares and 420,000 SPAC Class A Ordinary Shares (such shares, the “Subject Shares”) and 420,000 SPAC Rights, in the aggregate as set forth on Schedule I attached hereto;
WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, SPAC and McKinley Acquisition Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of SPAC (“Merger Sub”), have entered into that certain Business Combination Agreement (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), dated as of the date hereof, pursuant to which, on the terms and conditions set forth therein, among other transactions, (i) prior to the Effective Time, SPAC will migrate to, and domesticate as, a Delaware corporation in accordance with Section 388 of the DGCL and the Cayman Islands Companies Act (as revised) (the “Domestication”) and (ii) following the Domestication, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of SPAC; and
WHEREAS, as an inducement to SPAC and the Company to enter into the Business Combination Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE 1
SHAREHOLDER SUPPORT AGREEMENT; COVENANTS AGREEMENT
1.1. Binding Effect of Business Combination Agreement. Each SPAC Holder Party hereby acknowledges that he, she or it has read the Business Combination Agreement and this Agreement and has had the opportunity to consult with his, her or its tax and legal advisors. Each SPAC Holder Party shall be bound by and comply with Sections 8.12 (Exclusivity) and 8.08 (Public Announcements) of the Business Combination Agreement (and any relevant definitions contained in any such Sections) as if (a) such SPAC Holder Party was an original signatory to the Business Combination Agreement with respect to such provisions, and (b) each reference to the “SPAC” contained in Section 8.12 of the Business Combination Agreement also referred to each such SPAC Holder Party.
1.2. No Transfer. During the period commencing on the date hereof and ending on the earlier of (a) the Effective Time and (b) such date and time as the Business Combination Agreement shall be terminated in accordance with Section 10.01 thereof (the earlier of clauses (a) and (b), the “Expiration Time”), each SPAC Holder Party shall not (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase (or Lien on), deposit into a voting trust or otherwise dispose of or agree to dispose of, directly or indirectly, file (or participate in the filing of) a registration statement with the SEC (other than the Registration Statement) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Subject Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Subject Shares (clauses (i) and (ii) collectively, a “Transfer”) or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).
1.3. New Shares. In the event that (a) any Subject Shares are issued to a SPAC Holder Party after the date of this Agreement pursuant to any share split, share dividend, combination, recapitalization and the like of Subject Shares or otherwise, (b) a SPAC Holder Party purchases or otherwise acquires beneficial ownership of any Subject Shares after the date of this Agreement (including pursuant to the exercise of any option or other applicable equity award), or (c) a SPAC Holder Party acquires the right to vote or share in the voting of any Subject Shares after the date of this Agreement (collectively, the “New Securities”), then such New Securities acquired or purchased by such SPAC Holder Party shall be subject to the terms of this Agreement to the same extent as if they constituted the Subject Shares owned by such SPAC Holder Party as of the date hereof.
1.4. SPAC Holder Party Agreements.
(a) From the date hereof until the Expiration Time, each SPAC Holder Party hereby unconditionally and irrevocably agrees that, at any meeting of the shareholders of SPAC (or any adjournment or postponement thereof), such SPAC Holder Party shall, if a meeting is held, appear at the meeting (or any adjournment or postponement thereof), in person or by proxy, or otherwise cause its Subject Shares (to the extent such Subject Shares are entitled to vote on or provide consent with respect to such matter) to be counted as present thereat for purposes of establishing a quorum, and such SPAC Holder Party shall vote or provide consent (or cause to be voted or consented), in person or by proxy, all of its Subject Shares (to the extent such Subject Shares are entitled to vote on or provide consent with respect to such matter):
(i) in favor of, and to approve and adopt, the SPAC Proposals;
(ii) against any Business Combination Proposal or any proposal relating to a Business Combination Proposal, in each case, other than the Domestication and the Merger;
(iii) against any merger agreement, merger, consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by SPAC (other than the Business Combination Agreement or the Ancillary Agreements and the Transactions);
(iv) against any change in the business, management or board of directors of SPAC (other than in connection with the SPAC Proposals or pursuant to the Business Combination Agreement or the Ancillary Agreements or the Transactions); and
(v) against any proposal, action or agreement that would reasonably be expected to (A) impede, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement or the Merger, (B) result in a breach or inaccuracy of any covenant, representation, warranty or any other obligation or agreement of SPAC under the Business Combination Agreement, (C) result in a breach or inaccuracy of any covenant, representation, warranty or any other obligation or agreement of any SPAC Holder Party under this Agreement, (D) result in any of the conditions set forth in Article IX of the Business Combination Agreement not being fulfilled or (E) change in any manner the dividend policy or capitalization of, including the voting rights of, any class of capital stock or other securities of SPAC (other than, in the case of this clause (E), pursuant to the Business Combination Agreement or the Ancillary Agreements and the Transactions).
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(b) During the period commencing on the date hereof and ending upon the termination of this Agreement in accordance with Section 3.1, each SPAC Holder Party hereby agrees that it shall not commit, agree or publicly propose any intention to take any action inconsistent with the foregoing.
(c) The obligations of each SPAC Holder Party hereunder shall apply whether or not the SPAC Board recommends any of the SPAC Proposals and whether or not the SPAC Board changes, withdraws, withholds, qualifies or modifies, or publicly proposes to change, withdraw, withhold, qualify or modify, any such recommendation.
(d) Waiver of Redemption Rights. Each SPAC Holder Party irrevocably and unconditionally hereby agrees that such SPAC Holder Party shall not elect to redeem or otherwise tender or submit for redemption any SPAC equity interests (including all of such SPAC Holder Party’s Subject Shares, to the extent applicable) it holds or may hereafter acquire prior to the Effective Time pursuant to or in connection with any exercise of Redemption Rights or otherwise in connection with the Transactions.
1.5. Further Assurances. Each SPAC Holder Party shall take, or cause to be taken, all such further actions and do, or cause to be done, all things reasonably necessary (including under applicable Laws) to effect the actions required to consummate the Merger and the other transactions contemplated by this Agreement and the Business Combination Agreement, in each case, on the terms and subject to the conditions set forth herein and therein, as applicable.
1.6. No Inconsistent Agreement. Each SPAC Holder Party hereby represents and covenants that such SPAC Holder Party has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of such SPAC Holder Party’s obligations hereunder.
1.7. No Challenges. During the period commencing on the date hereof and ending upon the termination of this Agreement in accordance with Section 3.1, each SPAC Holder Party agrees not to commence, join in, facilitate, assist or encourage, and agrees to take all actions within its power necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise against SPAC, Merger Sub, the Company, the Company’s affiliates or any of their respective successors, assigns or directors (except in any case arising out of the fraud of any such parties) (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or the Business Combination Agreement or (b) alleging a breach of any fiduciary duty of any person in connection with the evaluation, negotiation or entry into the Business Combination Agreement.
1.8. Consent to Disclosure. Each SPAC Holder Party hereby consents to the publication and disclosure of such SPAC Holder Party’s identity and beneficial ownership of Subject Shares in the Registration Statement on Form S-4 and any other documents or communications filed with the SEC or provided by SPAC or the Company to any Governmental Authority or to securityholders of the Company or SPAC. Each SPAC Holder Party will promptly provide any information reasonably requested by SPAC or the Company for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including filings with the SEC).
1.9. No Agreement as Director or Officer. Notwithstanding anything to the contrary herein, each SPAC Holder Party is entering into this Agreement solely in the SPAC Holder Party’s capacity as record or beneficial owner of Subject Shares and nothing herein is intended to or shall limit or affect any actions taken by any employee, officer, director (or person performing similar functions), partner or other Affiliate of the SPAC Holder Party, solely in his or her capacity as a director or officer of the SPAC or other fiduciary capacity for the SPAC Holder Party.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of each SPAC Holder Party. Each SPAC Holder Party represents and warrants as of the date hereof to SPAC and the Company (severally and not jointly, and solely with respect to itself, himself or herself and not with respect to any other SPAC Holder Party) as follows:
(a) Organization; Due Authorization. If such SPAC Holder Party is not an individual, it is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby are within such SPAC Holder Party’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of such SPAC Holder Party. If such SPAC Holder Party is an individual, such SPAC Holder Party has full legal capacity, right and authority to execute and deliver this Agreement and to perform his or her obligations hereunder. This Agreement has been duly executed and delivered by such SPAC Holder Party and, assuming due authorization, execution and delivery by the other parties to this Agreement, this Agreement constitutes a legally valid and binding obligation of such SPAC Holder Party, enforceable against such SPAC Holder Party in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Agreement is being executed in a representative or fiduciary capacity, the Person signing this Agreement has full power and authority to enter into this Agreement on behalf of the applicable SPAC Holder Party.
(b) Ownership. Such SPAC Holder Party is the record and beneficial owner (as defined in the Securities Act) of, and has good title to, all of such SPAC Holder Party’s Subject Shares, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subject Shares (other than transfer restrictions under the Securities Act)) affecting any such Subject Shares, other than Liens (a) pursuant to (i) this Agreement, (ii) SPAC’s organizational documents, (iii) the Business Combination Agreement, or (iv) any applicable securities Laws or (b) that would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of the SPAC Holder Party to perform its obligations under this Agreement or the consummation of the transactions contemplated by this Agreement or the Business Combination Agreement. Such Subject Shares of such SPAC Holder Party are the only SPAC Ordinary Shares owned of record or beneficially by such SPAC Holder Party on the date of this Agreement, and except pursuant to the SPAC Letter Agreement, none of such SPAC Holder Party’s Subject Shares are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Shares that is inconsistent with of such SPAC Holder Party’s obligations pursuant to this Agreement. Other than as set forth opposite such SPAC Holder Party’s name on Schedule I, such SPAC Holder Party does not hold or own any rights to acquire (directly or indirectly) any equity securities of SPAC or any equity securities convertible into, or which can be exchanged for, equity securities of SPAC.
(c) No Conflicts. The execution and delivery of this Agreement by such SPAC Holder Party does not, and the performance by such SPAC Holder Party of his, her or its obligations hereunder will not, (i) if such SPAC Holder Party is not an individual, conflict with or result in a violation of the organizational documents of such SPAC Holder Party or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any contract binding upon such SPAC Holder Party or such SPAC Holder Party’s Subject Shares), in each case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by such SPAC Holder Party of its, his or her obligations under this Agreement.
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(d) Litigation. There are no Actions pending against such SPAC Holder Party, or to the knowledge of such SPAC Holder Party threatened against such SPAC Holder Party, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by such SPAC Holder Party of its, his or her obligations under this Agreement.
(e) Adequate Information. Such SPAC Holder Party is a sophisticated shareholder and has adequate information concerning the business and financial condition of the Company, Merger Sub and SPAC to make an informed decision regarding this Agreement and the transactions contemplated by the Business Combination Agreement and has independently and without reliance upon the Company, Merger Sub or SPAC and based on such information as such SPAC Holder Party has deemed appropriate, made its own analysis and decision to enter into this Agreement. Such SPAC Holder Party acknowledges that the Company, Merger Sub and SPAC have not made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. Such SPAC Holder Party acknowledges that the agreements contained herein with respect to the Subject Shares held by such SPAC Holder Party are irrevocable.
(f) Brokerage Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement based upon arrangements made by such SPAC Holder Party, for which the Company or any of its Affiliates (including SPAC) may become liable.
(g) Acknowledgment. Such SPAC Holder Party understands and acknowledges that each of SPAC, Merger Sub and the Company is entering into the Business Combination Agreement in reliance upon such SPAC Holder Party’s execution and delivery of this Agreement.
2.2. No Other Representations or Warranties. Except for the representations and warranties made by each SPAC Holder Party in this ARTICLE 2, no SPAC Holder Party makes any express or implied representation or warranty to the Company in connection with this Agreement or the transactions contemplated by this Agreement, and each SPAC Holder Party expressly disclaims any such other representations or warranties.
ARTICLE 3
MISCELLANEOUS
3.1. Termination. This Agreement and all of its provisions shall terminate and be of no further force or effect upon the earlier of (a) the Expiration Time and (b) the written agreement of the Company, SPAC and each SPAC Holder Party. Upon such termination of this Agreement, all obligations of the parties under this Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Agreement prior to such termination. This ARTICLE 3 shall survive the termination of this Agreement.
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3.2. Governing Law and Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware Chancery Court; provided, that if jurisdiction is not then available in the Delaware Chancery Court, then any such legal Action may be brought in any federal court located in the State of Delaware or any other Delaware state court. The parties hereto hereby (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) agree not to commence any Action relating thereto except in the courts described above in Delaware, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the Transactions, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the Action in any such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
3.3. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.3.
3.4. Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned (including by operation of law) without the prior written consent of all of the other parties hereto. Any attempted assignment of this Agreement not in accordance with the terms of this Section 3.4 shall be void.
3.5. Specific Performance. The parties hereto agree that irreparable damage, for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties hereto do not perform their respective obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions contemplated by this Agreement) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case, without posting a bond or undertaking and without proof of damages, and this being in addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereto agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that (a) the other parties hereto have an adequate remedy at law, or (b) an award of specific performance is not an appropriate remedy for any reason at law or in equity.
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3.6. Amendment; Waiver.
(a) This Agreement may not be amended, modified or terminated (other than as provided in Section 3.1), except upon a written agreement executed and delivered by the Company, SPAC and each of the SPAC Holder Parties. Any waiver of any breach of this Agreement extended by SPAC and the Company to a SPAC Holder Party shall not be construed as a waiver of any rights or remedies of SPAC or the Company with respect to any other SPAC Holder Party or with respect to any subsequent breach of such SPAC Holder Party or any other such SPAC Holder Party. Any waiver of any provisions hereof by any party to this Agreement shall not be deemed a waiver of any other provisions hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party.
(b) Notwithstanding the foregoing, Schedule I hereto may be amended by the Company from time to time to add transferees of any Subject Shares in compliance with the terms of this Agreement without the consent of the other parties.
3.7. Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, then all other provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
3.8. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 3.8):
(a) if to SPAC or Merger Sub:
McKinley Acquisition Corporation
75 Second Ave., Suite 605
Needham, MA 02494
Attention: Peter Wright
Email: [email protected]
with a copy to:
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attention: Mitchell Nussbaum
Email: [email protected]
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(b) if to the Company:
Space-Eyes, Inc.
1200 Brickell Avenue, Penthouse 2010
Miami, FL 33131
Attn: Capt. Jatin Bains
Email:
with a copy to:
Troutman Pepper Locke LLP
400 Berwyn Park Rd
Berwyn, PA 19312
Attention: Thomas Dwyer
E-Mail: [email protected]
(c) If to a SPAC Holder Party:
To such SPAC Holder Party’s address set forth in Schedule I.
3.9. Counterparts. This Agreement may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
3.10. Several Liability. The liability of any SPAC Holder Party hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any SPAC Holder Party be liable for any other SPAC Holder Party’s breach of such other SPAC Holder Party’s representations, warranties, covenants, or agreements contained in this Agreement.
3.11. Entire Agreement. This Agreement and the agreements referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior understandings, agreements, representations or other arrangements, both written and oral, by or among the parties hereto with respect to the subject matter hereof.
3.12. Trust Account Waiver. Each of the SPAC Holder Parties and the Company, on behalf of themselves and each of their respective subsidiaries, and each of their respective agents, representatives and any other person or entity acting on its and their behalf (collectively, “Related Parties”), hereby acknowledges that SPAC has established a trust account (the “Trust Account”) to hold the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (in each case, including any interest accrued from time to time thereon) for the benefit of SPAC’s public shareholders and certain other parties. For and in consideration of SPAC entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the SPAC Holder Parties, the Company and SPAC, on behalf of itself and its Related Parties, hereby agrees that it shall not, in connection with this Agreement, seek to enforce any right, title or interest in or to, or initiate any action, claim, suit or proceeding of any kind against, the assets held in the Trust Account or the trustee thereof. SPAC hereby acknowledges that any such claim that any of the SPAC Holder Parties, the Company or their Affiliates may have arising at any time prior to the consummation of the Merger is not waived or released pursuant to this paragraph but may be preserved and initiated against SPAC at any time after the consummation of the Merger, and that nothing in this paragraph shall preclude any claims by any of the SPAC Holder Parties, the Company or any of their Related Parties against (a) SPAC seeking recourse against any assets of SPAC other than the Trust Account, or (b) assets released to SPAC from the Trust Account upon the consummation of the Merger. This Section 3.12 shall survive any expiration or termination of this Agreement.
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IN WITNESS WHEREOF, the SPAC Holder Parties, SPAC and the Company have each caused this Shareholder Support Agreement to be duly executed as of the date first written above.
| SPAC HOLDER PARTIES: | ||
| MCKINLEY PARTNERS LLC | ||
| By: | /s/ Peter Wright | |
| Name: | Peter Wright | |
| Title: | Managing Member |
|
| COMPANY: | ||
| SPACE-EYES, INC. | ||
| By: | /s/ Jatin Bains | |
| Name: | Jatinder Bains | |
| Title: | Chief Executive Officer | |
| SPAC: | ||
| MCKINLEY ACQUISITION CORPORATION | ||
| By: | /s/ Peter Wright | |
| Name: | Peter Wright | |
| Title: | Chief Executive Officer | |
[Signature Page to Stockholder Support Agreement]
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Schedule I
SPAC Holder Party Subject Shares
| SPAC Holder Party | Address | SPAC Class B Ordinary Shares |
SPAC Class A Ordinary Shares |
SPAC Rights | ||||||||||
| McKinley Partners LLC | 75 Second Ave., Suite 605 Needham, MA 02494 |
6,543,103 | 420,000 | 420,000 | ||||||||||
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Exhibit 10.3
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of [●] is made and entered into by and among, (i) McKinley Acquisition Corporation, a Delaware corporation (formerly a Cayman Islands exempted company) (the “Company”), (ii) McKinley Partners LLC, a Delaware limited liability company, the sponsor of the Company (the “Sponsor”), (iii) Clear Street LLC (the “Representative”), (iv) the Sponsor equityholders as set forth on Exhibit A hereto (the “Sponsor Equityholders”), (v) certain equityholders designated on Exhibit B hereto (the “Eligible Equityholders”) and (vi) any other parties listed on the signature pages hereto and any other person or entity who hereafter becomes a party to this Agreement pursuant to Section 6.2 of this Agreement, (each of the Sponsor, Representative, Sponsor Equityholders, Eligible Equityholders, and such other parties listed on the signature page hereto or become a party to this Agreement, individually a “Holder”, and collectively the “Holders”). Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the BCA (as defined below).
RECITALS
WHEREAS, the Company, the Representative and the Sponsor are parties to that certain Registration Rights Agreement, dated as of August 11, 2025 (the “Prior Agreement”);
WHEREAS, the Company, McKinley Acquisition Merger Sub Inc., a Delaware corporation (“Merger Sub”), and Space-Eyes, Inc., a Delaware corporation (the “Target”) are party to that certain Business Combination Agreement, dated as of July 30, 2026 (as amended or restated from time to time, the “BCA”), pursuant to which, among other things, (i) prior to the date hereof, the Company migrated to, and domesticated as, a Delaware corporation and (ii) on the date hereof, Merger Sub merged (the “Merger”) with and into the Target, with the Target surviving the Merger as a wholly owned subsidiary of the Company;
WHEREAS, the Company, the Target and each of the investors listed on the Schedule of Buyers attached thereto are party to that certain Securities Purchase Agreement dated as of January 30, 2026 (the “SPA”);
WHEREAS, pursuant to Section 5.5 of the Prior Agreement, no amendment, modification or termination of the Prior Agreement shall be binding upon any party unless executed in writing by such party; and
WHEREAS, in connection with the consummation of the Merger, the parties to the Prior Agreement desire to amend and restate the Prior Agreement in its entirety as set forth herein, and the parties hereto desire to enter into this Agreement pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement, effective as of the Closing.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or Chief Financial Officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.
“Block Trade” shall mean an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction.
“Board” shall mean the Board of Directors of the Company.
“Change in Control” shall mean any transfer (whether by tender offer, merger, stock purchase, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold more than 50% of outstanding voting securities of the Company (or surviving entity) or would otherwise have the power to control the Board or to direct the operations of the Company.
“Class A Common Stock” shall mean the Company’s Class A Common Stock, par value $0.0001 per share.
“Class B Common Stock” shall mean the Company’s Class B Common Stock, par value $0.0001 per share.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Stock” shall mean the Class A Common Stock and Class B Common Stock.
“Earnout Shares” shall have the meaning ascribed to such term in the BCA.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form S-1” shall mean a registration statement on Form S-1 or any similar long-form registration statement that may be available at such time.
“Form S-3” shall mean a registration statement on Form S-3 or any similar short form registration statement that may be available at such time, and if the Company is a WKSI, such Form S-3 may be an Automatic Shelf Registration Statement.
“Founder Shares” shall mean the 6,543,103 shares of Class B Common Stock issued or issuable upon conversion of the 6,543,103 Class B ordinary shares of the Company issued to the Company’s initial shareholders prior to the Company’s initial public offering.
“Holders” shall have the meaning given in the Preamble, for so long as such person or entity holds any Registrable Securities.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading.
“Permitted Transferees” shall mean any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities prior to the expiration of the Lock-up Period under this Agreement and any other applicable agreement between such Holder and the Company, and to any transferee thereafter.
“Private Placement Shares” shall mean the 511,500 shares of Class A Common Stock issued or issuable upon conversion of the shares and rights included in the 465,000 units issued by the Company in a private placement offering simultaneously with the consummation of the Company’s initial public offering.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
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“Registrable Security” shall mean the (a) the Founder Shares, (b) the Private Placement Shares, (c) the Working Capital Shares, (d) the Representative Shares, (e) the Earnout Shares, (f) the Underlying Shares, (g) the Warrant Shares,(h) the Common Stock to be issued upon exercise of the outstanding Company Bridge Amended and Restated Warrants; (i) the Space-Eyes Subsequent Closing Shares (as defined in the SPA), (j) the Common Stock to be issued upon exercise of the Company July 2026 Warrants, (k) any outstanding share of the Common Stock or any other equity security (including the shares of Common Stock issued or issuable upon the exercise of any other equity security) of the Company held by a Holder as of the date of this Agreement, and (l) any other equity security of the Company issued or issuable with respect to any such shares of the Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (B) such securities shall have been otherwise transferred (other than to a Permitted Transferee), new certificates for such securities not bearing (or book entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration effected by preparing and filing a Registration Statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration, listing and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange on which the Common Stock is then listed;
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses;
(D) reasonable fees and disbursements of counsel for the Company;
(E) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
(F) in an Underwritten Offering, reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders (not to exceed $150,000 without the prior written consent of the Company).
“Registration Statement” shall mean any registration statement filed by the Company with the Commission that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Representative Shares” shall mean the 86,250 shares of Class A Common Stock issued to the Representative upon consummation of the Company’s initial public offering.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
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“Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf (each as defined in Section 2.1.1 of this Agreement) or any subsequent Shelf Registration.
“Shelf Registration” shall mean a registration of securities pursuant to a Registration Statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
“Sponsor” shall mean McKinley Partners LLC, a Delaware limited liability company.
“Transfer” shall mean the (a) sale or assignment of, offer to sell, hypothecate, pledge, contract or agreement to sell, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Registration” or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“WKSI” shall mean a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act.
“Underlying Shares” shall mean shares of Class A Common Stock issued or issuable upon conversion of convertible notes issued by Space-Eyes, Inc.
“Warrant Shares” shall mean the shares of Class A Common Stock issued or issuable upon exercise of warrants issued by Space-Eyes, Inc. and assumed by the Company in connection with the Merger.
“Working Capital Shares” shall mean any shares of Common Stock issued or issuable upon conversion of the shares and rights included in the units of the Company issued upon conversion of working capital loans from the Sponsor and its Affiliates or designees to the Company at or prior to the Closing.
ARTICLE II
REGISTRATIONS
2.1 Shelf Registration.
2.1.1 Filing. The Company shall as soon as reasonably practicable, but in any event within forty-five (45) calendar days after the Closing Date, use commercially reasonable efforts to file with the Commission a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) covering, subject to Section 3.4, the public resale of all of the Registrable Securities owned by (i) the Sponsor, (ii) the Sponsor Equityholders, and (iii) the Eligible Equityholders (collectively, the “Eligible Holders”) (determined as of two (2) business days prior to such filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to cause such Form S-1 Shelf to be declared effective as soon as practicable after the filing thereof, but in no event later than the earlier of (i) the 60th calendar day (or the 90th calendar day if the Commission notifies the Company that it will “review” the Registration Statement) following the Closing Date and (ii) the 5th business day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review. Such Form S-1 Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. The Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Following the filing of a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) to a Registration Statement on Form S-3 (the “Form S-3 Shelf”) as soon as reasonably practicable after the Company is eligible to use Form S-3. As soon as reasonably practicable following the effective date of a Registration Statement filed pursuant to this Section 2.1.1, the Company shall notify the Holders of the effectiveness of such Registration Statement. The Company’s obligation under this Section 2.1.1 shall, for the avoidance of doubt be subject to Section 3.4 hereto.
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2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration”) registering the resale of all Registrable Securities (determined as of two (2) business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an Automatic Shelf Registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a WKSI at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form. The Company’s obligation under this Section 2.1.2 shall, for the avoidance of doubt be subject to Section 3.4 hereto.
2.1.3 Additional Registration Statement(s). Subject to Section 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon written request of such Holder, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by filing a Subsequent Shelf Registration and cause the same to become effective as soon as practicable after such filing and such Subsequent Shelf Registration shall be subject to the terms hereof; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered twice per calendar year for each of the Sponsor or the Sponsor Equityholders and the Eligible Equityholders.
2.1.4 Requests for Underwritten Shelf Takedowns. Following the expiration of the Lock-up Period (as defined in Section 4.1 of this Agreement), at any time and from time to time when an effective Shelf is on file with the Commission, (i) Holders of at least a majority in interest of the then outstanding number of Registrable Securities held collectively by the Sponsor or the Sponsor Equityholders (the “Demanding Sponsor Holders”), or (ii) Holders of at least a majority in interest of the then outstanding number of Registrable Securities held collectively by the Eligible Equityholders (the “Eligible Equityholder Demanding Holders” and together with the Demanding Sponsor Holders, collectively the “Demanding Holders”, and each individually, a “Demanding Holder”) may request to sell all or any portion of their Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Offering if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder(s), either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $10 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Offering. Subject to Section 2.3.4, the Company shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably withheld, conditioned or delayed). The Demanding Holder, may demand not more than two (2) Underwritten Offerings pursuant to this Section 2.1.4 in any 12-month period. Notwithstanding anything to the contrary in this Agreement, the Company may affect any Underwritten Offering pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering.
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2.1.5 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Holders requesting piggyback rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other shares of Common Stock or other equity securities that the Company desires to sell and all other shares of Common Stock or other equity securities, if any, as to which a Registration has been requested pursuant to separate written contractual piggyback registration rights held by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Registration (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other equity securities of other persons or entities that the Company is obligated to register in a Registration pursuant to separate written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.
2.1.6 Withdrawal. Prior to the pricing of an Underwritten Shelf Takedown, a majority-in-interest of the Demanding Holders initiating such Underwritten Offering shall have the right to withdraw from a Registration pursuant to such Underwritten Offering for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Offering; provided that the Eligible Holders may elect to have the Company continue an Underwritten Offering if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Offering by the Eligible Holders. If withdrawn, a demand for an Underwritten Offering shall constitute a demand for an Underwritten Offering by the withdrawing Demanding Holder for purposes of Section 2.1.4, unless either (i) such Demanding Holder has not previously withdrawn any Underwritten Offering or (ii) such Demanding Holder reimburses the Company for all Registration Expenses with respect to such Underwritten Offering (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Offering); provided that, if the Eligible Holders elect to continue an Underwritten Offering pursuant to the proviso in the immediately preceding sentence, such Underwritten Offering shall instead count as an Underwritten Offering demanded by the Sponsor or the Eligible Holders, as applicable for purposes of Section 2.1.4. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Holders that had elected to participate in such Underwritten Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with an Underwritten Shelf Takedown prior to its withdrawal under this Section 2.1.6, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Section 2.1.6.
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2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2.1 hereof), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company, (iv) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (v) for a dividend reinvestment plan, or (vi) for a Block Trade, then the Company shall give written notice of such proposed filing to all of the Eligible Holders of Registrable Securities as soon as practicable but not less than ten (10) calendar days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Eligible Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Eligible Holders may request in writing within five (5) calendar days after receipt of such written notice (such Registration a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Eligible Holders pursuant to this Section 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such registered offering and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Eligible Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this Section 2.2.1 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration, in good faith, advises the Company and the Eligible Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company desires to sell, taken together with (i) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Eligible Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggyback registration rights of stockholders of the Company other than the Eligible Holders of Registrable Securities, exceeds the Maximum Number of Securities, then:
(a) If the Registration or a registered offering is undertaken for the Company’s account, the Company shall include in any such Registration or a registered offering (A) first, the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Eligible Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1 hereof, Pro Rata, based on the respective number of Registrable Securities that each Eligible Holder has so requested to be included in such Registration or such registered offering, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to written contractual piggyback registration rights of stockholders of the Company other than the Eligible Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities;
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(b) If the Registration or a registered offering is pursuant to a request by persons or entities other than the Eligible Holders of Registrable Securities, then the Company shall include in any such Registration or a registered offering (A) first, the shares of Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Eligible Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, Pro Rata, based on the respective number of Registrable Securities that each Eligible Holder has so requested to be included in such Registration or such registered offering, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggyback registration rights of persons or entities other than the Eligible Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; and
(c) If the Registration or registered offering is pursuant to a request by Eligible Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then the Company shall include in any such Registration or registered offering securities in the priority set forth in Section 2.1.5.
2.2.3 Piggyback Registration Withdrawal. Any Eligible Holder of Registrable Securities (other than a Demanding Holder, whose right to withdraw from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.6) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons or entities pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement or abandon the Underwritten Shelf Takedown in connection with a Piggyback Registration at any time prior to the launch of such Underwritten Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as a Registration pursuant to a Underwritten Shelf Takedown effected under Section 2.1 hereof.
2.3 Block Trades.
2.3.1 Notwithstanding the foregoing, at any time and from time to time when an effective Shelf is on file with the Commission, if a Demanding Holder wishes to engage in a Block Trade, (x) with a total offering price reasonably expected to exceed $75 million in the aggregate or (y) with respect to all remaining Registrable Securities held by the Demanding Holder, then such Demanding Holder only needs to notify the Company of the Block Trade at least five (5) business days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade shall use commercially reasonable efforts to work with the Company and any Underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade.
2.3.2 Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade, a majority-in-interest of the Demanding Holders initiating such Block Trade shall have the right to submit a Withdrawal Notice to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Block Trade. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade prior to its withdrawal under this Section 2.3.2.
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2.3.3 Notwithstanding anything to the contrary in this Agreement, Section 2.2 hereof shall not apply to a Block Trade initiated by a Demanding Holder pursuant to this Agreement.
2.3.4 The Demanding Holder in a Block Trade shall have the right to select the Underwriters for such Block Trade (which shall consist of one or more reputable nationally recognized investment banks).
2.3.5 The Eligible Holders may each demand no more than one (1) Block Trade pursuant to this Section 2.3 in any twelve (12) month period. For the avoidance of doubt, any Block Trade effected pursuant to this Section 2.3 shall not be counted as a demand for an Underwritten Shelf Takedown pursuant to Section 2.1.4 hereof.
2.4 Restrictions on Registration Rights. If (A) during the period starting with the date sixty (60) calendar days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) calendar days after the effective date of, a Company initiated Registration and provided that the Company continues to actively employ, in good faith, all commercially reasonable efforts to cause the applicable Registration Statement to become effective; (B) the Holders have requested an Underwritten Registration and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment of the Board such Registration would be seriously detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board it would be seriously detrimental to the Company for such Registration Statement to be filed in the near future and that it is therefore essential to defer the filing of such Registration Statement. In such event, the Company shall have the right to defer such filing for a period of not more than ninety (90) consecutive days; or more than one hundred and twenty (120) total calendar days, in each case, during any 12-month period.
ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. If the Company is required to effect the Registration of Registrable Securities pursuant to this Agreement, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall:
3.1.1 prepare and file with the Commission within the time frame required by Section 2.1.1 (to the extent applicable) a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective, until all Registrable Securities covered by such Registration Statement have been sold or have ceased to be Registrable Securities;
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by (i) the Sponsor or any Holder holding at least 5% of the Registrable Securities or (ii) any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus or have ceased to be Registrable Securities;
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3.1.3 at least five (5) days prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto (or such shorter period of time as may be (a) necessary in order to comply with the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder or (b) advisable in order to reduce the number of days that sales are suspended pursuant to Section 3.4), furnish without charge to the Underwriters, if any, and each Holder of Registrable Securities included in such Registration, and each such Holder’s legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and each Holder of Registrable Securities included in such Registration or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders; provided, that the Company shall have no obligation to furnish any documents publicly filed or furnished with the Commission pursuant to the Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) and provided further, the Company shall provide each Holder and their legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall consider in good faith any comments provided by such Holder or their legal counsel;
3.1.4 prior to any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as any Holder of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence reasonably satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 use its commercially reasonable efforts to cause all Registrable Securities included in any Registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 [reserved]
3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 in the event of an Underwritten Offering, a Block Trade, or sale by a broker, placement agent or sales agent pursuant to such Registration, in each of the cases to the extent customary for a transaction of its type, permit a representative of the Holders (such representative to be selected by a majority of the participating Holders), the Underwriters or other financial institutions facilitating such Underwritten Offering, Block Trade or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders or Underwriters to participate, at each such person’s or entity’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection with the Registration; provided, however, that such representatives, Underwriters or financial institutions enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
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3.1.11 obtain a “comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Offering, a Block Trade or sale by a broker, placement agent or sales agent pursuant to such Registration in customary form and covering such matters of the type customarily covered by “comfort” letters for a transaction of its type as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;
3.1.12 in the event of an Underwritten Offering, a Block Trade or sale by a broker, placement agent or sales agent pursuant to such Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration, to the extent customary for a transaction of its type, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the participating Holders, the broker, placement agents or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the participating Holders, broker, placement agents, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters;
3.1.13 in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;
3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect), and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;
3.1.15 if the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $5 million, use its commercially reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the participating Holders, consistent with the terms of this Agreement, in connection with such Registration.
Notwithstanding the foregoing, the Company shall not be required to provide any documents or information to an Underwriter, broker, sales agent or placement agent if such Underwriter, broker, sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or other offering involving a registration as an Underwriter, broker, sales agent or placement agent, as applicable.
3.2 Registration Expenses. Except as otherwise provided herein, the Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that each Holder shall bear, with respect to such Holder’s Registrable Securities being sold, all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements for Participation in Underwritten Offerings. Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide the Company with its requested Holder Information (as defined in Section 5.1.2), the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that it is necessary or advisable to include such information in the applicable Registration Statement or Prospectus and such Holder continues thereafter to withhold such information. In addition, no person or entity may participate in any Underwritten Offering or other offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person or entity (i) agrees to sell such person’s or entity’s securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements. For the avoidance of doubt, the exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.
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3.4 Suspension of Sales; Adverse Disclosure.
3.4.1 Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as reasonably practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed.
3.4.2 If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require the Company to make an Adverse Disclosure, (b) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, or (c) in the good faith judgment of the majority of the Board such Registration, be seriously detrimental to the Company and the majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than ninety (90) consecutive days, during any 12-month period. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from the Company that such sales or offers of Registrable Securities may be resumed, and in each case maintain the confidentiality of such notice and its contents. The Company shall as promptly as reasonably practicable notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings; provided that any documents publicly filed or furnished with the Commission pursuant to EDGAR shall be deemed to have been furnished or delivered to the Holders pursuant to this Section 3.5. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Section 4(a)(1) of the Securities Act or Rule 144 promulgated under the Securities Act (or any successor rule then in effect), including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
3.6 Restrictive Legend Removal. Subject to receipt from the Holder by the Company and the Company’s transfer agent (the “Transfer Agent”) of such customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith, the Holder may request that the Company remove any legend from the book entry position evidencing its Registrable Securities and the Company will, if required by the Transfer Agent, use its commercially reasonable efforts to cause an opinion of the Company’s counsel to be provided, in a form reasonably acceptable to the Transfer Agent to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, following the earliest of such time as such Registrable Securities (i) have been sold or transferred pursuant to an effective Registration, (ii) have been sold pursuant to Rule 144, or (iii) are eligible for resale under Rule 144(b)(1) or any successor provision without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 and without volume or manner-of-sale restrictions applicable to the sale or transfer of such Registrable Securities. If restrictive legends are no longer required for such Registrable Securities pursuant to the foregoing, the Company shall, in accordance with the provisions of this Section 3.6 and within three (3) trading days of any request therefor from the Holder accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such book entry Registrable Securities. The Company shall be responsible for the fees of its Transfer Agent and all DTC fees associated with such issuance.
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ARTICLE IV
LOCK-UP
4.1 Lock-up.
4.1.1 Except as permitted by Section 4.2, an Eligible Holder (each, a “Lock-up Party”) shall not Transfer any Founder Shares (the “Lock-up”) until the date that is the earlier of (i) one year from the date hereof or (ii) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property (the “Lock-up Period”).
4.2 Exceptions. The provisions of Section 4.1 shall not apply to:
4.2.1 transactions relating to shares of Common Stock or warrants acquired in open market transactions;
4.2.2 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock as a bona fide gift or charitable contribution;
4.2.3 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock to a trust, family limited partnership or other entity formed for estate planning purposes for the primary benefit of the spouse, domestic partner, parent, sibling, child or grandchild of a Holder or any other person with whom a Holder has a relationship by blood, marriage or adoption not more remote than first cousin and Transfers to any such family member;
4.2.4 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock by will or intestate succession or the laws of descent and distributions upon the death of a Holder (it being understood and agreed that the appointment of one or more executors, administrators or personal representatives of the estate of a Holder shall not be deemed a Transfer hereunder to the extent that such executors, administrators and/or personal representatives comply with the terms of this Article IV on behalf of such estate);
4.2.5 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock pursuant to a qualified domestic order or in connection with a divorce settlement;
4.2.6 if a Holder is a corporation, partnership (whether general, limited or otherwise), limited liability company, trust or other business entity, (i) Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock to another corporation, partnership, limited liability company, trust or other business entity that controls, is controlled by or is under common control or management with a Holder (including, for the avoidance of doubt, where such Holder is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership), or (ii) Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock as part of a dividend, distribution, transfer or other disposition of shares of Common Stock to partners, limited liability company members, direct or indirect stockholders or other equity holders of a Holder, including, for the avoidance of doubt, where such Holder is a partnership, to its general partner or a successor partnership, fund or investment vehicle, or any other partnerships, funds or investment vehicles controlled or managed by such partnership;
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4.2.7 if the Holder is a trust, Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock to a trustor or beneficiary of such trust or to the estate of a beneficiary of such trust;
4.2.8 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock to the Company’s or the Holder’s officers, directors, members, consultants or their affiliates;
4.2.9 pledges of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock as security or collateral in connection with any borrowing or the incurrence of any indebtedness by any Holder (provided such borrowing or incurrence of indebtedness is secured by a portfolio of assets or equity interests issued by multiple issuers);
4.2.10 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock pursuant to a bona fide third-party tender offer, merger, asset acquisition, stock sale, recapitalization, consolidation, business combination or other transaction or series of related transactions involving a Change in Control of the Company, provided that in the event that such tender offer, merger, asset acquisition, stock sale, recapitalization, consolidation, business combination or other such transaction is not completed, the securities subject to this Agreement shall remain subject to this Agreement;
4.2.11 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock to the Company in connection with the liquidation or dissolution of the Company by virtue of the laws of the state of the Company’s organization and the Company’s organizational documents;
4.2.12 the establishment of a trading plan pursuant to Rule 10b5-1 promulgated under the Exchange Act, provided that such plan does not provide for the Transfer of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock during the Lock-up Period; and
4.2.13 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock to satisfy any U.S. federal, state, or local income tax obligations of the Lock-up Party (or its direct or indirect owners) arising from a change in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or the U.S. Treasury Regulations promulgated thereunder (the “Regulations”) after the date on which the BCA was executed by the parties, and such change prevents the Merger from qualifying as a “reorganization” pursuant to Section 368 of the Code (and the Merger does not qualify for similar tax-free treatment pursuant to any successor or other provision of the Code or Regulations taking into account such changes), in each case solely and to the extent necessary to cover any tax liability as a direct result of the transaction;
PROVIDED, THAT IN THE CASE OF ANY TRANSFER OR DISTRIBUTION PURSUANT TO SECTIONS 4.2.2 THROUGH 4.2.8 AND 4.2.13, EACH DONEE, DISTRIBUTEE OR OTHER TRANSFEREE SHALL AGREE IN WRITING, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO BE BOUND BY THE PROVISIONS OF THIS AGREEMENT.
4.3 Null and Void. If any Transfer of shares of Common Stock prior to the end of the Lock-up Period is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be null and void ab initio, and the Company shall refuse to recognize any such purported transferee of the Common Stock as one of its equityholders for any purpose.
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4.4 Legend. During the Lock-up Period, each certificate evidencing any Common Stock shall be stamped or otherwise imprinted with a legend in substantially the following form, in addition to any other applicable legends:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN AN AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, DATED AS OF NOVEMBER 10, 2022 (AS MAY BE AMENDED OR RESTATED FROM TIME TO TIME), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH AGREEMENT.”
Promptly upon the expiration of the Lock-up Period, the Company shall use commercially reasonable efforts to cause the removal of such legend and, if determined appropriate by the Company, any restrictive legend related to compliance with the federal securities laws from the certificates evidencing the Common Stock.
ARTICLE V
INDEMNIFICATION AND CONTRIBUTION
5.1 Indemnification.
5.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each person or entity who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and out-of-pocket expenses (including, without limitation, reasonable and documented attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a Prospectus, in light of the circumstances in which they were made), except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
5.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers and agents and each person or entity who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and out-of-pocket expenses (including, without limitation, reasonable and documented attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of a Prospectus, in light of the circumstances in which they were made), but only to the extent that such untrue statement is contained in (or not contained in, in the case of an omission) the Holder Information; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
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5.1.3 Any person or entity entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel (plus one local counsel if necessary in the reasonable judgment of the indemnified party) for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
5.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.
5.1.5 If the indemnification provided under Section 5.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action and the benefits received by such indemnified party or indemnifying party; provided, however, that the liability of any Holder under this Section 5.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 5.1.1, 5.1.2 and 5.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Section 5.1.5. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 5.1.5 from any person or entity who was not guilty of such fraudulent misrepresentation.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. Any notice hereunder shall be sent in writing, addressed as specified below, and shall be deemed given: (a) if by hand or recognized courier service, by 4:00PM on a business day, addressee’s day and time, on the date of delivery, and otherwise on the first business day after such delivery; (b) if by fax or email, on the date that transmission is confirmed electronically, if by 4:00PM on a business day, addressee’s day and time, and otherwise on the first business day after the date of such confirmation; or (c) five (5) days after mailing by certified or registered mail, return receipt requested. Notices shall be addressed to the respective parties as follows, or to such other address as a party shall specify to the others in accordance with this Section 6.1: if to the Company, to: Space-Eyes, Inc., 1200 Brickell Avenue, Penthouse 2010, Miami, FL 33131, Attn: Capt. Jatin Bains, email: [email protected], with a copy to Troutman Pepper Locke LLP, 400 Berwyn Park Rd, Berwyn, PA 19312 Attn: Thomas Dwyer, e-mail: [email protected]; and, if to any Holder, at such Holder’s address or contact information as set forth in the Company’s books and records.
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6.2 Assignment; No Third Party Beneficiaries.
6.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
6.2.2 Subject to Section 6.2.4 and Section 6.2.5, this Agreement and the rights, duties and obligations of a Holder hereunder may be assigned in whole or in part to such Holder’s Permitted Transferees; provided that with respect to the Eligible Holders, the rights hereunder that are personal to such Holders may not be assigned or delegated in whole or in part, except that the Sponsor Equityholders shall be permitted to transfer their rights hereunder as the Sponsor Equityholders to one or more of their respective affiliates or any direct or indirect partners, members or equity holders of the Sponsor Equityholders (it being understood that no such transfer shall reduce any rights of the Sponsor Equityholders or such transferees).
6.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
6.2.4 This Agreement shall not confer any rights or benefits on any persons or entities that are not parties hereto, other than as expressly set forth in this Agreement and Section 6.2 hereof.
6.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 6.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 6.2 shall be null and void.
6.3 Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one agreement. This Agreement shall become effective upon delivery to each party of an executed counterpart or the earlier delivery to each party of original, photocopied, or electronically transmitted signature pages that together (but need not individually) bear the signatures of all other parties.
6.4 Governing Law; Venue. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. Any Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Action, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the proceeding or Action shall be heard and determined only in any such court, and (iv) agrees not to bring any proceeding or Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought pursuant to this Section 6.4.
6.5 Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVE ANY RIGHT EACH SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY ACTION OF ANY KIND OR NATURE, IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY ADDITIONAL AGREEMENT, OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN OR AMONG ANY OF THE PARTIES TO THIS AGREEMENT OF ANY KIND OR NATURE. NO PARTY SHALL BE AWARDED PUNITIVE OR OTHER EXEMPLARY DAMAGES RESPECTING ANY DISPUTE ARISING UNDER THIS AGREEMENT OR ANY ADDITIONAL AGREEMENT.
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6.6 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof shall also require the written consent of the Sponsor so long as the Sponsor and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock of the Company; provided, further, that any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
6.7 Other Registration Rights. The Company represents and warrants that no person or entity, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person or entity. The Company hereby agrees and covenants that it will not grant rights to register any Common Stock (or securities convertible into or exchangeable for Common Stock) pursuant to the Securities Act that are more favorable, pari passu or senior to those granted to the Holders hereunder without (a) the prior written consent of the Sponsor, for so long as the Sponsor and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock of the Company; or (b) granting economically and legally equivalent rights to the Holders hereunder such that the Holders shall receive the benefit of such more favorable or senior terms and/or conditions. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail. This Agreement supersedes, and amends and restates in its entirety, the Prior Agreement.
6.8 Term. Following the Closing Date, this Agreement shall terminate upon the earlier of (i) the tenth (10th) anniversary of the date of this Agreement, (ii) the date as of which all of the Registrable Securities have been sold or disposed of or (iii) with respect to any particular Holder, on the date such Holder no longer holds any Registrable Securities. The provisions of Section 3.5 and Article IV shall survive any termination.
6.9 Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder.
6.10 Severability. A determination by a court or other legal authority that any provision that is not of the essence of this Agreement is legally invalid shall not affect the validity or enforceability of any other provision hereof. The parties shall cooperate in good faith to substitute (or cause such court or other legal authority to substitute) for any provision so held to be invalid a valid provision, as alike in substance to such invalid provision as is lawful.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties have caused this Amended and Restated Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
| McKinley Acquisition Corporation | ||
| a Delaware corporation | ||
| By: | ||
| Name: | ||
| Title: | ||
| HOLDERS: | ||
| McKinley Partners LLC | ||
| a Delaware limited liability company | ||
| By: | ||
| Name: | ||
| Title: | ||
| Clear Street LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
| Brookline Capital Markets, | ||
| a division of Arcadia Securities, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature page to Registration Rights and Lock-Up Agreement]
IN WITNESS WHEREOF, the parties have caused this Amended and Restated Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
| HOLDER | ||
| [HOLDER] | ||
| By: | ||
| Print Name: | ||
| Title (if applicable): | ||
[Signature page to Registration Rights and Lock-Up Agreement]
EXHIBIT A
Sponsor Equityholders
EXHIBIT B
Eligible Equityholders
Exhibit 10.4
Execution Version
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of July 30, 2026, is by and among Space-Eyes, Inc., a Delaware corporation with offices located at 1200 Brickell Avenue, Penthouse 2010, Miami, FL 33131 (“Space-Eyes”), McKinley Acquisition Corporation, a Cayman Islands exempted company with offices located at 75 Second Ave., Suite 605, Needham, MA 02494 (“McKinley”) and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”). For the purposes hereof, the “Company” shall mean (i) prior to the Merger Effective Date (as defined below), Space-Eyes and (ii) upon and following the Merger Effective Date, McKinley (it being understood that, following the Merger (as defined below), Space-Eyes will be a wholly owned subsidiary of McKinley).
RECITALS
A. Space-Eyes and McKinley intend to consummate a business combination (the “Merger”) pursuant to that certain Business Combination Agreement in the form provided to the Buyers on or before the date hereof and attached hereto as Exhibit A (the “Business Combination Agreement”).
B. Space-Eyes, McKinley and each Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
C. Space-Eyes has authorized a new series of Senior Secured Convertible Notes in the form attached hereto as Exhibit B, which such Notes (as defined below) shall entitle the Buyers to receive Issuer Equity Interests (together with any capital stock into which such Issuer Equity Interests shall have been changed or any share capital resulting from a reclassification of such Issuer Equity Interests, the “Common Stock”) (such underlying Common Stock then issuable pursuant to the terms of the Notes, the “Note Shares”). “Notes” shall mean (i) prior to the Merger Effective Date (as defined below), the Senior Secured Convertible Notes issued by Space-Eyes to the Buyers pursuant to the terms hereof (the “Space-Eyes Notes”) and (ii) on and after the Merger Effective Date, the Senior Secured Convertible Notes issued by McKinley to the Buyers in exchange for the Space-Eyes Notes on the Merger Effective Date, which shall be on terms identical to the Space-Eyes Notes (the “McKinley Notes”). “Issuer Equity Interests” shall mean (i) prior to the Merger Effective Date, shares of common stock, par value $0.001 per share, of Space-Eyes and (ii) on and after the Merger Effective Date, shares of common stock, par value $0.0001 per share, of McKinley (following the Domestication (as defined in the Business Combination Agreement)), which shall be listed on Nasdaq (as defined below). “Merger Effective Date” shall mean the date that the Merger is consummated.
D. Space-Eyes has also authorized the issuance of warrants to purchase Common Stock in the form attached hereto as Exhibit C (such underlying Common Stock issuable upon exercise of a Warrant (as defined below), collectively, the “Warrant Shares” and, together with the Note Shares, the “Underlying Shares”). “Warrants” shall mean (i) prior to the Merger Effective Date, the warrants to purchase Common Stock issued by Space-Eyes to the Buyers pursuant to the terms hereof (the “Space-Eyes Warrants”) and (ii) on and after the Merger Effective Date, the warrants to purchase Common Stock issued by McKinley to the Buyers in exchange for the Space-Eyes Warrants on the Merger Effective Date, which shall be on terms identical to the Space-Eyes Warrants (the “McKinley Warrants”).
E. Each Buyer wishes to purchase, and Space-Eyes wishes to sell, upon the terms and conditions stated in this Agreement, (i) the aggregate principal amount of Initial Purchased Notes set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, (ii) the aggregate principal amount of Subsequently Purchased Notes set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers and (iii) a Warrant exercisable for the aggregate number of Warrant Shares as is determined in accordance with such Warrant at the Subsequent Closing (the “Purchased Warrants”).
F. At the Initial Closing (as defined below), Space-Eyes and each Buyer shall execute and deliver (i) the security agreements (the “Space-Eyes Security Agreements”), in a form satisfactory to the Buyers in their sole discretion, pursuant to which Space-Eyes shall grant a first priority security interest to the Collateral Agent (as defined in the Space-Eyes Security Agreements), as collateral agent for the holders of the Notes in all tangible and intangible assets, now owned and hereafter created or acquired, of Space-Eyes and its Subsidiaries and (ii) one or more Control Agreements (as defined in the Notes) related to the Controlled Cash Account (as defined in the Notes).
G. Concurrently with the consummation of the Merger, (i) McKinley shall exchange the Space-Eyes Notes for McKinley Notes and the Space-Eyes Warrants for McKinley Warrants and (ii) McKinley and each Buyer shall execute and deliver the security agreements (the “McKinley Security Agreements”), in a form satisfactory to the Buyers in their sole discretion, pursuant to which McKinley shall agree to grant a first priority security interest to the Collateral Agent (as defined in the McKinley Security Agreements), as collateral agent for the holders of the Notes in all tangible and intangible assets, now owned and hereafter created or acquired, of McKinley and its Subsidiaries.
H. For the purposes herein, the term “Securities” collectively refers to (i) prior to the Merger Effective Date, the Initial Purchased Notes, any Subsequently Purchased Notes, any Space-Eyes Subsequent Closing Shares and the Purchased Warrants, (ii) on and after the Merger Effective Date, the McKinley Notes, the McKinley Warrants, and the McKinley Subsequent Closing Shares, (iii) the Underlying Shares and (iv) the Replenishment Shares.
I. At or before the Initial Closing, each of the parties set forth on Exhibit D shall execute and deliver a Lock-Up Agreement, in the form attached hereto as Exhibit E (the “Lock-Up Agreement”), pursuant to which such parties shall agree to certain equity transfer restrictions.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Space-Eyes and each Buyer hereby agree as follows:
| 1. | PURCHASE, SALE AND EXCHANGE OF SECURITIES. |
(a) Purchase of Initial Purchased Notes. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 7 and 8(A), as applicable, Space-Eyes shall, in reliance upon the exemptions from securities registration afforded by Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation D, issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from Space-Eyes on the Initial Closing Date (as defined below) the aggregate principal amount of Notes as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (the “Initial Purchased Notes”). For the avoidance of doubt, no Warrants shall be issued at the Initial Closing.
(b) Initial Closing. The closing (the “Initial Closing”) of the purchase of the Initial Purchased Notes by the Buyers shall occur by electronic transmission or other transmission as mutually acceptable to the parties. The date and time of the Initial Closing (the “Initial Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Initial Closing set forth in Sections 7 and 8(A) are satisfied or waived (or such other date as is mutually agreed to by Space-Eyes and each Buyer). As used herein “Business Day” means any day other than a Saturday, a Sunday or any day on which commercial banks in the City of New York are authorized or required by law or executive order to close or be closed; provided, however, for clarification, commercial banks in the City of New York shall not be deemed to be authorized or required by law or executive order to close or be closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the City of New York are open for use by customers on such day.
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(c) Initial Note Purchase Price. The aggregate purchase price for the Initial Purchased Notes to be purchased by each Buyer at the Initial Closing (the “Initial Notes Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.
(d) Form of Payment for Initial Purchased Notes. On the Initial Closing Date, (i) each Buyer shall pay its respective Initial Notes Purchase Price to Space-Eyes for the Initial Purchased Notes to be issued and sold to such Buyer at the Initial Closing (net of expenses payable pursuant to Section 5(j)) by wire transfer of immediately available funds in accordance with a Flow of Funds Letter with respect to the Initial Purchased Notes and (ii) Space-Eyes shall deliver to each Buyer Initial Purchased Notes duly executed on behalf of Space-Eyes and registered on the books and records of Space-Eyes in the name of such Buyer or its designee.
(e) Purchase of Subsequently Purchased Notes and Purchased Warrants and Issuance of Subsequent Closing Shares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 7 and 8, as applicable, Space-Eyes shall, in reliance upon the exemptions from securities registration afforded by Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation D, issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from Space-Eyes on the Subsequent Closing Date (as defined below) the following Securities:
(i) the aggregate principal amount of Notes as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers (the “Subsequently Purchased Notes” and together with the Initial Purchased Notes, the “Purchased Notes”); provided that the aggregate principal amount of the Subsequently Purchased Notes shall be subject to reduction in accordance with Section 5(e)(ii); and
(ii) a Warrant exercisable for the aggregate number of Warrant Shares as is determined in accordance with such Warrant at the Subsequent Closing (the “Purchased Warrants”).
In addition, concurrently with the issuance of the Subsequently Purchased Notes and the Purchased Warrants, Space-Eyes will deliver to each Buyer a number of shares of Space-Eyes common stock which, upon completion of the Merger, shall equal such Buyer’s Pro Rata Portion of 9.9% of the outstanding shares of McKinley’s common stock (the “Space-Eyes Subsequent Closing Shares”). The Buyer may apply any Subsequent Closing Shares (as defined below) received pursuant to the terms hereof to satisfy the issuance of Interest Payment Shares, Amortization Payment Shares, Event of Default Equity Shares or Conversion Consideration (as each such term is defined in the Notes) due and owing to such Buyer under such Buyer’s Notes or as otherwise provided for in such Buyer’s Notes. “Pro Rata Portion” means, with respect to each Buyer at any time of determination, a fraction (expressed as a percentage), the numerator of which is the aggregate outstanding Principal Amount (as defined in the Notes) of Notes then held by such Buyer and the denominator of which is the aggregate outstanding Principal Amount of all Notes then held by all Buyers. The number of Subsequent Closing Shares delivered to each Buyer at the Subsequent Closing shall be such Buyer’s “Subsequent Closing Share Balance,” which shall be (i) reduced from time to time as Subsequent Closing Shares are applied to satisfy the issuance of Interest Payment Shares, Amortization Payment Shares, Event of Default Equity Shares or Conversion Consideration in accordance with the terms of such Buyer’s Notes, (ii) increased from time to time by the number of Replenishment Shares (as defined below) issued to such Buyer pursuant to Section 5(gg), (iii) reduced from time to time by the number of Abeyance Shares (as defined below) held in abeyance pursuant to Section 5(gg)(iv) and (iv) increased from time to time by the number of Abeyance Shares released from abeyance pursuant to Section 5(gg)(iv). “Subsequent Closing Shares” shall mean (i) prior to the Merger Effective Date, the Space-Eyes Subsequent Closing Shares issued by Space-Eyes to the Buyers pursuant to the terms hereof and (ii) on and after the Merger Effective Date (x) the shares of Common Stock issued by McKinley to the Buyers in exchange for the Space-Eyes Subsequent Closing Shares on the Merger Effective Date (the “McKinley Subsequent Closing Shares”) and (y) any additional Replenishment Shares issued to the Buyers or Abeyance Shares released to the Buyers, in each case pursuant to the terms hereof. The aggregate principal amount of the Subsequently Purchased Notes shall be subject to reduction in accordance with Section 5(e)(ii).
(f) Subsequent Closing. The closing (the “Subsequent Closing” and together with the Initial Closing, each a “Closing”) of the purchase by the Buyers of the Subsequently Purchased Notes and Purchased Warrants shall occur by electronic transmission or other transmission as mutually acceptable to the parties at 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Subsequent Closing set forth in Sections 7 and 8 are satisfied or waived (or such other date as is mutually agreed to by Space-Eyes and each Buyer) (such date, the “Subsequent Closing Date” and together with the Initial Closing Date, each a “Closing Date”).
(g) Subsequent Securities Purchase Price. The aggregate purchase price for the Subsequently Purchased Notes to be purchased by the Buyers at the Subsequent Closing (the “Subsequent Notes Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers. The aggregate purchase price for the Purchased Warrants to be purchased by the Buyers at the Subsequent Closing (the “Warrant Purchase Price”) shall be determined in accordance with such Warrant at the Subsequent Closing. The Subsequent Notes Purchase Price and the Warrant Purchase Price are collectively referred to as the “Subsequent Securities Purchase Price.”
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(h) Form of Payment for Subsequently Purchased Notes and Purchased Warrants. On the Subsequent Closing Date, (i) each Buyer shall pay its respective Subsequent Securities Purchase Price to Space-Eyes for the Subsequently Purchased Notes and Purchased Warrants to be issued and sold to such Buyer at the Subsequent Closing Date (net of expenses payable pursuant to Section 5(j)), by wire transfer of immediately available funds in accordance with a Flow of Funds Letter with respect to such Subsequently Purchased Notes and Purchased Warrants, (ii) Space-Eyes shall deliver to each Buyer Subsequently Purchased Notes, duly executed on behalf of Space-Eyes and registered on the books and records of Space-Eyes in the name of such Buyer or its designee, and (iii) Space-Eyes shall deliver to each Buyer the Purchased Warrants exercisable for the aggregate number of Warrant Shares as is determined in accordance with such Warrant at the Subsequent Closing, duly executed on behalf of Space-Eyes and registered on the books and records of Space-Eyes in the name of such Buyer or its designee.
(i) Tax Treatment and Purchase Price Allocation. Each Buyer, Space-Eyes, and McKinley intend that (i) the Notes will be treated as equity (and not debt) for U.S. federal income tax purposes, and as preferred stock for purposes of Section 305 of the Internal Revenue Code of 1986, as amended (the “Code”) (the “Intended Tax Treatment”), (ii) any conversion of the Notes will be treated for U.S. federal income tax purposes as a tax-free exchange into the shares, except solely to the extent specifically provided in Treasury Regulations section 1.305-7; and (iii) any redemption or repayment of the Notes would be treated as a sale or exchange (and not as a distribution) for U.S. federal income tax purposes. Each of Space-Eyes and McKinley shall, and shall cause any agent thereof to, report consistently with, and take no positions or actions inconsistent with (including on any information return), the Intended Tax Treatment (including by way of withholding) unless otherwise required by a change in law or a final determination within the meaning of Section 1313(a) of the Code. Furthermore, each Buyer, Space-Eyes, and McKinley acknowledge that neither Space-Eyes nor McKinley expects to have any earnings and profits for any taxable year within the period the Notes are expected to be outstanding and therefore each Buyer (or any assignee or transferee (as the case may be)) is not expected to be required to include in income as a dividend for U.S. federal income tax purposes, and no U.S. withholding tax is expected to apply to, any amounts in respect of the Notes. If notwithstanding such expectation, Space-Eyes or McKinley determines that it (as applicable) is likely to have earnings and profits in any taxable year so that Space-Eyes or McKinley (as applicable) may be required to withhold any U.S. federal income tax on any amount in respect of the Notes, Space-Eyes or McKinley (as applicable) will promptly notify each Buyer (or any assignee or transferee (as the case may be)) of such determination and will use its reasonable best efforts to cooperate with each Buyer (or any assignee or transferee (as the case may be)) to reduce, eliminate, or otherwise mitigate the impact of, such withholding. Each Buyer, Space-Eyes, and McKinley further agree that if Space-Eyes or McKinley is required to apply U.S. federal withholding to any amount in respect of the Notes, Space-Eyes and McKinley (as applicable) (x) will not withhold any tax if the holder delivers a valid IRS Form W-9 certifying that it is not subject to backup withholding; and (y) will determine the rate of any applicable U.S. federal withholding tax in accordance with the applicable withholding rate set forth in the IRS Form W-8BEN-E (or any successor form) (including as an attachment to an IRS Form W-8IMY) delivered by each Buyer (or any assignee or transferee, as applicable) to Space-Eyes or McKinley (as applicable) (or its paying agent) prior to the applicable date with respect to which withholding is required to be applied. Each Buyer, Space-Eyes and McKinley agree that the Initial Notes Purchase Price and Subsequent Notes Purchase Price shall be allocated as set forth on the Schedule of Buyers. Neither the Buyers nor Space-Eyes nor McKinley shall take any position inconsistent with such allocation in any tax return or for any other purposes (including in any judicial or administrative proceeding in respect of taxes), except as may be otherwise required by applicable law.
(j) Securities Exchange. Concurrently with the Merger, on the Merger Effective Date, McKinley shall issue to each Buyer (i) McKinley Notes in exchange for such Buyer’s Space-Eyes Notes (including any Initial Purchased Notes then outstanding) in an aggregate principal amount equal to the aggregate outstanding principal amount of such Buyer’s Space-Eyes Notes immediately prior to the Merger Effective Date, which McKinley Notes shall be on terms identical to the Space-Eyes Notes, provided that such McKinley Notes shall not bear any restrictive legends; provided further that such McKinley Notes have been registered on the Registration Statement (as defined in the Business Combination Agreement); (ii) McKinley Warrants in exchange for such Buyer’s Space-Eyes Warrants that are exercisable for the same number of Warrant Shares as such Buyer’s Space-Eyes Warrants were exercisable immediately prior to the Merger Effective Date (subject to adjustment as provided in the Purchased Warrants), which McKinley Warrants shall be on terms identical to the Space-Eyes Warrants, provided that such McKinley Warrants shall not bear any restrictive legends; provided that such McKinley Warrants have been registered on the Registration Statement (as defined in the Business Combination Agreement); and (iii) McKinley Subsequent Closing Shares, which shall be Freely Tradeable (as defined in the Notes), provided that such McKinley Subsequent Closing Shares have been registered on the Registration Statement (as defined in the Business Combination Agreement), in exchange for such Buyer’s Space-Eyes Subsequent Closing Shares in an amount equal to such Buyer’s Subsequent Closing Share Balance immediately prior to the Merger Effective Date (collectively, the “Securities Exchange”). Space-Eyes and McKinley shall use their commercially reasonable efforts to cause the McKinley Notes (and the Underlying Shares issuable pursuant thereto), McKinley Warrants (and the Underlying Shares issuable pursuant thereto) and McKinley Subsequent Closing Shares to be registered under the 1933 Act pursuant to the Registration Statement (as defined in the Business Combination Agreement) to be filed by Space-Eyes and McKinley in connection with the transactions contemplated by the Business Combination Agreement. Upon consummation of the Securities Exchange, each Buyer shall be deemed to have automatically surrendered its Space-Eyes Notes, Space-Eyes Warrants and Space-Eyes Subsequent Closing Shares (collectively, the “Space-Eyes Securities”) in exchange for the corresponding McKinley Notes, McKinley Warrants and McKinley Subsequent Closing Shares, and such Space-Eyes Securities shall be deemed cancelled for all purposes; provided that no Buyer shall be required to execute any additional instrument of transfer or surrender, and the Securities Exchange shall be effected automatically and without any further action on the part of any Buyer.
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| 2. | BUYER’S REPRESENTATIONS AND WARRANTIES. |
Each Buyer, severally and not jointly, represents and warrants to Space-Eyes and McKinley with respect to only itself that, as of the date hereof, as of the Initial Closing Date and as of the Subsequent Closing Date:
(a) Organization; Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
(b) No Public Sale or Distribution. Such Buyer (i) is acquiring its Notes and Warrants, and (ii) upon conversion of, or otherwise in accordance with, its Notes will acquire the Note Shares issuable upon conversion thereof, or otherwise in accordance therewith, and upon exercise of, or otherwise in accordance with, its Warrants will acquire the Warrant Shares issuable upon exercise thereof, or otherwise in accordance therewith, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently and will not have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute any of the Securities in violation of applicable securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity (as defined below) or any department or agency thereof.
(c) Accredited Investor Status. At the time such Buyer was offered the Securities, it was and, as of the date hereof, such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(d) Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that each of Space-Eyes and McKinley is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.
(e) Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of Space-Eyes and McKinley and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its advisors, if any, have had (i) the opportunity to review the Transaction Documents and the SEC Documents (as defined below) and has been afforded the opportunity to ask such questions of Space-Eyes and McKinley as it has deemed necessary of, and to receive answers from, representatives of Space-Eyes and McKinley concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about each of Space-Eyes and McKinley and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that Space-Eyes or McKinley possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on Space-Eyes’ or McKinley’s representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby. Such Buyer did not learn of the investment in the Securities as a result of any general solicitation or general advertising. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. Such Buyer is not relying upon, and has not relied upon, any representation or warranty made by any person, except for representations and warranties made by Space-Eyes in Section 3 and McKinley in Section 4 of this Agreement, in making its investment or decision to invest in Space-Eyes or McKinley. Such Buyer acknowledges and agrees that (i) none of Clear Street, LLC, Alexander Capital, L.P. (collectively, the “Placement Agents”) or any of their respective affiliates has provided such Buyer with any information or advice with respect to the Securities nor is such information or advice necessary or desired, (ii) no Placement Agent or any of its affiliates has made or makes any representation as to Space-Eyes or McKinley or the quality of the Securities; and (iii) the Placement Agents and their respective affiliates may have acquired non-public information with respect to Space-Eyes or McKinley which such Buyer agrees need not be provided to it. In connection with the issuance of the Securities to such Buyer, no Placement Agent or any of its affiliates has acted as a financial advisor or fiduciary to such Buyer.
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(f) Independent Investment Decision. Such Buyer has independently evaluated the merits of its decision to purchase Securities pursuant to the Transaction Documents, and such Buyer confirms that it has not relied on the advice of any other Buyer’s business and/or legal counsel in making such decision. Such Buyer understands that nothing in this Agreement or any other materials presented by or on behalf of Space-Eyes or McKinley to such Buyer in connection with the purchase of the Securities constitutes legal, tax or investment advice. Such Buyer has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities. Such Buyer understands that the Placement Agents have acted solely as the agent of Space-Eyes in this placement of the Securities and such Buyer has not relied on the business or legal advice of the Placement Agents or any of their agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such Persons has made any representations or warranties to such Buyer in connection with the transactions contemplated by the Transaction Documents.
(g) No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(h) Transfer or Resale. Such Buyer understands that, as of the Initial Closing Date and the Subsequent Closing Date: (i) the Securities have not been registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred by any Buyer or any other holder of such Securities unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); and (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 2(h).
(i) Validity; Enforcement. This Agreement and the Security Documents (as defined below) have been (or will be upon the completion of the Merger, with respect to the McKinley Security Agreements) duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. As used in this Agreement, “Security Documents” means the Space-Eyes Security Agreements (prior to the completion of the Merger), the McKinley Security Agreements (upon the completion of the Merger), the Control Agreements (as defined in the Notes) and each other agreement or instrument pursuant to or in connection with which Space-Eyes or any of its Subsidiaries grants a security interest in any Pledged Collateral to any Secured Party (as defined in the Space-Eyes Security Agreements or the McKinley Security Agreements, as applicable), for its benefit and the benefit of the holders of the Notes, or pursuant to which any such security interest in Pledged Collateral (as defined in the Space-Eyes Security Agreements or the McKinley Security Agreements, as applicable) is perfected, each as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof.
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(j) No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Transaction Documents and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
(k) No Bad Actor Disqualification Event. Such Buyer represents, after reasonable inquiry, that none of the “Bad Actor” disqualifying events described in Rule 506(d)(l)(i) to (viii) under the 1933 Act (a “Disqualification Event”) is applicable to such Buyer or any of its Rule 506(d) Related Parties (if any). “Rule 506(d) Related Party” means a person or entity that is a beneficial owner of such Buyer’s securities for purposes of Rule 506(d).
(l) Disclosure. Each Buyer understands and confirms that each of McKinley and Space-Eyes has relied on and will rely on the foregoing representations in effecting transactions under this Agreement and the Transaction Documents. Each Buyer acknowledges and agrees that neither Space-Eyes nor McKinley makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 with respect to Space-Eyes or Section 4 with respect to McKinley.
(m) Insolvency. Each Buyer has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does each Buyer have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. For purposes of this Section 2(m), “Insolvent” means, (i) with respect to any Person and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of such Person’s and its Subsidiaries’ assets is less than the amount required to pay such Person’s and its Subsidiaries’ total Indebtedness (as defined below), (B) such Person and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) such Person and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect to such Person and each of its Subsidiaries, individually, (A) the present fair saleable value of such Person’s or such Subsidiary’s (as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (B) such Person or such Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) such Person or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature.
(n) Regulatory Permits. Each Buyer possesses all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not reasonably be likely to have, individually or in the aggregate, a material adverse effect, and each Buyer has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.
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(o) Illegal or Unauthorized Payments; Political Contributions. Neither such Buyer nor, to such Buyer’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of such Buyer or any of its Subsidiaries or affiliates, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office to influence official action or secure an improper advantage, except for personal political contributions not involving the direct or indirect use of funds of such Buyer or any of its Subsidiaries.
(p) Money Laundering. The operations of each Buyer and its Subsidiaries are and have been conducted at all times in material compliance with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and executive orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V. The operations of each Buyer and its Subsidiaries are and have been conducted at all times in material compliance with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations.
(q) Sanctions. None of the Buyers nor any of their Subsidiaries or any director, officer, employee or, to the knowledge of the Buyers and their respective Subsidiaries, agent or other person acting for or on behalf of the foregoing is the subject or target of any economic or financial sanctions imposed, administered or enforced by the United States (including the U.S. Department of the Treasury Office of Foreign Assets Control and the U.S. Department of State) or other relevant sanctions authority (collectively, “Sanctions” and each such Person, a “Sanctioned Person”). The operations of the Buyers and their respective Subsidiaries are and have been conducted within the past ten (10) years, in compliance with applicable Sanctions. Neither the Buyers nor any of their Subsidiaries will, directly or indirectly, use any part of the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund or facilitate any dealings or transactions with, involving or for the benefit of any Sanctioned Person, or otherwise in any manner that would constitute or give rise to a violation of any Sanctions by any Person (including any Person participating in the offering, whether as buyer, underwriter, advisor, investor or otherwise).
| 3. | REPRESENTATIONS AND WARRANTIES OF SPACE-EYES. |
Space-Eyes represents and warrants to each of the Buyers that, as of the date hereof, as of the Initial Closing Date and as of the Subsequent Closing Date:
(a) Organization and Qualification. Each of Space-Eyes and each of its Subsidiaries are entities duly organized and validly existing and in good standing (if a good standing concept exists in such jurisdiction) under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted. Each of Space-Eyes and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing (if a good standing concept exists in such jurisdiction) in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Space-Eyes Material Adverse Effect (as defined below). As used in this Agreement, “Space-Eyes Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of Space-Eyes or its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments entered into in connection herewith or therewith or (iii) the authority or ability of Space-Eyes or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents. Except as set forth on Schedule 3(a), Space-Eyes has no significant Subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X. “Subsidiaries” means any Person in which the Person in question, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary”.
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(b) Authorization; Enforcement; Validity. Space-Eyes has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents to which it is or will be a party and to issue the Securities in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by Space-Eyes, and the consummation by Space-Eyes and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Initial Purchased Notes and the Subsequently Purchased Notes, Purchased Warrants and Space-Eyes Subsequent Closing Shares), have been duly authorized by Space-Eyes’ board of directors (the “Space-Eyes Board of Directors”), and no further filing, consent or authorization is required by Space-Eyes, its Subsidiaries, their respective boards of directors or their shareholders or other governing body in connection therewith. This Agreement has been, and the other Transaction Documents to which it is a party will be duly executed and delivered by Space-Eyes prior to the applicable Closing, and each constitutes a legal, valid and binding obligation of Space-Eyes, enforceable against Space-Eyes in accordance with its respective terms, except (i) as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies, (ii) as limited by laws relating to the availability of specific performance, injunctive relief and other equitable remedies and (iii) insofar as rights to indemnification and to contribution may be limited by applicable law. “Transaction Documents” means, collectively, this Agreement, the Notes, the Warrants, the Lock-Up Agreements, the Security Documents and the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time. The Business Combination Agreement has not been amended, supplemented or modified and neither Space-Eyes nor McKinley has waived any rights under the Business Combination Agreement.
(c) Issuance of Securities. The issuance of the Securities is duly authorized and, when issued and delivered in accordance with the terms of the Transaction Documents, the Securities shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof (other than any restrictions on transfer generally imposed under applicable securities laws). The Underlying Shares (upon issuance in accordance with the Notes and the Warrants, as applicable), will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issuance thereof (other than any restrictions on transfer generally imposed under applicable securities laws), with the holders being entitled to all rights accorded to a holder of Issuer Equity Interests. Assuming the accuracy of the Buyer’s representations and warranties in Section 2, the offer and issuance by Space-Eyes of the Securities is exempt from registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by Space-Eyes and the consummation by Space-Eyes of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes, the Warrants, the Underlying Shares and Subsequent Closing Shares) will not (i) result in a violation of the Space-Eyes Charter (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of Space-Eyes or any of its Subsidiaries, or any capital stock or other securities of Space-Eyes or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which Space-Eyes or any of its Subsidiaries is a party, or (iii) assuming the accuracy of the representations and warranties in Section 2, result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations, and including all applicable foreign, federal and state laws, rules and regulations) applicable to Space-Eyes or any of its Subsidiaries or by which any property or asset of Space-Eyes or any of its Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii) above, for such breaches, violations or conflicts as would not reasonably be expected, individually or in the aggregate, to have a Space-Eyes Material Adverse Effect.
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(e) Consents. Neither Space-Eyes nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than filings necessary to perfect the Liens granted under Space-Eyes Security Agreements) and such consents, authorizations, filings or registrations the absence of which would not, individually or in the aggregate, reasonably be expected to have a Space-Eyes Material Adverse Effect), any Governmental Entity or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which Space-Eyes or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Initial Closing Date, and neither Space-Eyes nor any of its Subsidiaries are aware of any facts or circumstances which might prevent Space-Eyes or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. “Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
(f) Acknowledgment Regarding Buyer’s Purchase of Securities. Space-Eyes acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of Space-Eyes or any of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144) of Space-Eyes or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) of more than 9.99% of the shares of any voting class of Space-Eyes’ shares. Space-Eyes further acknowledges that no Buyer is acting as a financial advisor or fiduciary of Space-Eyes or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. Space-Eyes further represents to each Buyer that Space-Eyes’ and each Subsidiary’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by Space-Eyes, each Subsidiary and their respective representatives.
(g) No General Solicitation; Placement Agent Fees. Neither Space-Eyes, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. Space-Eyes shall be responsible for the payment of any placement agents’ fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. Neither Space-Eyes nor any of its Subsidiaries has engaged any placement agent or other agent other than the Placement Agents in connection with the offer or sale of the Securities. Space-Eyes shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and reasonable and documented out-of-pocket expenses) arising in connection with any claim for the payment of any placement agents’ fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby.
(h) No Integrated Offering. Assuming the accuracy of the Buyers’ representations and warranties set forth in Section 2, none of Space-Eyes, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of shareholders of Space-Eyes in connection with the offering of the Securities for purposes of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of Space-Eyes are listed or designated for quotation. None of Space-Eyes, its Subsidiaries, their affiliates nor any Person acting on their behalf has taken or will take any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other offerings of securities of Space-Eyes.
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(i) Dilutive Effect. Space-Eyes understands and acknowledges that the number of Underlying Shares will increase in certain circumstances. Space-Eyes further acknowledges that its obligation to issue the Underlying Shares pursuant to the terms of the Notes and the Warrants in accordance with the terms thereof and this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Issuer.
(j) Application of Takeover Protections. Space-Eyes and the Space-Eyes Board of Directors have taken or will take prior to the Initial Closing Date all necessary action, if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill, stockholder rights plan or other similar anti-takeover provision under the Space-Eyes Charter or other organizational documents or the laws of the jurisdiction of its incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, Space-Eyes’ issuance of the Securities and any Buyer’s ownership of the Securities.
(k) Financial Statements. The financial statements of Space-Eyes provided to the Buyers have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of Space-Eyes and its consolidated Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). No other information provided by or on behalf of Space-Eyes to any of the Buyers (including, without limitation, information referred to in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstances under which they are or were made. Space-Eyes is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of Space-Eyes with respect thereto) provided to the Buyers (the “Space-Eyes Financial Statements”), nor is Space-Eyes currently aware of facts or circumstances which would require Space-Eyes to amend or restate any of Space-Eyes Financial Statements, in each case, in order for any of Space-Eyes Financial Statements to be in material compliance with GAAP. Space-Eyes has not been informed by its independent auditors that they recommend that Space-Eyes amend or restate any of Space-Eyes Financial Statements or that there is any need for Space-Eyes to amend or restate any of Space-Eyes Financial Statements.
(l) Absence of Certain Changes. Since January 1, 2025, there has been no Space-Eyes Material Adverse Effect. Since January 1, 2025, except as set forth on Schedule 3(l), neither Space-Eyes nor any of its Subsidiaries has (i) declared or paid any distributions or dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business, (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business or (iv) made any revaluation of any of their respective assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or accounts receivable or any sale of assets other than in the ordinary course of business.
(m) Insolvency. Neither Space-Eyes nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Space-Eyes or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. Space-Eyes and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof and as of the Initial Closing Date and any Subsequent Closing Date, if any, and after giving effect to the transactions contemplated hereby to occur on the Initial Closing Date and on any Subsequent Closing Date, if any, will not be Insolvent (as defined below). For purposes of this Section 3(m), “Insolvent” means, (i) with respect to any Person and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of such Person’s and its Subsidiaries’ assets is less than the amount required to pay such Person’s and its Subsidiaries’ total Indebtedness (as defined below), (B) such Person and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) such Person and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect to such Person and each of its Subsidiaries, individually, (A) the present fair saleable value of such Person’s or such Subsidiary’s (as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (B) such Person or such Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) such Person or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature.
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(n) Regulatory Permits. Space-Eyes and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not reasonably be likely to have, individually or in the aggregate, a Space-Eyes Material Adverse Effect, and neither Space-Eyes nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.
(o) Foreign Corrupt Practices. Neither Space-Eyes, any of Space-Eyes’ Subsidiaries, nor any director, officer, employee thereof, nor, to Space-Eyes’ knowledge, any agent or any other person acting for or on behalf of the foregoing (individually and collectively, a “Space-Eyes Affiliate”) have violated the U.S. Foreign Corrupt Practices Act or any other applicable anti-bribery or anti-corruption laws (individually and collectively, “Anti-Corruption Laws”), nor, to Space-Eyes’ knowledge, has any Space-Eyes Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively, a “Government Official”) or to any person under circumstances where such Space-Eyes Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of:
(i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting Space-Eyes or its Subsidiaries in obtaining or retaining business for or with, or directing business to, Space-Eyes or its Subsidiaries.
Neither of Space-Eyes nor any of its Subsidiaries will use, directly or indirectly, any part of the proceeds from the transaction contemplated by this Agreement or any of the Transaction Documents in any manner that would constitute a violation of Anti-Corruption Laws.
(p) Transactions With Affiliates. Except as set forth in Schedule 3(p), none of the officers or directors of Space-Eyes or its Subsidiaries, or any associate, or to the knowledge of Space-Eyes, any employee of Space-Eyes or its Subsidiaries or any affiliate of any thereof, is presently or has been in the last two years (i) a party to any transaction with Space-Eyes or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments in excess of $120,000 in any 12 month period to, any such director, officer or, to the knowledge of Space-Eyes, employee or any affiliates thereof (other than for ordinary course services as employees, officers or directors of Space-Eyes or any of its Subsidiaries)), (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of Space-Eyes or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock or ordinary shares, as applicable, of a company whose securities are traded on or quoted through an Eligible Market (as defined below)), nor does any such Person receive income in excess of $120,000 in any 12 month period from any source other than Space-Eyes or its Subsidiaries which relates to the business of Space-Eyes or its Subsidiaries or should properly accrue to Space-Eyes or its Subsidiaries nor (iii) indebted to Space-Eyes or its Subsidiaries, as the case may be, nor is Space-Eyes or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (A) for payment of salary for services rendered, (B) reimbursement for reasonable expenses incurred on behalf of Space-Eyes or its Subsidiaries, as the case may be, and (C) for other standard employee benefits made generally available to all employees or executives (including share option agreements outstanding under any share option plan approved by the Space-Eyes Board of Directors).
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(q) Equity Capitalization.
(i) Authorized and Outstanding Equity Interests. As of the date of this Agreement and as of the Closing, the authorized capital stock of Space-Eyes consists of 15,000,000 shares of common stock, par value $0.001 per share, of which 5,000,000 are issued and outstanding and no shares are reserved for issuance pursuant to Space-Eyes Convertible Securities (as defined below) (other than the Notes) exercisable or exchangeable for, or convertible into, shares. “Space-Eyes Convertible Securities” means any capital stock, partnership interests or other security of Space-Eyes or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock, partnership interests, or other security of Space-Eyes (including, without limitation, shares, partnership interests and any rights, warrants or options to subscribe for or purchase shares or partnership interests or Convertible Securities (collectively, “Space-Eyes Options”)) or any of its Subsidiaries.
(ii) Valid Issuance; Affiliates. All of Space-Eyes’ outstanding shares of capital stock are duly authorized and have been validly issued and are fully paid and non-assessable. Schedule 3(q)(ii) sets forth the number of shares that are as of the date hereof and as of the Closing, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of any class of Space-Eyes’ issued and outstanding shares are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of Space-Eyes or any of its Subsidiaries. To Space-Eyes’ knowledge, as of the date hereof and each Closing Date, except as set forth on Schedule 3(q)(ii) no Person owns 10% or more of any class of Space-Eyes’ issued and outstanding shares.
(iii) Existing Securities; Obligations. Except as set forth on Schedule 3(q)(iii): (A) none of Space-Eyes’ or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by Space-Eyes or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of Space-Eyes or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which Space-Eyes or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of Space-Eyes or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of Space-Eyes or any of its Subsidiaries; (C) there are no agreements or arrangements under which Space-Eyes or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D) there are no outstanding securities or instruments of Space-Eyes or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which Space-Eyes or any of its Subsidiaries is or may become bound to redeem a security of Space-Eyes or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (F) neither Space-Eyes nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(iv) Organizational Documents. The Company has furnished to the Buyers true, correct and complete copies of Space-Eyes’ Certificate of Incorporation, as amended, and as in effect on the date hereof and each Closing Date (the “Space-Eyes Charter”).
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(r) Indebtedness and Other Contracts. Except as set forth on Schedule 3(r), neither Space-Eyes nor any of its Subsidiaries (i) has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of Space-Eyes or any of its Subsidiaries or by which Space-Eyes or any of its Subsidiaries is or may become bound; (ii) has any financing statements securing obligations in any amounts filed against Space-Eyes or any of its Subsidiaries or with respect to any of their respective assets; (iii) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Space-Eyes Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of Space-Eyes’ officers, has or is expected to have a Space-Eyes Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication, (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in accordance with GAAP (without giving effect to the treatment of operating leases as capital leases under ASC 842), consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations (as defined below) in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
(s) Litigation. There is no material action, suit, arbitration, proceeding, inquiry or investigation before or by Nasdaq, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of Space-Eyes, threatened against or affecting Space-Eyes or any of its Subsidiaries (or pending or threatened by Space-Eyes or any of its Subsidiaries) or any of Space-Eyes’ or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such. To the knowledge of Space-Eyes, no director, officer or employee of Space-Eyes or any of its Subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge of Space-Eyes, there is not pending, contemplated or anticipated, any inquiry or investigation by the SEC involving Space-Eyes, any of its Subsidiaries or any current or former director or officer of Space-Eyes or any of its Subsidiaries. After reasonable inquiry of its officers (as defined in Rule 16a-1(f) promulgated under the 1934 Act) and the Space-Eyes Board of Directors, Space-Eyes is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither Space-Eyes nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity.
(t) Insurance. Space-Eyes and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of Space-Eyes believes to be prudent and customary in the businesses in which Space-Eyes and its Subsidiaries are engaged. Neither Space-Eyes nor any of its Subsidiaries has been refused any insurance coverage sought or applied for, and neither Space-Eyes nor any of its Subsidiaries has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Space-Eyes Material Adverse Effect.
(u) Employee Relations. Neither Space-Eyes nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. Space-Eyes and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of Space-Eyes or any of its Subsidiaries has notified Space-Eyes or any such Subsidiary that such officer intends to leave Space-Eyes or any such Subsidiary or otherwise terminate such officer’s employment with Space-Eyes or any such Subsidiary. To the knowledge of Space-Eyes, no executive officer or other key employee of Space-Eyes or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant with Space-Eyes or any of its Subsidiaries, and the continued employment of each such executive officer or other key employee (as the case may be) does not subject Space-Eyes or any of its Subsidiaries to any liability with respect to any of the foregoing matters. Space-Eyes and its Subsidiaries are in material compliance with all applicable federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Space-Eyes Material Adverse Effect.
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(v) Title. Each of Space-Eyes and its Subsidiaries holds good title to, in accordance with customary industry standards, or a valid leasehold interest in, all real property, facilities or other interests in real property owned or held under lease by Space-Eyes or any of its Subsidiaries, as applicable, that is material to the business of Space-Eyes and its Subsidiaries, taken as a whole (the “Space-Eyes Real Property”). The Space-Eyes Real Property are free and clear of all Liens and, to the knowledge of Space-Eyes, are not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (i) Liens for current taxes not yet due, (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto and (iii) other Permitted Liens (as defined in the Notes). Any Space-Eyes Real Property held under lease by Space-Eyes or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere in any material respect with the use made and proposed to be made of such property and buildings by Space-Eyes or any of its Subsidiaries.
(w) Fixtures and Equipment. Each of Space-Eyes and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by Space-Eyes and its Subsidiaries to conduct their respective businesses (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair (ordinary wear and tear excepted), are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of Space-Eyes’ and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the date hereof and each Closing Date. Except as set forth on Schedule 3(w), each of Space-Eyes and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (i) Liens for current taxes not yet due, (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto and (iii) other Permitted Liens (as defined in the Notes).
(x) Intellectual Property Rights. Space-Eyes and each of its Subsidiaries owns or possesses adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, original works of authorship, inventions, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct or its business as now conducted. None of Space-Eyes’ or its Subsidiaries’ Intellectual Property Rights, subject to a registration or application for registration with a Governmental Entity which are necessary to conduct their respective businesses, have expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned, within three years from the date of this Agreement, except expiration at the end of the Intellectual Property Right’s term and where Space-Eyes or one of its Subsidiaries has, in its reasonable business judgment, allowed to expire, terminate, or allow to abandon such registrations or applications for registration. Neither Space-Eyes nor any of its Subsidiaries has, (i) infringed, misappropriated, diluted or violated the Intellectual Property Rights of others, (ii) violated and failed to cure within the applicant cure period any material term or provision of any contract concerning Intellectual Property Rights, except where such violations have been waived by the relevant counterparty, (iii) to the knowledge of Space-Eyes, violated any material right of any person (including any right to privacy or publicity), or (iv) conducted its business in a manner that would constitute unfair competition or unfair trade practices under the laws of the applicable jurisdiction. There is no claim, action or proceeding being made or brought, or to the knowledge of Space-Eyes or any of its Subsidiaries, being threatened, against Space-Eyes or any of its Subsidiaries regarding Intellectual Property Rights of others that would reasonably be expected to have a Space-Eyes Material Adverse Effect on Space-Eyes. Space-Eyes is not aware of any facts or circumstances which might give rise to any of the foregoing infringements by Space-Eyes of Intellectual Property Rights of a third party or claims, actions or proceedings. Space-Eyes and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all trade secrets within the Intellectual Property Rights of Space-Eyes that are materially necessary to conduct their respective businesses. To the knowledge of Space-Eyes, no third party is infringing, violating or misappropriating any Space-Eyes-owned or exclusively in-licensed Intellectual Property Rights, and there is no claim pending or proceeding regarding any such actual or alleged infringement, misappropriation or other violation of any Space-Eyes-owned or exclusively in-licensed Intellectual Property Rights. All former and current employees, contractors and consultants of Space-Eyes who have contributed to the creation or development of material Space-Eyes-owned or exclusively in-licensed Intellectual Property Rights have executed a valid and enforceable agreement containing an irrevocable assignment to Space-Eyes of all of their ownership and other rights therein, including to any invention, improvement or discovery or ownership of such material Space-Eyes-owned or exclusively in-licensed Intellectual Property Rights automatically vested with Space-Eyes or one of its Subsidiaries by operation of law. Space-Eyes has not distributed, incorporated or otherwise used any “Open Source Code” (also known as “free software” (as defined by the Free Software Foundation) or “open source software” (as defined by the Open Source Initiative)) in a manner that would require that any of the proprietary software owned by Space-Eyes or included in a Space-Eyes product or service: (i) be made available or distributed in source code form; (ii) be licensed for the purpose of making derivative works; (iii) be licensed under terms that allow reverse engineering, reverse assembly or disassembly of any kind; or (iv) be redistributable at no charge. Space-Eyes and its Subsidiaries are in material compliance with the terms and conditions of all licenses for free or Open Source Code licensed to Space-Eyes or any of its Subsidiaries.
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(y) Environmental Laws. Space-Eyes and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as defined below), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, except in each of the foregoing clauses (i), (ii) and (iii), where the failure to so comply or having such permits, licenses or other approval would not reasonably be expected to have, individually or in the aggregate, a Space-Eyes Material Adverse Effect. The term “Environmental Laws” means all federal, state, provincial, local or foreign laws, regulations, orders, judgments, decrees, permits or common law provision or other legally binding standards relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous materials, substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of, or exposure to, Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(z) Hazardous Materials.
(i) To Space-Eyes’ knowledge, no Hazardous Materials have been disposed of or otherwise released from any Space-Eyes Real Property in violation of any Environmental Laws.
(ii) To Space-Eyes’ knowledge, no Hazardous Materials are present on, over, beneath, in or upon any Space-Eyes Real Property or any portion thereof in quantities that would constitute a violation of any Environmental Laws or in quantities, a manner or location that would reasonably be expected to require remedial action pursuant to any Environmental Laws. No prior use by Space-Eyes or any of its Subsidiaries of any Space-Eyes Real Property has occurred that violates any Environmental Laws, which violation would have a Space-Eyes Material Adverse Effect.
(iii) To Space-Eyes’ knowledge, neither Space-Eyes nor any of its Subsidiaries knows of any other Person that has stored, treated, recycled, disposed of or otherwise located on any Space-Eyes Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iv) To Space-Eyes’ knowledge, none of Space-Eyes Real Property is on any federal or state “Superfund” list or Comprehensive Environmental Response, Compensation and Liability Information System (“CERCLIS”) list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(v) Neither Space-Eyes nor its Subsidiaries is subject to any pending or, to Space-Eyes’ and its Subsidiaries’ knowledge, threatened claim or proceeding to any Environmental Laws, except for any claims or proceeding that would not reasonably be expected to have, individually or in the aggregate, a Space-Eyes Material Adverse Effect.
(aa) Tax Status. Space-Eyes and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject through the date of this Agreement or have requested extensions thereof (except where the failure to file would not, individually or in the aggregate, have a Space-Eyes Material Adverse Effect) and (ii) has timely paid all taxes and other governmental assessments and charges, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and for which reserves required by GAAP have been created in the financial statements of Space-Eyes or for cases in which the failure to pay would not have a Space-Eyes Material Adverse Effect. There is no tax deficiency that has been determined adversely to Space-Eyes or any of its Subsidiaries which has had a Space-Eyes Material Adverse Effect, nor does Space-Eyes or its Subsidiaries have any knowledge or notice of any tax deficiency which could reasonably be expected to be determined adversely to Space-Eyes or its Subsidiaries and which could reasonably be expected to have a Space-Eyes Material Adverse Effect.
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(bb) Internal Accounting and Disclosure Controls. Space-Eyes and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. Since January 1, 2024, neither Space-Eyes nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of Space-Eyes or any of its Subsidiaries.
(cc) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between Space-Eyes or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that would be required to be disclosed by Space-Eyes in any filings with the SEC if Space-Eyes were subject to the filing requirements of the 1934 Act or that otherwise could be reasonably likely to have a Space-Eyes Material Adverse Effect.
(dd) Investment Company Status. Space-Eyes is not, and upon consummation of the sale of the Securities and the application of the proceeds thereof, will not be, an “investment company,” or a company controlled by an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ee) Acknowledgment Regarding Buyers’ Trading Activity. It is understood and acknowledged by Space-Eyes that (i) following the public disclosure of the transactions contemplated by the Transaction Documents in the Press Release (as defined below), none of the Buyers have been asked by Space-Eyes or any of its Subsidiaries to agree, nor has any Buyer agreed with Space-Eyes or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities of Space-Eyes, or “derivative” securities based on securities issued by Space-Eyes or to hold any of the Securities for any specified term; (ii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iii) each Buyer may rely on Space-Eyes’ obligation to timely deliver Underlying Shares as and when required pursuant to the Transaction Documents for purposes of effecting trading in the Issuer Equity Interests. Space-Eyes further understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press Release, one or more Buyers may have engaged and may after the date hereof engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable Issuer Equity Interests) at various times prior to or during the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Underlying Shares deliverable with respect to the Securities are being determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable Issuer Equity Interests), if any, can reduce the value of the existing equity interest in Space-Eyes both at and after the time the hedging and/or trading activities are being conducted. Space-Eyes acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or any other Transaction Document or any of the documents executed in connection herewith or therewith.
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(ff) Manipulation of Price. Neither Space-Eyes nor any of its Subsidiaries has, and, to the knowledge of Space-Eyes, no Person acting on their behalf has, (i) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other than the fees to be paid to the Placement Agents), or (ii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of Space-Eyes or any of its Subsidiaries or (iii) paid or agreed to pay any Person for research services with respect to any securities of Space-Eyes or any of its Subsidiaries.
(gg) U.S. Real Property Holding Corporation. Neither Space-Eyes nor any of its Subsidiaries is, or has ever been, and so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended (the “Code”), and Space-Eyes and each Subsidiary shall so certify upon any Buyer’s request.
(hh) Transfer Taxes. All stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by Space-Eyes, and all laws imposing such taxes will be or will have been complied with; provided that Space-Eyes shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any Underlying Shares pursuant to the Notes or Warrants in a name other than that of the Buyer of such Notes or Warrants, and Space-Eyes shall not be required to issue or deliver such Underlying Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to Space-Eyes the amount of such tax or shall have established to the satisfaction of Space-Eyes that such tax has been paid.
(ii) Bank Holding Company Act. Neither Space-Eyes nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither Space-Eyes nor any of its Subsidiaries owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither Space-Eyes nor any of its Subsidiaries exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(jj) Shell Company Status. Space-Eyes is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
(kk) Illegal or Unauthorized Payments; Political Contributions. Neither Space-Eyes nor any of its Subsidiaries nor, to Space-Eyes’ knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of Space-Eyes or any of its Subsidiaries or affiliates, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office to influence official action or secure an improper advantage, except for personal political contributions not involving the direct or indirect use of funds of Space-Eyes or any of its Subsidiaries.
(ll) Money Laundering. The operations of Space-Eyes and its Subsidiaries are and have been conducted at all times in material compliance with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and executive orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V. The operations of Space-Eyes and its Subsidiaries are and have been conducted at all times in material compliance with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations.
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(mm) Sanctions. None of Space-Eyes, any of its Subsidiaries or any director, officer, employee or, to the knowledge of Space-Eyes and its Subsidiaries, agent or other person acting for or on behalf of the foregoing is the subject or target of any economic or financial sanctions imposed, administered or enforced by the United States (including the U.S. Department of the Treasury Office of Foreign Assets Control and the U.S. Department of State) or other relevant sanctions authority (collectively, “Sanctions” and each such Person, a “Sanctioned Person”). The operations of Space-Eyes and its Subsidiaries are, and have been conducted within the past ten (10) years, in compliance with applicable Sanctions. Neither Space-Eyes nor any of its Subsidiaries will, directly or indirectly, use any part of the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund or facilitate any dealings or transactions with, involving or for the benefit of any Sanctioned Person, or otherwise in any manner that would constitute or give rise to a violation of any Sanctions by any Person (including any Person participating in the offering, whether as buyer, underwriter, advisor, investor or otherwise).
(nn) Management. During the past five year period, no current or then-current officer or director of Space-Eyes, to the knowledge of Space-Eyes, has been the subject of:
(i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);
(iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(2) engaging in any particular type of business practice; or
(3) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;
(v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
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(oo) Cybersecurity. The information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases used or owned by, or leased or licensed to, Space-Eyes or any of its Subsidiaries (collectively, “Space-Eyes IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of Space-Eyes and its Subsidiaries as currently conducted free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. Space-Eyes and its Subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all Space-Eyes IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data” means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any other piece of information that allows the identification of a natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any incidents under internal review or investigations relating to the same. To the knowledge of Space-Eyes, there have been no breaches, violations, outages or unauthorized uses of or accesses to Personal Data that required statutory notification to individuals or governmental or regulatory authorities. Space-Eyes and its Subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of Space-Eyes IT Systems and Personal Data and to the protection of such Space-Eyes IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
(pp) Compliance with Data Privacy Laws. Space-Eyes and its Subsidiaries are, and at all prior times were, in material compliance with all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and Space-Eyes and its Subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”). Space-Eyes and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). Space-Eyes and its Subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of Space-Eyes, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. Neither Space-Eyes nor any Subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(qq) Artificial Intelligence. Space-Eyes and its Subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, documented internal policies and contractual obligations relating to artificial intelligence. Notwithstanding the generality of the foregoing, Space-Eyes and its Subsidiaries are taking or have taken all reasonably necessary actions to prepare to comply with the European Union Artificial Intelligence Act (and other applicable laws and regulations with respect to artificial intelligence that have been announced as of the date hereof as becoming effective within 12 months after the date hereof, and for which any non-compliance with same would be reasonably likely to create a material liability). Neither Space-Eyes nor any of its Subsidiaries, (i) has received written notice of any actual or potential liability of Space-Eyes or its Subsidiaries from any governmental or regulatory agencies or bodies (except as would not be material to Space-Eyes and its Subsidiaries, taken as a whole) under or relating to, or actual or potential violation by Space-Eyes or any of its Subsidiaries of, any of such laws and regulations; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation or other corrective action by or mandated by any governmental or regulatory agency or body pursuant to any of such laws and regulations; or (iii) is a party to any order, decree, or agreement with any governmental or regulatory agency or body that imposed any obligation or liability under any of such laws and regulations.
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(rr) Government Contracting.
(i) Compliance with Applicable Law. Space-Eyes is, and at all times during the three (3) years preceding the date of this Agreement has been, in material compliance with (i) the Federal Acquisition Regulation (48 C.F.R. Chapter 1) (“FAR”); (ii) the Defense Federal Acquisition Regulation Supplement (48 C.F.R. Chapter 2) (“DFARS”); and (iii) all other applicable federal, state, and local laws, regulations, rules, and executive orders governing the award, administration, performance, and termination of government contracts and subcontracts (collectively, “Government Contracting Laws”). Space-Eyes has not received any written notice of, nor to its knowledge is there any pending or threatened, claim, demand, audit finding, show cause notice, cure notice, or termination for default alleging any material violation of any Government Contracting Law.
(ii) Status of Government Contracts. All contracts, subcontracts, task orders, delivery orders, basic ordering agreements, and blanket purchase agreements between Space-Eyes and any Governmental Entity, or between Space-Eyes and any prime contractor or higher-tier subcontractor in connection with a contract with any Governmental Entity, that are currently in effect or were in effect at any time during the preceding three (3) years (collectively, “Government Contracts”) are in material full force and effect in accordance with their terms. Space-Eyes is not in material breach or default under any Government Contract, and no counterparty to any Government Contract has provided written notice of any termination for default, termination for convenience, stop-work order, or cure notice that remains unresolved as of the date hereof.
(iii) Debarment and Suspension. Neither Space-Eyes nor, to Space-Eyes’ knowledge, any of its principals (as that term is defined in FAR 2.101) is currently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts or subcontracts by any Governmental Entity under FAR Subpart 9.4, any applicable agency supplement thereto, or any other applicable debarment or suspension authority. No proceedings for debarment, suspension, or declaration of ineligibility are pending or, to Space-Eyes’ knowledge, threatened against Space-Eyes or any of its principals. Space-Eyes has not been notified of, and is not aware of, any circumstances that would reasonably be expected to form the basis for any such proceeding.
(iv) Cost Accounting; DCAA Audit. To the extent Space-Eyes is subject to the Cost Accounting Standards (48 C.F.R. Chapter 99) (“CAS”), Space-Eyes has materially disclosed and consistently applied its cost accounting practices in accordance with CAS and FAR Part 31. Space-Eyes has not received any written notice of any material finding, questioned cost, disallowed cost, or recommendation for penalty or interest from the Defense Contract Audit Agency (“DCAA”) or any other government audit agency that remains unresolved as of the date hereof.
(v) Representations and Certifications. All representations, certifications, and disclosures made or submitted by Space-Eyes in connection with the award, novation, modification, or administration of any Government Contract were, at the time made, true, correct, and complete in all material respects. Space-Eyes has not made, and to Space-Eyes’ knowledge no employee or agent of Space-Eyes has made, any material false statement or false claim to any Governmental Entity in connection with any Government Contract in violation of the False Claims Act, 31 U.S.C. §§ 3729–3733, or any equivalent state law.
(vi) Organizational Conflicts of Interest. Space-Eyes has no knowledge of any organizational conflict of interest, as defined in FAR Subpart 9.5, that would require disclosure to, or a waiver from, any Governmental Entity, except for any such conflict that has been disclosed in writing to the applicable Governmental Entity and, to Space-Eyes’ knowledge, resolved or waived.
(vii) No Extraordinary Obligations. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) constitute a material breach of or default under any Government Contract; (ii) require the consent, novation, or approval of any Governmental Entity under any Government Contract, except as set forth on Schedule 3(rr) hereto; or (iii) result in the loss, termination, suspension, or material adverse modification of any Government Contract.
(ss) No Disqualification Event. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Space-Eyes Regulation D Securities”), none of Space-Eyes, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of Space-Eyes participating in the offering contemplated hereby, or, to Space-Eyes’ knowledge, any beneficial owner of 20% or more of Space-Eyes’ outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with Space-Eyes in any capacity at the time of sale, nor, to Space-Eyes’ knowledge, any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Space-Eyes Regulation D Securities, including the Placement Agents (each, a “Space-Eyes Covered Person”), is subject to any Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). Space-Eyes has exercised reasonable care to determine whether any Space-Eyes Covered Person is subject to a Disqualification Event. Space-Eyes has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(tt) Other Covered Persons. Other than the Placement Agents, Space-Eyes is not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Space-Eyes Regulation D Securities.
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(uu) Disclosure. Space-Eyes confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning Space-Eyes or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. Space-Eyes understands and confirms that each of the Buyers has relied on and will rely on the foregoing representations in effecting transactions in securities of Space-Eyes. All disclosure provided by Space-Eyes to the Buyers regarding Space-Eyes and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of Space-Eyes or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of Space-Eyes or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Space-Eyes acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
(vv) No Additional Agreements. Space-Eyes does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
| 4. | REPRESENTATIONS AND WARRANTIES OF MCKINLEY. |
McKinley represents and warrants to each of the Buyers that, as of the date hereof, as of the Initial Closing Date and as of the Subsequent Closing Date:
(a) Organization and Qualification. Each of McKinley and each of its Subsidiaries are entities duly organized and validly existing and in good standing (if a good standing concept exists in such jurisdiction) under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted. Each of McKinley and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing (if a good standing concept exists in such jurisdiction) in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a McKinley Material Adverse Effect (as defined below). As used in this Agreement, “McKinley Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of McKinley or its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments entered into in connection herewith or therewith or (iii) the authority or ability of McKinley or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents. Except for Merger Sub (as defined in the Business Combination Agreement), McKinley has no significant Subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X.
(b) Authorization; Enforcement; Validity. McKinley has the requisite power and authority to enter into and perform its obligations under this Agreement and the other Transaction Documents and to issue the McKinley Notes, McKinley Warrants, McKinley Subsequent Closing Shares, Underlying Shares and the Replenishment Shares in accordance with the terms hereof and thereof. Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by McKinley, and the consummation by McKinley and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the reservation for issuance and the issuance of the Underlying Shares and the Replenishment Shares), have been duly authorized by McKinley’s board of directors (“McKinley’s Board of Directors”), and no further filing, consent or authorization is required by McKinley, its Subsidiaries, their respective boards of directors or their shareholders or other governing body in connection therewith. This Agreement has been, and the other Transaction Documents to which it is a party will be duly executed and delivered by McKinley prior to the applicable Closing, and each constitutes a legal, valid and binding obligation of McKinley, enforceable against McKinley in accordance with its respective terms, except (i) as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies, (ii) as limited by laws relating to the availability of specific performance, injunctive relief and other equitable remedies and (iii) insofar as rights to indemnification and to contribution may be limited by applicable law. The Business Combination Agreement has not been amended, supplemented or modified and neither Space-Eyes nor McKinley has waived any rights under the Business Combination Agreement.
(c) Issuance of Securities. The issuance of the Securities is duly authorized and, when issued and delivered in accordance with the terms of the Transaction Documents, the Securities shall be validly issued, fully paid and non-assessable and free from all Liens with respect to the issuance thereof, except under any applicable securities laws. The Underlying Shares (upon issuance in accordance with the Notes and the Warrants, as applicable), the McKinley Subsequent Closing Shares and the Replenishment Shares (upon issuance in accordance with Section 5(gg)) will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights or Liens with respect to the issuance thereof, except under any applicable securities laws, with the holders being entitled to all rights accorded to a holder of Issuer Equity Interests.
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(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by McKinley and the consummation by McKinley of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Underlying Shares and the Replenishment Shares, and the reservation of Issuer Equity Interests for issuance of the Underlying Shares and the Replenishment Shares) will not (i) result in a violation of the McKinley Charter (as defined below), certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of McKinley or any of its Subsidiaries, or any capital stock or other securities of McKinley or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which McKinley or any of its Subsidiaries is a party, or (iii) assuming the accuracy of the representations and warranties in Section 2 and the completion of the Merger, result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations, and, to the extent applicable, the rules and regulations of The Nasdaq Stock Market (“Nasdaq”) and including all applicable foreign, federal and state laws, rules and regulations) applicable to McKinley or any of its Subsidiaries or by which any property or asset of McKinley or any of its Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii) above, for such breaches, violations or conflicts as would not reasonably be expected, individually or in the aggregate, to have a McKinley Material Adverse Effect.
(e) Consents. Neither McKinley nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with and such consents, authorizations, filings or registrations, the absence of which would not, individually or in the aggregate, reasonably be expected to have a McKinley Material Adverse Effect, any Governmental Entity or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All such consents, authorizations, orders, filings and registrations which McKinley or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to the Initial Closing Date, and neither McKinley nor any of its Subsidiaries are aware of any facts or circumstances which might prevent McKinley or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. McKinley is not in violation of the requirements of Nasdaq, to the extent applicable to McKinley, and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Class A ordinary shares, par value $0.0001 per share, of McKinley (the “McKinley Shares”).
(f) Acknowledgment Regarding Buyer’s Purchase of the Securities. McKinley acknowledges and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of McKinley or any of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144) of McKinley or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” (as defined for purposes of Rule 13d-3 of the 1934 Act) of more than 9.99% of the shares of any voting class of McKinley’s ordinary shares. McKinley further acknowledges that no Buyer is acting as a financial advisor or fiduciary of McKinley or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. McKinley’s and each Subsidiary’s decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by McKinley, each Subsidiary and their respective representatives.
(g) No General Solicitation; Placement Agent Fees. Neither McKinley, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. Neither McKinley nor any of its Subsidiaries has engaged any placement agent or other agent other than the Placement Agents in connection with the offer or sale of the Securities.
(h) No Integrated Offering. Assuming the accuracy of the Buyers’ representations and warranties set forth in Section 2, none of McKinley, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of shareholders of McKinley in connection with the offering of the Securities for purposes of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of McKinley are listed or designated for quotation. Except as contemplated by Section 5(y) of this Agreement, none of McKinley, its Subsidiaries, their affiliates nor any Person acting on their behalf has taken or will take any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other offerings of securities of McKinley.
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(i) Dilutive Effect. McKinley understands and acknowledges that the number of Underlying Shares and Replenishment Shares will increase in certain circumstances. McKinley further acknowledges that, following the completion of the Merger, McKinley’s obligation to issue the Underlying Shares pursuant to the terms of the Notes and the Warrants and/or the Replenishment Shares in accordance with the terms thereof and this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of McKinley.
(j) Application of Takeover Protections. McKinley and McKinley’s Board of Directors have taken or will take prior to each Closing Date all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill, stockholder rights plan or other similar anti-takeover provision under the McKinley Charter, bylaws or other organizational documents or the laws of the jurisdiction of its incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the issuance of the Securities and any Buyer’s ownership of the Underlying Shares.
(k) SEC Documents and Financial Statements. During the one (1) year prior to the date hereof and as of each Closing Date, McKinley has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SEC (other than Section 16 ownership filings) pursuant to the reporting requirements of the 1934 Act (reports filed in compliance with the time period specified in Rule 12b-25 promulgated under the 1934 Act shall be considered timely for this purpose) (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). McKinley has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of McKinley included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with United States GAAP, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of McKinley and its consolidated Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). No other information provided by or on behalf of McKinley to any of the Buyers which is not included in the SEC Documents (including, without limitation, information referred to in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstances under which they are or were made. McKinley is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of McKinley with respect thereto) included in the SEC Documents (the “McKinley Financial Statements”), nor is McKinley currently aware of facts or circumstances which would require McKinley to amend or restate any of the McKinley Financial Statements, in each case, in order for any of the McKinley Financial Statements to be in material compliance with GAAP and the rules and regulations of the SEC. McKinley has not been informed by its independent auditors that they recommend that McKinley amend or restate any of the McKinley Financial Statements or that there is any need for McKinley to amend or restate any of the McKinley Financial Statements.
(l) Absence of Certain Changes. Since the date of McKinley’s audited financial statements contained in McKinley’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), there has been no McKinley Material Adverse Effect. Since the date of the audited financial statements contained in the Annual Report, except as set forth on Schedule 4(l), neither McKinley nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business, (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business or (iv) made any revaluation of any of their respective assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or accounts receivable or any sale of assets other than in the ordinary course of business.
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(m) Insolvency. Neither McKinley nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does McKinley or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. McKinley and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof and as of each Closing Date and after giving effect to the transactions contemplated hereby to occur on each Closing Date, will not be Insolvent.
(n) Listing and Trading. Regulatory Permits. Since the date of the Annual Report, (i) the McKinley Shares have been listed or designated for quotation on Nasdaq, (ii) trading in the McKinley Shares has not been suspended by the SEC or Nasdaq and (iii) McKinley has received no communication, written or oral, from the SEC or Nasdaq regarding the suspension or delisting of the McKinley Shares from Nasdaq. McKinley and each of its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not reasonably be likely to have, individually or in the aggregate, a McKinley Material Adverse Effect, and neither McKinley nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.
(o) Foreign Corrupt Practices. Neither McKinley, any of McKinley’s Subsidiaries, nor any director, officer, employee thereof, nor, to McKinley’s knowledge, any agent or any other person acting for or on behalf of the foregoing (individually and collectively, a “McKinley Affiliate”) have violated any Anti-Corruption Laws, nor, to McKinley’s knowledge, has any McKinley Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party or official thereof or to any Government Official or to any person under circumstances where such McKinley Affiliate knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of:
(i) (A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting McKinley or its Subsidiaries in obtaining or retaining business for or with, or directing business to, McKinley or its Subsidiaries.
Neither of McKinley nor any of its Subsidiaries will use, directly or indirectly, any part of the proceeds from the transaction contemplated by this Agreement or any of the Transaction Documents in any manner that would constitute a violation of Anti-Corruption Laws.
(p) Sarbanes-Oxley Act. McKinley and each of its Subsidiaries is in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof and as of each Closing Date.
(q) Transactions With Affiliates. No current or former employee, partner, director, officer or shareholder (direct or indirect) of McKinley or its Subsidiaries, or any associate, or, to the knowledge of McKinley, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently or has been (i) a party to any transaction with McKinley or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or shareholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors of McKinley or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customer of McKinley or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock or ordinary shares, as applicable, of a company whose securities are traded on or quoted through an Eligible Market), nor does any such Person receive income from any source other than McKinley or its Subsidiaries which relates to the business of McKinley or its Subsidiaries or should properly accrue to McKinley or its Subsidiaries. No employee, officer, shareholder or director of McKinley or any of its Subsidiaries or member of his or her immediate family is indebted to McKinley or its Subsidiaries, as the case may be, nor is McKinley or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of McKinley or its Subsidiaries, as the case may be, and (iii) for other standard employee benefits made generally available to all employees or executives (including share option agreements outstanding under any share option plan approved by McKinley’s Board of Directors).
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(r) Equity Capitalization.
(i) Authorized and Outstanding Share Capital. As of the date of this Agreement and as of the Initial Closing, the authorized share capital of McKinley is Twenty-Five Thousand United States Dollars (US$25,000.00) divided into (A) Two Hundred and Thirty-Nine Million (239,000,000) Class A ordinary shares of a nominal or par value of US$0.0001 each, of which 17,801,250 are issued and outstanding and with 1,771,500 McKinley Shares reserved for issuance pursuant to McKinley Convertible Securities (as defined below) exercisable or exchangeable for, or convertible into, McKinley Shares, (B) Ten Million (10,000,000) Class B ordinary shares of a nominal or par value of US$0.0001, of which Six Million, Five Hundred and Forty Three Thousand and One Hundred and Three (6,543,103) are issued and outstanding, ((C) One Million (1,000,000) preference shares of a nominal or par value of US$0.0001 each, none of which are issued or outstanding. and (D) Seventeen Million, Seven Hundred and Fifteen Thousand (17,715,000) rights (“McKinley Rights”), each entitling the holder to receive one-tenth (.10) of one McKinley Share upon the consummation of the Merger, of which Seventeen Million, Seven Hundred and Fifteen Thousand (17,715,000) are issued and outstanding. “McKinley Convertible Securities” means any capital stock or other security of McKinley or any of its Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of McKinley (including, without limitation, ordinary shares and any rights, warrants or options to subscribe for ordinary shares or McKinley Convertible Securities, including, for the avoidance of doubt, the McKinley Units and the McKinley Rights (collectively, “McKinley Options” and, together with the Space-Eyes Options, the “Options”)) or any of its Subsidiaries.
(ii) Valid Issuance; Available Shares; Affiliates. All of McKinley’s outstanding shares of capital stock are duly authorized and have been validly issued and are fully paid and non-assessable. Schedule 4(r)(ii) sets forth the number of McKinley Shares that are (A) reserved for issuance pursuant to McKinley Convertible Securities as of the date hereof and as of the Initial Closing and (B) as of the date hereof and as of the Initial Closing, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of any class of McKinley’s issued and outstanding ordinary shares are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of McKinley or any of its Subsidiaries. To McKinley’s knowledge, as of the date hereof and the Initial Closing Date, no Person owns 10% or more of any class of McKinley’s issued and outstanding ordinary shares (calculated based on the assumption that all McKinley Convertible Securities, whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal securities laws).
(iii) Existing Securities; Obligations. Except as provided in this Agreement or as otherwise set forth on Schedule 4(r)(iii): (A) none of McKinley’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered or permitted by McKinley or any Subsidiary; (B) other than stock options, restricted share units, performance share units, deferred share units and other stock-based awards awarded to employees, directors and consultants of McKinley under equity incentive plans adopted by McKinley’s Board of Directors and described in the SEC Documents, there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of McKinley or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which McKinley or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of McKinley or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock of McKinley or any of its Subsidiaries; (C) there are no agreements or arrangements under which McKinley or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D) there are no outstanding securities or instruments of McKinley or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which McKinley or any of its Subsidiaries is or may become bound to redeem a security of McKinley or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Underlying Shares; and (F) neither McKinley nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(iv) Organizational Documents. McKinley has furnished to the Buyers true, correct and complete copies of McKinley’s Amended and Restated Memorandum and Articles of Association, as amended, and as in effect on the date hereof and each Closing Date (the “McKinley Charter”) and the terms of all McKinley Convertible Securities and the material rights of the holders thereof in respect thereto.
(s) Indebtedness and Other Contracts. Except as set forth on Schedule 4(s), neither McKinley nor any of its Subsidiaries (i) has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of McKinley or any of its Subsidiaries or by which McKinley or any of its Subsidiaries is or may become bound; (ii) has any financing statements securing obligations in any amounts filed against McKinley or any of its Subsidiaries or with respect to any of their respective assets; (iii) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a McKinley Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of McKinley’s officers, has or is expected to have a McKinley Material Adverse Effect. Neither McKinley nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of McKinley’s or its Subsidiaries’ respective businesses consistent with past practices and which, individually or in the aggregate, do not or could not have a McKinley Material Adverse Effect.
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(t) Litigation. There is no material action, suit, arbitration, proceeding, inquiry or investigation before or by Nasdaq, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of McKinley, threatened against or affecting McKinley or any of its Subsidiaries (or pending or threatened by McKinley or any of its Subsidiaries), the ordinary shares or any of McKinley’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such. To the knowledge of McKinley, no director, officer or employee of McKinley or any of its Subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge of McKinley, there is not pending, contemplated or anticipated, any inquiry or investigation by the SEC involving McKinley, any of its Subsidiaries or any current or former director or officer of McKinley or any of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by McKinley under the 1933 Act or the 1934 Act. After reasonable inquiry of its officers (as defined in Rule 16a-1(f) promulgated under the 1934 Act) and members of McKinley’s Board of Directors, McKinley is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither McKinley nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity.
(u) Insurance. McKinley and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of McKinley believes to be prudent and customary in the businesses in which McKinley and its Subsidiaries are engaged. Neither McKinley nor any of its Subsidiaries has been refused any insurance coverage sought or applied for, and neither McKinley nor any of its Subsidiaries has any reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a McKinley Material Adverse Effect.
(v) Employee Relations. Neither McKinley nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. McKinley and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of McKinley or any of its Subsidiaries has notified McKinley or any such Subsidiary in writing that such officer intends to leave McKinley or any such Subsidiary or otherwise terminate such officer’s employment with McKinley or any such Subsidiary. To the knowledge of McKinley, no executive officer or other key employee of McKinley or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant with McKinley or any of its Subsidiaries. McKinley and its Subsidiaries are in material compliance with all applicable federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a McKinley Material Adverse Effect.
(w) Title. Each of McKinley and its Subsidiaries holds good title to or a valid leasehold interest in, all real property, leases in real property, facilities or other interests in real property owned or held by McKinley or any of its Subsidiaries, as applicable, that is material to the business of McKinley (the “McKinley Real Property”). The McKinley Real Property is free and clear of all Liens and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (i) Liens for current taxes not yet due and (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Any McKinley Real Property held under lease by McKinley or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere in any material respect with the use made and proposed to be made of such property and buildings by McKinley or any of its Subsidiaries.
(x) Fixtures and Equipment. Each of McKinley and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by McKinley and its Subsidiaries to conduct their respective businesses (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally sound, are in good operating condition and repair (ordinary wear and tear excepted), are adequate for the uses to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of McKinley’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the date hereof and each Closing Date. Except as set forth on Schedule 4(x), each of McKinley and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (i) Liens for current taxes not yet due, (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto and (iii) other Permitted Liens (as defined in the Notes).
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(y) Intellectual Property Rights. McKinley and each of its Subsidiaries owns or possesses adequate rights or licenses to use all Intellectual Property Rights necessary to conduct their respective businesses as now conducted and as presently proposed to be conducted. None of McKinley’s or its Subsidiaries’ Intellectual Property Rights, which are necessary to conduct their respective businesses, have expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned, within three years from the date of this Agreement. Neither McKinley nor any of its Subsidiaries has, (i) infringed, misappropriated, diluted or violated the Intellectual Property Rights of others, (ii) violated any material term or provision of any contract concerning Intellectual Property Rights, (iii) violated any material right of any person (including any right to privacy or publicity), or (iv) conducted its business in a manner that would constitute unfair competition or unfair trade practices under the laws of any jurisdiction. There is no claim, action or proceeding being made or brought, or to the knowledge of McKinley or any of its Subsidiaries, being threatened, against McKinley or any of its Subsidiaries regarding Intellectual Property Rights of others that would reasonably be expected to have a McKinley Material Adverse Effect. McKinley is not aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. McKinley and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all trade secrets within the Intellectual Property Rights of McKinley that are materially necessary to conduct their respective businesses. To the knowledge of McKinley, no third party is infringing, violating or misappropriating any McKinley-owned Intellectual Property Rights, and there is no claim pending or proceeding regarding any such actual or alleged infringement, misappropriation or other violation of any McKinley-owned Intellectual Property Rights. All former and current employees, contractors and consultants of McKinley who have contributed to the creation or development of the McKinley-owned Intellectual Property Rights have executed a valid and enforceable agreement containing an irrevocable assignment to McKinley of all of their ownership and other rights therein, including to any invention, improvement or discovery. McKinley has not distributed, incorporated or otherwise used any “Open Source Code” (also known as “free software” (as defined by the Free Software Foundation) or “open source software” (as defined by the Open Source Initiative) or has not otherwise distributed publicly software under terms that permit modification and redistribution of such software) in a manner that would require that any of the proprietary software owned by McKinley or included in a McKinley product or service: (i) be made available or distributed in source code form; (ii) be licensed for the purpose of making derivative works; (iii) be licensed under terms that allow reverse engineering, reverse assembly or disassembly of any kind; or (iv) be redistributable at no charge. McKinley is in compliance with the terms and conditions of all licenses for free or Open Source Code.
(z) Environmental Laws. McKinley and its Subsidiaries (i) are in compliance with any and all Environmental Laws, (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, except in each of the foregoing clauses (i), (ii) and (iii), where the failure to so comply or having such permits, licenses or other approval would not reasonably be expected to have, individually or in the aggregate, a McKinley Material Adverse Effect.
(aa) Hazardous Materials.
(i) To McKinley’s knowledge, no Hazardous Materials have been disposed of or otherwise released from any McKinley Real Property in violation of any Environmental Laws.
(ii) To McKinley’s knowledge, no Hazardous Materials are present on, over, beneath, in or upon any McKinley Real Property or any portion thereof in quantities that would constitute a violation of any Environmental Laws or in quantities, a manner or location that would reasonably be expected to require remedial action pursuant to any Environmental Laws. No prior use by McKinley or any of its Subsidiaries of any McKinley Real Property has occurred that violates any Environmental Laws, which violation would have a McKinley Material Adverse Effect.
(iii) To McKinley’s knowledge, neither McKinley nor any of its Subsidiaries knows of any other Person that has stored, treated, recycled, disposed of or otherwise located on any McKinley Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iv) To McKinley’s knowledge, none of the McKinley Real Property is on any federal or state “Superfund” list or CERCLIS list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(v) Neither McKinley nor its Subsidiaries is subject to any pending or, to McKinley’s and its Subsidiaries’ knowledge, threatened claim or proceeding to any Environmental Laws, except for any claims or proceeding that would not reasonably be expected to have, individually or in the aggregate, a McKinley Material Adverse Effect.
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(bb) Tax Status. McKinley and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject through the date of this Agreement or have requested extensions thereof (except where the failure to file would not, individually or in the aggregate, have a McKinley Material Adverse Effect) and (ii) has timely paid all taxes and other governmental assessments and charges, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and for which reserves required by GAAP have been created in the financial statements of McKinley or for cases in which the failure to pay would not have a McKinley Material Adverse Effect. There is no tax deficiency that has been determined adversely to McKinley or any of its Subsidiaries which has had a McKinley Material Adverse Effect, nor does McKinley or its Subsidiaries have any knowledge or notice of any tax deficiency which could reasonably be expected to be determined adversely to McKinley or its Subsidiaries and which could reasonably be expected to have a McKinley Material Adverse Effect.
(cc) Internal Accounting and Disclosure Controls. McKinley and each of its Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. McKinley maintains disclosure controls and procedures (as such term is defined in Rule 13a15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by McKinley in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by McKinley in the reports that it files or submits under the 1934 Act is accumulated and communicated to McKinley’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Since the filing of the Annual Report, neither McKinley nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of McKinley or any of its Subsidiaries.
(dd) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between McKinley or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by McKinley in its SEC Documents and is not so disclosed or that otherwise could be reasonably likely to have a McKinley Material Adverse Effect.
(ee) Investment Company Status. McKinley is not, and upon consummation of the sale of the Underlying Shares and the application of the proceeds thereof, will not be, an “investment company,” or a company controlled by an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ff) Acknowledgment Regarding Buyers’ Trading Activity. It is understood and acknowledged by McKinley that (i) following the public disclosure of the transactions contemplated by the Transaction Documents in the Press Release (as defined below), none of the Buyers have been asked by McKinley or any of its Subsidiaries to agree, nor has any Buyer agreed with McKinley or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities of McKinley, or “derivative” securities based on securities issued by McKinley or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short” position in the ordinary shares which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) following completion of the Merger, each Buyer may rely on McKinley’s obligation to timely deliver Issuer Equity Interests as and when required pursuant to the Transaction Documents for purposes of effecting trading in the Issuer Equity Interests. McKinley further understands and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Press Release one or more Buyers may have engaged and may after the date hereof engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable ordinary shares) at various times prior to or during the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Underlying Shares deliverable with respect to the Notes and the Warrants are being determined and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable ordinary shares), if any, can reduce the value of the existing shareholders’ equity interest in McKinley both at and after the time the hedging and/or trading activities are being conducted. McKinley acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or any other Transaction Document or any of the documents executed in connection herewith or therewith.
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(gg) Manipulation of Price. Neither McKinley nor any of its Subsidiaries has, and, to the knowledge of McKinley, no Person acting on their behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of McKinley or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of McKinley or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of McKinley or any of its Subsidiaries.
(hh) U.S. Real Property Holding Corporation. Neither McKinley nor any of its Subsidiaries is, or has ever been, and so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended (the “Code”), and McKinley and each Subsidiary shall so certify upon any Buyer’s request.
(ii) Transfer Taxes. All stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully paid or provided for by McKinley, and all laws imposing such taxes will be or will have been complied with; provided that McKinley shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any Securities in a name other than that of the Buyer of such Securities, and McKinley shall not be required to issue or deliver any applicable Securities unless or until the Person or Persons requesting the issuance thereof shall have paid to McKinley the amount of such tax or shall have established to the satisfaction of McKinley that such tax has been paid.
(jj) Bank Holding Company Act. Neither McKinley nor any of its Subsidiaries is subject to the BHCA and to regulation by the Board of Governors of the Federal Reserve. Neither McKinley nor any of its Subsidiaries owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither McKinley nor any of its Subsidiaries exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(kk) [Reserved].
(ll) Illegal or Unauthorized Payments; Political Contributions. Neither McKinley nor any of its Subsidiaries nor, to McKinley’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of McKinley or any of its Subsidiaries or affiliates, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office to influence official action or secure an improper advantage, except for personal political contributions not involving the direct or indirect use of funds of McKinley or any of its Subsidiaries.
(mm) Money Laundering. The operations of McKinley and its Subsidiaries are and have been conducted at all times in material compliance with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and executive orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V. The operations of McKinley and its Subsidiaries are and have been conducted at all times in material compliance with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations.
(nn) Sanctions. None of McKinley, any of its Subsidiaries or any director, officer, employee or, to the knowledge of McKinley and its Subsidiaries, agent or other person acting for or on behalf of the foregoing is the subject or target of any Sanctions. The operations of McKinley and its Subsidiaries are, and have been conducted within the past ten (10) years, in compliance with applicable Sanctions. Neither McKinley nor any of its Subsidiaries will, directly or indirectly, use any part of the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund or facilitate any dealings or transactions with, involving or for the benefit of any Sanctioned Person, or otherwise in any manner that would constitute or give rise to a violation of any Sanctions by any Person (including any Person participating in the offering, whether as buyer, underwriter, advisor, investor or otherwise).
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(oo) Management. During the past five year period, no current or then-current officer or director of McKinley, to the knowledge of McKinley, has been the subject of:
(i) a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate to driving while intoxicated or driving under the influence);
(iii) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(2) engaging in any particular type of business practice; or
(3) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities laws or commodities laws;
(iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be associated with persons engaged in any such activity;
(v) a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended or vacated; or
(vi) a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(pp) Stock Option Plans. Each stock option granted by McKinley was granted (i) in accordance with the terms of the applicable stock option plan of McKinley and (ii) with an exercise price at least equal to the fair market value of the ordinary shares on the date such stock option would be considered granted under GAAP and applicable law. To McKinley’s knowledge, no stock option granted under a McKinley stock option plan has been backdated. McKinley has not knowingly granted, and there is no and has been no policy or practice of McKinley to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding McKinley or its Subsidiaries or their financial results or prospects.
(qq) Cybersecurity. The information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases used or owned by, or leased or licensed to, McKinley or any of its Subsidiaries (collectively, “McKinley IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of McKinley and its Subsidiaries as currently conducted free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. McKinley and its Subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all McKinley IT Systems and data, including “Personal Data,” used in connection with their businesses. There have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any incidents under internal review or investigations relating to the same. To the knowledge of McKinley, there have been no breaches, violations, outages or unauthorized uses of or accesses to Personal Data that required statutory notification to individuals or governmental or regulatory authorities. McKinley and its Subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of McKinley IT Systems and Personal Data and to the protection of such McKinley IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
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(rr) Compliance with Data Privacy Laws. McKinley and its Subsidiaries are, and at all prior times were, in material compliance with all applicable Privacy Laws, and McKinley and its Subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance with, the GDPR (EU 2016/679). McKinley and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their Policies. McKinley and its Subsidiaries have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of McKinley, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material respect. Neither McKinley nor any Subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(ss) No Disqualification Event. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“McKinley Regulation D Securities”), none of McKinley, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of McKinley participating in the offering contemplated hereby, or, to McKinley’s knowledge, any beneficial owner of 20% or more of McKinley’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with McKinley in any capacity at the time of sale, nor, to McKinley’s knowledge, any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any McKinley Regulation D Securities, including the Placement Agents (each, a “McKinley Covered Person”), is subject to any Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). McKinley has exercised reasonable care to determine whether any McKinley Covered Person is subject to a Disqualification Event. McKinley has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(tt) Other Covered Persons. Other than the Placement Agents, McKinley is not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any McKinley Regulation D Securities.
(uu) Margin Stock. The application of the proceeds received by McKinley from the issuance, sale and delivery of the Underlying Shares as described in the Transaction Documents will not violate Regulation T, U or X of the Board of Governors of the Federal Reserve system or any other regulation of such Board of Governors.
(vv) Disclosure. McKinley confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning McKinley or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. McKinley understands and confirms that each of the Buyers has relied on and will rely on the foregoing representations in effecting transactions in securities of McKinley. All of the written information furnished after the date hereof by or on behalf of McKinley or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. McKinley acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
(ww) No Additional Agreements. McKinley does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
| 5. | COVENANTS. |
(a) Best Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement. Space-Eyes shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 8 of this Agreement. McKinley shall use its best efforts to timely satisfy each of the covenants hereunder to be satisfied by it.
(b) Blue Sky. Each of Space-Eyes and McKinley shall, on or before the Initial Closing Date, take such action as Space-Eyes shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at each Closing Date and upon conversion of the Notes and exercise of the Warrants, pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to each Closing Date. Without limiting any other obligation of Space-Eyes or McKinley under this Agreement, each of Space-Eyes and McKinley shall timely make all filings and reports relating to the issuance, offer and sale of the Securities required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and each of Space-Eyes and McKinley shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the issuance, offering and sale of the Securities to the Buyers.
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(c) Securities Exchange. Concurrently with the consummation of the Merger, McKinley shall effect the Securities Exchange.
(d) Reporting Status. Continuing until the earlier of (i) the date upon which the Buyers shall have sold all of the Underlying Shares and (ii) the one-year anniversary of the later to occur of the termination of the Notes or the Warrants (the “Reporting Period”), McKinley shall timely file all reports required to be filed by McKinley with the SEC pursuant to the 1934 Act (reports filed in compliance with the time period specified in Rule 12b-25 promulgated under the 1934 Act shall be considered timely for this purpose), and McKinley shall not voluntarily terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
(e) Use of Proceeds.
(i) Space-Eyes will deposit the gross proceeds from the sale of the Initial Purchased Notes and the Subsequently Purchased Notes (less any amounts withheld by the Buyers for the payment of applicable fees and expenses incurred by such Buyers) into the Controlled Cash Account (as defined in the Notes). Notwithstanding the foregoing, following the completion of the transactions contemplated by the Business Combination Agreement, Space-Eyes shall be permitted (unless a Permitted Pre-DeSPAC Financing shall have been previously completed, in which case Space-Eyes shall use the proceeds from the Permitted Pre-DeSPAC Financing to pay the following legal fees and expenses) to use up to one hundred fifty thousand ($150,000) of the gross proceeds from the sale of the Subsequently Purchased Notes (the “Legal Fee Reimbursement”) to pay the outstanding fees and expenses of Troutman Pepper Locke LLP rather than depositing such amount into the Controlled Cash Account, but only to the extent that Space-Eyes has contributed an amount equal to or greater than the Legal Fee Reimbursement to the payment of such fees and expenses.
(ii) The Buyers shall have a right of first refusal to fund the Designated Acquisition from the proceeds of the Subsequently Purchased Notes, in an amount not to exceed the lesser of $40,000,000 and the amount actually payable to the sellers in connection with such Designated Acquisition (the “Designated Acquisition Funding Amount”). The Company shall deliver written notice to the Buyers of the material terms of the proposed Designated Acquisition (including the proposed purchase price) (a “Designated Acquisition Funding Request”); provided that the Company may only deliver a Designated Acquisition Funding Request if the proceeds of the Subsequently Purchased Notes funded in connection therewith will be applied to consummate the Designated Acquisition and the Company reasonably anticipates that the closing of the Designated Acquisition will occur within twenty (20) Business Days following the date of such Designated Acquisition Funding Request. If the closing of the Designated Acquisition does not occur within twenty (20) Business Days following the date of a Designated Acquisition Funding Request (whether or not the Buyers elected to fund the Designated Acquisition Funding Amount), such Designated Acquisition Funding Request shall automatically expire and be of no further force or effect, and the Company shall be required to deliver a new Designated Acquisition Funding Request in order to exercise any rights with respect to the Designated Acquisition Funding Amount or the Facility Reduction Option. The Buyers shall have ten (10) Business Days following receipt of such Designated Acquisition Funding Request to elect whether to fund the Designated Acquisition Funding Amount from the Controlled Cash Account for such purpose. If the Buyers do not elect to fund the Designated Acquisition Funding Amount within such ten (10) Business Day period (or affirmatively decline in writing prior to the expiration of such period), the Company shall have the option (the “Facility Reduction Option”), exercisable by written notice to the Buyers within five (5) Business Days thereafter, but in no event later than the consummation of the Subsequent Closing, to reduce the aggregate principal amount of the Subsequently Purchased Notes from $77,000,000 to an amount equal to $77,000,000 less the quotient of (x) the Designated Acquisition Funding Amount divided by (y) 0.9 (and the corresponding Subsequent Notes Purchase Price shall be reduced proportionately). Upon the exercise of the Facility Reduction Option, the Company may raise alternative financing for the Designated Acquisition through a separate Subsidiary of the Company (a “Designated Acquisition Financing Subsidiary”), which financing shall have senior status solely within such Designated Acquisition Financing Subsidiary and shall not be secured by or recourse to any assets of the Company or any other Subsidiary (other than the Designated Acquisition Financing Subsidiary). For the avoidance of doubt, the Designated Acquisition constitutes a pre-approved Approved Acquisition pursuant to the definition thereof and shall not require additional approval from the Required Holders.
As used herein, “Approved Acquisition” means (i) the Designated Acquisition, or (ii) an acquisition by the Company or any of its Subsidiaries of any Person or any business, assets or equity interests of any Person approved by the Required Holders (which approval shall not be unreasonably withheld, conditioned or delayed). Notwithstanding anything contained herein or the Notes to the contrary, any acquisition by the Company or any of its Subsidiaries of any business, assets or equity interests of any Person shall not require the approval of the Required Holders if such acquisition is funded by the Company from free cash flow and following such acquisition, the Company has no less than $25,000,000 of cash and cash equivalents on its balance sheet.
“Designated Acquisition” means the acquisition by Space-Eyes of all the equity interests of the Designated Target or substantially all of the assets of the Designated Target through a merger, asset acquisition or similar business combination transaction. “Designated Target” means the entity designated by the parties by letter agreement on the date hereof.
“Designated Acquisition Financing Subsidiary” means any Subsidiary of the Company that is formed solely for the purpose of financing the Designated Acquisition and holding the assets acquired in connection therewith.
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(f) Space-Eyes Information. From the date hereof until the date on which no Notes remain outstanding, Space-Eyes shall provide each Buyer, subject to Section 5(k)(ii), such information relating to the financial condition, business, prospects, or corporate affairs of Space-Eyes as such Buyer may from time to time reasonably request, including copies of any financial statements, product information relating to Space-Eyes’ and its Subsidiaries’ products and services, information regarding Space-Eyes’ and its Subsidiaries’ Firm Orders (as defined in the Notes) and Prospective Orders (as defined in the Notes and reflected in the Company's demand forecast or sales pipeline), and copies of any government contracts and other material contracts entered into by Space-Eyes or any of its Subsidiaries; provided, however, that Space-Eyes shall not be obligated under this Section 5(f) to disclose any information to the extent that, upon the advice of counsel, such disclosure (i) would be prohibited by applicable law, (ii) would reasonably be expected to cause a violation of any contract or agreement to which Space-Eyes or any of its Subsidiaries is a party or (iii) would cause a loss of privilege to Space-Eyes or any of its Subsidiaries (provided that Space-Eyes shall use its reasonable best efforts to make appropriate substitute disclosure arrangements under circumstances where the foregoing restrictions apply).
(g) Financial Information. McKinley shall send the following to each Buyer during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within two (2) Business Days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, shareholders’ equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof, e-mail copies of all press releases issued by McKinley or any of its Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given to the shareholders of McKinley generally, contemporaneously with the making available or giving thereof to the shareholders.
(h) Listing. Concurrently with and conditioned upon the completion of the Merger, McKinley shall secure the listing or designation for quotation (as the case may be) of all of the Securities to be listed upon each national securities exchange and automated quotation system, if any, upon which the Issuer Equity Interests are then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Securities from time to time issuable under the terms of the Transaction Documents on such national securities exchange or automated quotation system. McKinley shall maintain the Issuer Equity Interests’ listing or authorization for quotation (as the case may be) on Nasdaq, The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”). Neither McKinley nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Issuer Equity Interests on an Eligible Market. McKinley shall pay all fees and expenses in connection with satisfying its obligations under this Section 5(h).
(i) Fees. Space-Eyes shall pay for the reasonable and documented out-of-pocket due diligence and legal fees and expenses incurred by the Buyers in connection with the due diligence, structuring, documentation, negotiation, and closing of the transactions contemplated by the Transaction Documents (and the enforcement thereof by the Buyers) and the Business Combination Agreement, regardless of whether the Merger is consummated, including, without limitation, reasonable and documented consultant fees, all reasonable and documented legal fees and disbursements of Latham & Watkins LLP, counsel to the Buyers, and due diligence and regulatory filings in connection therewith, and all legal fees and expenses of the Buyers and the Collateral Agent in connection with implementing and perfecting security interests, net of and without duplication of any amount previously paid by or on behalf of the Company to Latham & Watkins LLP (the “Transaction Expenses”) and such Transaction Expenses, to the extent they have not already been paid to the Buyer, may be withheld by the Buyers from its Initial Notes Purchase Price and Subsequent Securities Purchase Price at the Initial Closing and the Subsequent Closing. Space-Eyes shall be responsible for the payment of any placement agents’ fees, financial advisory fees, transfer agent fees, The Depository Trust Company (“DTC”) fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby. Space-Eyes shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and reasonable and documented out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.
(j) Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, Space-Eyes and McKinley each acknowledges and agrees that the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide Space-Eyes or McKinley with any notice thereof or otherwise make any delivery to Space-Eyes or McKinley pursuant to this Agreement or any other Transaction Document including, without limitation, Section 2(h) hereof; provided that a Buyer and its pledgee shall be required to comply with the provisions of Section 2(h) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company and McKinley each hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer. Notwithstanding the foregoing, the Buyers shall ensure that any Subsequent Closing Shares they hold are excluded from any margin agreement or similar financing arrangement such that such Subsequent Closing Shares will be ineligible for lending to others to facilitate short sales.
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(k) Disclosure of Transactions and Other Material Information.
(i) Disclosure of Transaction. No later than 9:30 a.m., New York time, on the date immediately following the date of this Agreement, Space-Eyes and McKinley shall issue a press release (the “Press Release”) reasonably acceptable to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents and the Business Combination Agreement. No later than 5:30 p.m., New York time, on the fourth (4th) Business Day after the date of this Agreement, McKinley shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents and the Business Combination Agreement in the form required by the 1934 Act and attaching all the material Transaction Documents (the “8-K Filing”). From and after the issuance of the Press Release, Space-Eyes and McKinley shall each have disclosed all material, non-public information (if any) provided to any of the Buyers by Space-Eyes or any of its Subsidiaries, or McKinley or any of its Subsidiaries, or any of their respective officers, directors, employees or agents, including, but not limited to, the Placement Agents. In addition, effective upon the issuance of the Press Release, Space-Eyes and McKinley each acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between Space-Eyes or any of its Subsidiaries, or McKinley or any of its Subsidiaries, or any of their respective officers, directors, affiliates, employees or agents, including, but not limited to, the Placement Agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall have terminated and none of the Buyers have been subject to any such obligation since the issuance of such Press Release.
(ii) Limitations on Disclosure. Other than as required under the Transaction Documents (but subject to any other disclosure obligations of Space-Eyes or McKinley with respect thereto), neither Space-Eyes nor McKinley shall, and Space-Eyes and McKinley shall each cause each of its respective Subsidiaries and each of its and their respective officers, directors, employees and agents, including, but not limited to, the Placement Agents, not to provide any Buyer with any material, non-public information regarding Space-Eyes or any of its Subsidiaries, or McKinley or any of its Subsidiaries, from and after the date hereof unless prior thereto such Buyer shall have consented in writing to the receipt of such information and agreed with Space-Eyes or McKinley, as applicable, to keep such information confidential. If any material, non-public information is required to be provided by Space-Eyes or any of its Subsidiaries, or by McKinley or any of its Subsidiaries, to any Buyer pursuant to the Transaction Documents, Space-Eyes or McKinley, as applicable, shall obtain each Buyer’s prior written consent prior to providing such information to such Buyer, and if any Buyer fails to provide such written consent, Space-Eyes or McKinley, as applicable, shall not be deemed to be in breach of any of the Transaction Documents as a result of the failure to provide such information. To the extent that Space-Eyes or McKinley delivers any material, non-public information to a Buyer without such Buyer’s prior written consent in breach of the foregoing sentence, Space-Eyes or McKinley, as applicable, hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public information, provided that the Buyer shall remain subject to applicable law. Without the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), neither Space-Eyes nor McKinley shall (and shall cause each of its Subsidiaries and affiliates to not) submit for publication or otherwise cause or seek to publish any information naming any Buyer or disclose the name of such Buyer in any filing, announcement, release or otherwise; provided that, nothing in the foregoing shall be construed to prohibit Space-Eyes or McKinley from making any submission or filing (i) which it is required to make by applicable law or pursuant to judicial process, (ii) as required by federal securities law in connection with the filing of final Transaction Documents with the SEC, or (iii) to the extent such disclosure is required by law or regulations of Nasdaq; provided further, that (A) such filing or submission shall contain only such information as is necessary to comply with applicable law or judicial process and (B) unless specifically prohibited by applicable law or court order, Space-Eyes or McKinley, as applicable, shall promptly notify the Buyers of the requirement to make such submission or filing and provide the Buyers with a copy thereof, except in the 8-K Filing and as otherwise may be required by applicable law or regulations. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, Space-Eyes and McKinley each expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding agreement executed by Space-Eyes or McKinley, as applicable, and such particular Buyer (it being understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade in the securities of Space-Eyes or McKinley, as applicable, on the basis of, any material, non-public information regarding Space-Eyes or any of its Subsidiaries, or McKinley or any of its Subsidiaries, as applicable.
(l) Space-Eyes Restricted Period.
(i) Space-Eyes agrees that for the period commencing on the date hereof and ending upon the completion of the Merger (such period, the “Space-Eyes Restricted Period”), neither Space-Eyes nor any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or register or amend any outstanding registration statements or file any shelf registration statements or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Space-Eyes Convertible Securities, or any purchase rights) other than pursuant to a Permitted Pre-DeSPAC Financing. “Permitted Pre-DeSPAC Financing” means any sales of unsecured debt or equity securities with gross proceeds of up to ten million dollars ($10,000,000); provided that (i) such sale of securities does not constitute a Space-Eyes Variable Rate Transaction and (ii) the gross proceeds from such sale of securities are received by Space-Eyes prior to the consummation of the transactions contemplated by the Business Combination Agreement.
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(ii) Prior to the completion of the Merger, and so long as any Notes remain outstanding, Space-Eyes and each Subsidiary shall be prohibited from effecting, or entering into an agreement directly or indirectly to effect a Space-Eyes Variable Rate Transaction. “Space-Eyes Variable Rate Transaction” means a transaction in which Space-Eyes or any Subsidiary (A) issues or sells any Space-Eyes Convertible Securities either (i) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the partnership interests in Space-Eyes or any of its Subsidiaries, at any time after the initial issuance of such Space-Eyes Convertible Securities, or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Space-Eyes Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of Space-Eyes or the market for Space-Eyes’ equity securities, other than pursuant to customary adjustments for stock splits, stock dividends, stock combinations, recapitalizations and similar events or (B) enters into any agreement (including, without limitation, an equity line of credit) whereby Space-Eyes or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights).
(iii) So long as any Notes or Warrants remain outstanding, Space-Eyes will not, without the prior written consent of the Required Holders (as defined below), issue any Notes (other than to the Buyers as contemplated hereby) and Space-Eyes shall not issue any other securities that would cause a breach or default under the Notes or the Warrants. “Required Holders” means (I) prior to the Initial Closing Date, each Buyer entitled to purchase Purchased Notes at the Closing, (II) on or after the Initial Closing Date, but prior to the Merger Effective Date, Buyers holding Notes representing a majority of the aggregate Principal Amount (as defined in the Notes) then-outstanding, and (III) on and after the Merger Effective Date, holders of a majority of the Note Shares and/or Warrant Shares in the aggregate as of such time issued or issuable pursuant to the Notes or, if the Notes are no longer outstanding, the Warrants; provided that in the case of clauses (II) and (III) such majority must include HBC Investment Ltd., so long as HBC Investment Ltd. or any of its affiliates hold any Notes or Warrants.
(iv) Each Buyer shall be entitled to obtain injunctive relief against Space-Eyes and its Subsidiaries to preclude any issuance prohibited by this Section 5(l), which remedy shall be in addition to any right to collect damages.
(m) McKinley Restricted Period.
(i) Continuing so long as any Notes or Warrants remain outstanding, McKinley and each Subsidiary shall be prohibited from effecting, or entering into an agreement directly or indirectly to effect a McKinley Variable Rate Transaction. “McKinley Variable Rate Transaction” means a transaction in which McKinley or any Subsidiary (A) issues or sells any McKinley Convertible Securities either (i) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Issuer Equity Interests at any time after the initial issuance of such McKinley Convertible Securities, or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such McKinley Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of McKinley or the market for the Issuer Equity Interests, other than pursuant to customary adjustments for stock splits, stock dividends, stock combinations, recapitalizations and similar events or (B) enters into any agreement (including, without limitation, an equity line of credit) whereby McKinley or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights); provided that, for avoidance of doubt, an “at-the-market” offering within the meaning of Rule 415(a)(4) of the 1933 Act shall not be a “McKinley Variable Rate Transaction”, provided that issuances thereunder otherwise comply with the Notes and the Warrants.
(ii) So long as any Notes or Warrants remain outstanding, McKinley will not, without the prior written consent of the Required Holders (as defined below), issue any Notes (other than to the Buyers as contemplated hereby) and McKinley shall not issue any other securities that would cause a breach or default under the Notes or the Warrants.
(iii) Each Buyer shall be entitled to obtain injunctive relief against McKinley, and its Subsidiaries to preclude any issuance prohibited by this Section 5(m), which remedy shall be in addition to any right to collect damages.
(n) Compliance with Laws. Neither Space-Eyes nor any of its Subsidiaries, nor McKinley nor any of its Subsidiaries, shall violate any law, ordinance or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate, in a Space-Eyes Material Adverse Effect or a McKinley Material Adverse Effect, as applicable.
(o) Passive Foreign Investment Company. Each of Space-Eyes and McKinley shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses, in such a manner as will ensure that each of Space-Eyes and McKinley will not be deemed to constitute a passive foreign investment company within the meaning of Section 1297 of the Code.
(p) Restriction on Redemption and Cash Dividends. So long as any of the Notes or the Warrants are outstanding or during any period of time when a Subsequent Closing could still potentially occur, except as otherwise permitted under the Notes, neither Space-Eyes nor McKinley shall, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any of its securities without the prior express written consent of the Required Holders (other than as required by the Notes or as required by the terms thereof as in effect on the date hereof), except for the redemption rights set forth in the McKinley Charter in connection with the Merger.
(q) Legal Existence. So long as any Notes or Warrants remain outstanding, neither Space-Eyes nor McKinley shall be party to any Fundamental Change (as defined in the Notes) other than the Merger unless the Company is in compliance with the applicable provisions governing Fundamental Changes set forth in the Notes.
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(r) Conversion and Exercise Procedures. The terms of the Notes and the Warrants set forth the totality of the procedures required of the Buyers in order to receive Issuer Equity Interests pursuant to the Notes and the Warrants. Except as set forth in Sections 6(c) and 6(d), no additional legal opinion, other information or instructions shall be required of the Buyers to receive Issuer Equity Interests pursuant to the Notes or the Warrants. On and after the Merger Effective Date, McKinley shall honor an election by a Buyer to receive Issuer Equity Interests pursuant to the Notes or the Warrants, and shall deliver the Underlying Shares in accordance with the terms, conditions and time periods set forth in the Notes and the Warrants, as applicable. Except as explicitly set forth in the Notes or the Warrants, no legal opinion, information or instructions shall be required of the Buyers to receive Underlying Shares pursuant to the Notes or the Warrants.
(s) Regulation M. McKinley will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the Underlying Shares contemplated hereby.
(t) General Solicitation. None of Space-Eyes, McKinley, any of their respective affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf of Space-Eyes, McKinley or any such affiliate will solicit any offer to buy or offer to sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(u) Integration. None of Space-Eyes, McKinley, any of their respective affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of Space-Eyes, McKinley or any such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration of the Securities under the 1933 Act or require stockholder approval under the rules and regulations of Nasdaq and Space-Eyes and McKinley will each take all action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933 Act or (other than with respect to the Merger) the rules and regulations of Nasdaq, with the issuance of Securities contemplated hereby.
(v) [Reserved.]
(w) Rule 144. The Company shall (x) cause the Securities to be eligible to be offered, sold or otherwise transferred by the Buyers pursuant to Rule 144 under the 1933 Act, without any requirements as to volume or manner of sale or notice under the 1933 Act and without any requirement for registration under any state securities or “blue sky” law and (y) at all times satisfy the current public information requirement under Rule 144(c), in each case on and after the date that is twelve (12) months following the (A) Initial Closing Date with respect to the Initial Purchased Notes (and any McKinley Notes exchanged therefrom), (B) the Subsequent Closing Date with respect to the Subsequently Purchased Notes (and any McKinley Notes exchanged therefrom), the Purchased Warrants (and any McKinley Warrants exchanged therefrom) and Subsequent Closing Shares and (C) the date of issuance with respect to any Replenishment Shares. McKinley and Space-Eyes each acknowledges and agrees that, assuming the representations and warranties of the Buyers are true and correct, the Underlying Shares will have a holding period under Rule 144 that will be deemed to have commenced on the Initial Closing Date or the Subsequent Closing Date, as applicable, and Replenishment Shares will have a holding period under Rule 144 that will be deemed to have commenced on the date of issuance of such Replenishment Shares. McKinley and Space-Eyes each further acknowledges and agrees that, assuming the representations and warranties of the Buyers are true and correct, it will neither assert nor maintain a contrary position with respect to the date of commencement of such holding period under Rule 144 with respect to the Underlying Shares or Replenishment Shares.
(x) Share Reserve. On and after the Merger Effective Date, so long as any of the Notes or the Warrants remain outstanding, McKinley shall at all times have reserved solely for issuance of Underlying Shares and Replenishment Shares from its duly authorized capital stock not less than a number of shares of authorized but unissued Issuer Equity Interests equal to the greater of (A) the sum of (x) two hundred percent (200%) of a fraction, the numerator of which shall be the then outstanding aggregate Principal Amount (as defined in the Notes) with respect to the then-outstanding Notes plus an amount equal to all interest accruable on such outstanding Principal Amount through the Maturity Date (as defined in the Notes), and the denominator of which shall be the Market Equity Payment Price (as defined in the Notes), (y) two hundred percent (200%) of the aggregate number of Warrant Shares issuable upon exercise of all outstanding Warrants and (z) the aggregate number of Replenishment Shares that could be issuable in the event that all Subsequent Closing Shares then held by the Buyers were applied to satisfy the issuance of Interest Payment Shares, Amortization Payment Shares, Event of Default Equity Shares or Conversion Consideration under the then-outstanding Notes (which amount shall be calculated by McKinley in good faith based on the then-current number of outstanding shares of McKinley’s common stock) and (B) one hundred percent (100%) of the sum of (x) the Note Conversion Amount (as defined below) across all outstanding Notes and (y) the aggregate number of Warrant Shares issuable upon exercise of all outstanding Warrants (the “Required Reserve Amount”); provided that at no time shall the number of Issuer Equity Interests reserved pursuant to this Section 5(x) be reduced other than in connection with any stock combination, reverse stock split or other similar transaction. The “Note Conversion Amount” means, for each outstanding Note, a fraction, the numerator of which shall be the outstanding Principal Amount with respect to such Note and the denominator shall be the Conversion Price (as defined in the applicable Note) then in effect for such Note. The amounts set forth in the definition of Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders of the Notes and the Warrants based on the number of Issuer Equity Interests issuable pursuant to the Notes and the Warrants held by each holder thereof on the date of issuance of the Notes and the Warrants (without regard to any limitations on conversion or exercise) (collectively, the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes or Warrants, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any Issuer Equity Interests reserved and allocated to any Person which ceases to hold any Notes or Warrants shall be allocated to the remaining holders of the Notes and the Warrants, pro rata based on the number of Issuer Equity Interests issuable pursuant to the Notes and the Warrants then held by such holders thereof (without regard to any limitations on conversion or exercise). If at any time the number of Issuer Equity Interests authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, McKinley will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares to meet McKinley’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain stockholder approval (if required) of an increase in such authorized number of shares, and voting the management shares of McKinley in favor of an increase in the authorized shares of McKinley to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.
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(y) Registration Rights. McKinley shall:
(i) Use commercially reasonable efforts to register the McKinley Notes (and the Underlying Shares issuable pursuant thereto), the McKinley Warrants (and the Underlying Shares issuable pursuant thereto), and the McKinley Subsequent Closing Shares (the “Registrable Securities”) on the Registration Statement (as defined in the Business Combination Agreement) filed with the SEC within the time prescribed by the Business Combination Agreement;
(ii) promptly prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective and free from any material misstatement or omission to state a material fact therein until termination of such obligation as provided in Section 5(bb) below, subject to McKinley’s right to suspend pursuant to Section 5(aa) below;
(iii) furnish to the Buyers such number of copies of prospectuses in conformity with the requirements of the 1933 Act and such other documents as the Buyers may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Registrable Securities by the Buyers;
(iv) file such documents as may be required of McKinley for normal securities law clearance for the resale of the Registrable Securities in such states of the United States as may be reasonably requested by the Buyers and use its commercially reasonable efforts to maintain such blue sky qualifications during the period McKinley is required to maintain effectiveness of such Registration Statement; provided, however, that McKinley shall not be required in connection with this Section 5(y)(iv) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;
(v) upon notification by the SEC that the Registration Statement has been declared effective by the SEC, McKinley shall file the final prospectus under Rule 424 of the 1933 Act (“Rule 424”) within the applicable time period prescribed by Rule 424;
(vi) advise the Buyers promptly (and in any event within two (2) Trading Days thereof):
(A) of the effectiveness of the Registration Statement or any post-effective amendments thereto;
(B) of any request by the SEC for amendments to the Registration Statement or amendments to the prospectus or for additional information relating thereto;
(C) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement under the 1933 Act or of the suspension by any state securities commission of the qualification of the Registrable Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes;
(D) of the existence of any fact and the happening of any event that makes any statement of a material fact made in the Registration Statement, the prospectus and amendment or supplement thereto, or any document incorporated by reference therein, untrue, or that requires the making of any additions to or changes in the Registration Statement or the prospectus in order to make the statements therein not misleading;
(vii) cause all Underlying Shares and McKinley Subsequent Closing Shares comprising Registrable Securities to be listed on each securities exchange, if any, on which equity securities of McKinley are then listed; and
(viii) bear all expenses in connection with the procedures in paragraphs (i) through (viii) of this Section 5(y) and the registration of the Registrable Securities on such Registration Statement and the satisfaction of the blue sky laws of such states.
(ix) Fallback Resale Registration. If, notwithstanding McKinley’s commercially reasonable efforts pursuant to Section 5(y)(i), any Registrable Securities are not included on the Registration Statement at the time the Registration Statement is declared effective by the SEC (such securities, the “Excluded Registrable Securities”), McKinley shall:
(A) file with the SEC a registration statement on Form S-1 or Form S-3 (or any successor form) under the 1933 Act (providing for shelf registration of such shares under Rule 415 promulgated under the 1933 Act) (such registration statement, including any preliminary prospectus, final prospectus, exhibit or amendment included in or relating to such registration statement being the “Fallback Registration Statement”) within thirty (30) days following the date on which the Registration Statement is declared effective by the SEC (the “Fallback Filing Deadline”), to register for resale all Excluded Registrable Securities;
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(B) use its commercially reasonable efforts to cause the Fallback Registration Statement to be declared effective as soon as practicable and in any event within thirty (30) days of the filing thereof (or, in the event the staff of the SEC reviews and has written comments to the Fallback Registration Statement, within ninety (90) days of the filing thereof) (the “Fallback Effectiveness Deadline”), such efforts to include, without limiting the generality of the foregoing, preparing and filing with the SEC any financial statements or other information that is required to be filed prior to the effectiveness of such Fallback Registration Statement;
(C) not less than two (2) Trading Days prior to the filing of the Fallback Registration Statement or any related prospectus or any amendment or supplement thereto, furnish via e-mail to the Buyers copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated by reference therein) will be subject to the review of the Buyers, and McKinley shall reflect in each such document when so filed with the SEC such comments regarding the Buyers and the plan of distribution as the Buyers may reasonably and promptly propose no later than two (2) Trading Days after the Buyers have been so furnished with copies of such documents;
(D) promptly prepare and file with the SEC such amendments and supplements to the Fallback Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Fallback Registration Statement continuously effective and free from any material misstatement or omission to state a material fact therein until the earlier of (A) the date on which all Excluded Registrable Securities covered thereby have been resold or (B) the date on which all Excluded Registrable Securities covered thereby may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information;
(E) upon notification by the SEC that the Fallback Registration Statement will not be reviewed or is not subject to further review by the SEC, within one (1) Trading Day following the date of such notification request acceleration of the Fallback Registration Statement (with the requested effectiveness date to be not more than two (2) Trading Days later);
(F) upon notification by the SEC that the Fallback Registration Statement has been declared effective by the SEC, file the final prospectus under Rule 424 within the applicable time period prescribed by Rule 424;
(G) advise the Buyers promptly (and in any event within two (2) Trading Days): (A) of the effectiveness of the Fallback Registration Statement or any post-effective amendments thereto; (B) of any request by the SEC for amendments to the Fallback Registration Statement or amendments to the prospectus or for additional information relating thereto; (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Fallback Registration Statement under the 1933 Act or of the suspension by any state securities commission of the qualification of the Excluded Registrable Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes; and (D) of the existence of any fact and the happening of any event that makes any statement of a material fact made in the Fallback Registration Statement, the prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, untrue, or that requires the making of any additions to or changes in the Fallback Registration Statement or the prospectus in order to make the statements therein not misleading;
(H) furnish to the Buyers such number of copies of prospectuses in conformity with the requirements of the 1933 Act and such other documents as the Buyers may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Excluded Registrable Securities by the Buyers;
(I) file such documents as may be required of McKinley for normal securities law clearance for the resale of the Excluded Registrable Securities in such states of the United States as may be reasonably requested by the Buyers and use its commercially reasonable efforts to maintain such blue sky qualifications during the period McKinley is required to maintain effectiveness of the Fallback Registration Statement; provided, however, that McKinley shall not be required in connection with this clause (I) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;
(J) cause all Excluded Registrable Securities to be listed on each securities exchange, if any, on which Issuer Equity Interests are then listed; and
(K) bear all expenses in connection with the procedures in this Section 5(y)(ix) and the registration of the Excluded Registrable Securities on the Fallback Registration Statement, including, without limitation, all registration, filing and qualification fees, printing expenses, escrow fees, fees and disbursements of counsel for McKinley, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration.
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(x) Fallback Registration Delay Payments. If (i) the Fallback Registration Statement is (A) not filed with the SEC on or before the Fallback Filing Deadline (a “Fallback Filing Failure”) or (B) not declared effective by the SEC on or before the Fallback Effectiveness Deadline (a “Fallback Effectiveness Failure”), (ii) other than during a suspension permitted under Section 5(aa), on any day after the effective date of the Fallback Registration Statement sales of all of the Excluded Registrable Securities required to be included on such Fallback Registration Statement cannot be made pursuant to such Fallback Registration Statement (including, without limitation, because of a failure to keep such Fallback Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Fallback Registration Statement, a suspension or delisting of (or a failure to timely list) the Issuer Equity Interests on an Eligible Market, or a failure to register a sufficient number of Issuer Equity Interests or by reason of a stop order) or the prospectus contained therein is not available for use for any reason (a “Fallback Maintenance Failure”), or (iii) if the Fallback Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for any reason, and either (x) McKinley fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c) or (y) McKinley has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and McKinley shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Fallback Current Public Information Failure”) as a result of which any of the Buyers are unable to sell Excluded Registrable Securities without restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages to any holder by reason of any such delay in, or reduction of, its ability to sell the Excluded Registrable Securities (which remedy shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific performance), McKinley shall pay to each Buyer on each Fallback Registration Delay Payment Date (as defined below) an amount in cash equal to two percent (2%) of the product of (I) the number of such Buyer’s Excluded Registrable Securities as of such Fallback Registration Delay Payment Date and (II) the Daily VWAP (as defined in the Notes) on such date. A “Fallback Registration Delay Payment Date” is (1) the date of such Fallback Filing Failure, Fallback Effectiveness Failure, Fallback Maintenance Failure or Fallback Current Public Information Failure, as applicable, and (2) every thirty (30) day anniversary of (I) a Fallback Filing Failure until such Fallback Filing Failure is cured; (II) a Fallback Effectiveness Failure until such Fallback Effectiveness Failure is cured; (III) a Fallback Maintenance Failure until such Fallback Maintenance Failure is cured; and (IV) a Fallback Current Public Information Failure until the earlier of (i) the date such Fallback Current Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144 (in each case, prorated for periods totaling less than thirty (30) days). The payments to which a Buyer shall be entitled pursuant to this Section 5(y)(x) are referred to herein as “Fallback Registration Delay Payments.” Following the initial Fallback Registration Delay Payment for any particular event or failure, without limiting the foregoing, if an event or failure giving rise to the Fallback Registration Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then the Fallback Registration Delay Payment Date for such Fallback Registration Delay Payment shall be deemed to be the third (3rd) Business Day after such cure. Notwithstanding the foregoing, no Fallback Registration Delay Payments shall be owed to a Buyer (other than with respect to a Fallback Maintenance Failure resulting from a suspension or delisting of (or a failure to timely list) the Issuer Equity Interests on an Eligible Market) with respect to any period during which all of such Buyer’s Excluded Registrable Securities may be sold by such Buyer without restriction under Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
The indemnification and contribution provisions of Section 5(z) shall apply mutatis mutandis to the Fallback Registration Statement and the Excluded Registrable Securities registered thereunder, with all references therein to the “Registration Statement” being deemed to include the Fallback Registration Statement and all references to “Registrable Securities” being deemed to include the Excluded Registrable Securities. The suspension provisions of Section 5(aa) shall apply to the Fallback Registration Statement and the Excluded Registrable Securities registered thereunder. The obligations of McKinley pursuant to Section 5(y)(ix) shall cease and terminate, with respect to any Excluded Registrable Securities, upon such time as such Excluded Registrable Securities (A) have been resold in a transaction pursuant to which all restrictive legends were removed from such securities or (B) may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information.
(z) Registration Rights Indemnification.
(i) McKinley agrees to indemnify and hold harmless the Buyers and their respective affiliates, partners, members, officers, directors, agents, brokers and representatives, and each person, if any, who controls a Buyer within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each, a “Purchaser Party” and collectively the “Purchaser Parties”), to the fullest extent permitted by applicable law, from and against any losses, claims, damages or liabilities (collectively, “Losses”) to which they may become subject (under the 1933 Act or otherwise) insofar as such Losses (or actions or proceedings in respect thereof) arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Fallback Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or arise out of any failure by McKinley to fulfill any undertaking included in the Registration Statement or the Fallback Registration Statement and McKinley will, as incurred, reimburse the Purchaser Parties for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that McKinley shall not be liable in any such case to the extent that such Loss arises out of, or is based upon an untrue statement or omission or alleged untrue statement or omission made in the Registration Statement or the Fallback Registration Statement in reliance upon and in conformity with written information furnished to McKinley by or on behalf of the Buyers specifically for use in preparation of the Registration Statement or the Fallback Registration Statement.
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(ii) The Buyers agree to indemnify and hold harmless McKinley and its officers, directors, affiliates, agents, brokers and representatives and each person, if any, who controls McKinley within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each a “McKinley Party” and collectively the “McKinley Parties”), to the fullest extent permitted by applicable law, from and against any Losses to which the McKinley Parties may become subject (under the 1933 Act or otherwise), insofar as such Losses (or actions or proceedings in respect thereof) arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Fallback Registration Statement (or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in each case, on the effective date thereof), if, and only to the extent, such untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information furnished by or on behalf of the Buyers specifically for use in preparation of the Registration Statement or the Fallback Registration Statement, and the Buyers will, as incurred, reimburse each McKinley Party for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that in no event shall any indemnity under this Section 5(z) be greater in amount than the dollar amount of the net proceeds received by the Buyers upon their sale of the Registrable Securities or the Excluded Registrable Securities included in the Registration Statement or the Fallback Registration Statement giving rise to such indemnification obligation.
(iii) Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 5(z) such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, and, subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person and such indemnifying person shall have been notified thereof, such indemnifying person shall be entitled to participate therein, and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate in the reasonable judgment of the indemnified person for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person; provided, further that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (and, if necessary, one local counsel) for all indemnified parties. The indemnifying party shall not settle an action without the consent of the indemnified party, which consent shall not be unreasonably withheld.
(iv) If after proper notice of a claim or the commencement of any action against the indemnified party, the indemnifying party does not choose to participate, then the indemnified party shall assume the defense thereof and upon written notice by the indemnified party requesting advance payment of a stated amount for its reasonable defense costs and expenses, the indemnifying party shall advance payment for such reasonable defense costs and expenses (the “Advance Indemnification Payment”) to the indemnified party. In the event that the indemnified party’s actual defense costs and expenses exceed the amount of the Advance Indemnification Payment, then upon written request by the indemnified party, the indemnifying party shall reimburse the indemnified party for such difference; in the event that the Advance Indemnification Payment exceeds the indemnified party’s actual costs and expenses, the indemnified party shall promptly remit payment of such difference to the indemnifying party.
(v) If the indemnification provided for in this Section 5(z) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other, as well as any other relevant equitable considerations; provided, that in no event shall any contribution by an indemnifying party hereunder be greater in amount than the dollar amount of the proceeds received by such indemnifying party upon the sale of such Registrable Securities.
(aa) Suspensions. The Buyers acknowledge that there may be times when McKinley must suspend the use of the prospectus forming a part of the Registration Statement or the Fallback Registration Statement until such time as an amendment to such Registration Statement or Fallback Registration Statement has been filed by McKinley and declared effective by the SEC, or until such time as McKinley has filed an appropriate report with the SEC pursuant to the 1934 Act. The Buyers hereby covenant that they will not sell any Registrable Securities or Excluded Registrable Securities pursuant to said prospectus during the period commencing at the time at which McKinley gives the Buyers notice of the suspension of the use of said prospectus and ending at the time McKinley gives the Buyers notice that the Buyers may thereafter effect sales pursuant to said prospectus; provided, that such suspension periods shall in no event exceed 30 days in any 12 month period and that, in the good faith judgment of the McKinley Board of Directors, McKinley would, in the absence of such delay or suspension hereunder, be required under state or federal securities laws to disclose any corporate development, a potentially significant transaction or event involving McKinley, or any negotiations, discussions, or proposals directly relating thereto, in either case the disclosure of which would reasonably be expected to have a McKinley Material Adverse Effect.
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(bb) Termination of Registration Rights. The obligations of McKinley pursuant to Section 5(y) hereof (including Section 5(y)(ix)) shall cease and terminate, with respect to any Registrable Securities or Excluded Registrable Securities, upon such time as such Registrable Securities or Excluded Registrable Securities (i) may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information or (ii) have been resold in a transaction pursuant to which all restrictive legends were removed from such securities.
(cc) Replenishment Shares Registration Rights. If, at the time McKinley is obligated to issue Replenishment Shares pursuant to Section 5(gg), there is no effective registration statement covering the resale of such Replenishment Shares, McKinley shall:
(i) file with the SEC a registration statement on Form S-1 or Form S-3 (or any successor form) under the 1933 Act (providing for shelf registration of such shares under Rule 415 promulgated under the 1933 Act) (such registration statement, including any preliminary prospectus, final prospectus, exhibit or amendment included in or relating to such registration statement being the “Replenishment Shares Registration Statement”) within thirty (30) days following the first issuance of Replenishment Shares pursuant to Section 5(gg) (the “Replenishment Shares Filing Deadline”), to register for resale a number of shares of Issuer Equity Interests equal to the sum of (A) all Replenishment Shares that have been issued as of the date of filing and (B) all Replenishment Shares that could be issued in the future pursuant to Section 5(gg), based on the assumption that all Subsequent Closing Shares then held by the Buyers were applied to satisfy issuances of Interest Payment Shares, Amortization Payment Shares, Event of Default Equity Shares or Conversion Consideration under the Notes in full (the “Replenishment Shares Registrable Amount”);
(ii) use its commercially reasonable efforts to cause the Replenishment Shares Registration Statement to be declared effective as soon as practicable and in any event within thirty (30) days of the filing thereof (or, in the event the staff of the SEC reviews and has written comments to the Replenishment Shares Registration Statement, within ninety (90) days of the filing thereof), such efforts to include, without limiting the generality of the foregoing, preparing and filing with the SEC any financial statements or other information that is required to be filed prior to the effectiveness of such Replenishment Shares Registration Statement;
(iii) not less than two (2) Trading Days prior to the filing of the Replenishment Shares Registration Statement or any related prospectus or any amendment or supplement thereto, furnish via e-mail to the Buyers copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated by reference therein) will be subject to the review of the Buyers, and McKinley shall reflect in each such document when so filed with the SEC such comments regarding the Buyers and the plan of distribution as the Buyers may reasonably and promptly propose no later than two (2) Trading Days after the Buyers have been so furnished with copies of such documents;
(iv) upon notification by the SEC that the Replenishment Shares Registration Statement will not be reviewed or is not subject to further review by the SEC, within one (1) Trading Day following the date of such notification request acceleration of the Replenishment Shares Registration Statement (with the requested effectiveness date to be not more than two (2) Trading Days later);
(v) upon notification by the SEC that the Replenishment Shares Registration Statement has been declared effective by the SEC, file the final prospectus under Rule 424 within the applicable time period prescribed by Rule 424;
(vi) advise the Buyers promptly (and in any event within two (2) Trading Days): (A) of the effectiveness of the Replenishment Shares Registration Statement or any post-effective amendments thereto; (B) of any request by the SEC for amendments to the Replenishment Shares Registration Statement or amendments to the prospectus or for additional information relating thereto; (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Replenishment Shares Registration Statement under the 1933 Act or of the suspension by any state securities commission of the qualification of the Replenishment Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes; and (D) of the existence of any fact and the happening of any event that makes any statement of a material fact made in the Replenishment Shares Registration Statement, the prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, untrue, or that requires the making of any additions to or changes in the Replenishment Shares Registration Statement or the prospectus in order to make the statements therein not misleading;
(vii) if the Replenishment Shares Registrable Amount increases after the Replenishment Shares Registration Statement becomes effective due to subsequent issuances of Replenishment Shares, (A) to the extent permitted by the rules and regulations of the SEC, register such additional Replenishment Shares under the existing Replenishment Shares Registration Statement by filing a prospectus supplement or post-effective amendment, as applicable, with the SEC, or (B) if such registration under the existing Replenishment Shares Registration Statement is not so permitted, file a new registration statement with the SEC within thirty (30) days following the date on which such additional Replenishment Shares were issued (or the date on which McKinley determines that registration under the existing Replenishment Shares Registration Statement is not permitted, if later) to register such additional Replenishment Shares for resale, and use its commercially reasonable efforts to cause such new registration statement to become effective in accordance with the timing requirements set forth in clause (ii) above;
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(viii) promptly prepare and file with the SEC such amendments and supplements to the Replenishment Shares Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Replenishment Shares Registration Statement continuously effective and free from any material misstatement or omission to state a material fact therein until the earlier of (A) the date on which all Replenishment Shares covered thereby have been resold or (B) the date on which all Replenishment Shares covered thereby may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information;
(ix) furnish to the Buyers such number of copies of prospectuses in conformity with the requirements of the 1933 Act and such other documents as the Buyers may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Replenishment Shares by the Buyers;
(x) file such documents as may be required of McKinley for normal securities law clearance for the resale of the Replenishment Shares in such states of the United States as may be reasonably requested by the Buyers and use its commercially reasonable efforts to maintain such blue sky qualifications during the period McKinley is required to maintain effectiveness of the Replenishment Shares Registration Statement; provided, however, that McKinley shall not be required in connection with this clause (x) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;
(xi) cause all Replenishment Shares to be listed on each securities exchange, if any, on which Issuer Equity Interests are then listed; and
(xii) bear all expenses in connection with the procedures in this Section 5(cc) and the registration of the Replenishment Shares on the Replenishment Shares Registration Statement, including, without limitation, all registration, filing and qualification fees, printing expenses, escrow fees, fees and disbursements of counsel for McKinley, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration.
The indemnification and contribution provisions of Section 5(z) shall apply mutatis mutandis to the Replenishment Shares Registration Statement and the Replenishment Shares registered thereunder, with all references therein to the “Registration Statement” being deemed to include the Replenishment Shares Registration Statement and all references to “Registrable Securities” being deemed to include the Replenishment Shares. The suspension provisions of Section 5(aa) shall apply to the Replenishment Shares Registration Statement and the Replenishment Shares registered thereunder. The obligations of McKinley pursuant to this Section 5(cc) shall cease and terminate, with respect to any Replenishment Shares, upon such time as such Replenishment Shares (A) have been resold in a transaction pursuant to which all restrictive legends were removed from such securities or (B) may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information.
(dd) Warrant Shares Registration Rights. McKinley shall:
(i) file with the SEC a registration statement on Form S-1 or Form S-3 (or any successor form) under the 1933 Act (providing for shelf registration of such shares under Rule 415 promulgated under the 1933 Act) (such registration statement, including any preliminary prospectus, final prospectus, exhibit or amendment included in or relating to such registration statement being the “Warrant Shares Registration Statement”) within thirty (30) days following the Merger Effective Date (the “Warrant Shares Filing Deadline”), to register for resale the Warrant Shares;
(ii) use its commercially reasonable efforts to cause the Warrant Shares Registration Statement to be declared effective as soon as practicable and in any event within thirty (30) days of the filing thereof (or, in the event the staff of the SEC reviews and has written comments to the Warrant Shares Registration Statement, within ninety (90) days of the filing thereof), such efforts to include, without limiting the generality of the foregoing, preparing and filing with the SEC any financial statements or other information that is required to be filed prior to the effectiveness of such Warrant Shares Registration Statement;
(iii) not less than two (2) Trading Days prior to the filing of the Warrant Shares Registration Statement or any related prospectus or any amendment or supplement thereto, furnish via e-mail to the Buyers copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated by reference therein) will be subject to the review of the Buyers, and McKinley shall reflect in each such document when so filed with the SEC such comments regarding the Buyers and the plan of distribution as the Buyers may reasonably and promptly propose no later than two (2) Trading Days after the Buyers have been so furnished with copies of such documents;
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(iv) upon notification by the SEC that the Warrant Shares Registration Statement will not be reviewed or is not subject to further review by the SEC, within one (1) Trading Day following the date of such notification request acceleration of the Warrant Shares Registration Statement (with the requested effectiveness date to be not more than two (2) Trading Days later);
(v) upon notification by the SEC that the Warrant Shares Registration Statement has been declared effective by the SEC, file the final prospectus under Rule 424 within the applicable time period prescribed by Rule 424;
(vi) advise the Buyers promptly (and in any event within two (2) Trading Days): (A) of the effectiveness of the Warrant Shares Registration Statement or any post-effective amendments thereto; (B) of any request by the SEC for amendments to the Warrant Shares Registration Statement or amendments to the prospectus or for additional information relating thereto; (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Warrant Shares Registration Statement under the 1933 Act or of the suspension by any state securities commission of the qualification of the Warrant Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes; and (D) of the existence of any fact and the happening of any event that makes any statement of a material fact made in the Warrant Shares Registration Statement, the prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, untrue, or that requires the making of any additions to or changes in the Warrant Shares Registration Statement or the prospectus in order to make the statements therein not misleading;
(vii) promptly prepare and file with the SEC such amendments and supplements to the Warrant Shares Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Warrant Shares Registration Statement continuously effective and free from any material misstatement or omission to state a material fact therein until the earlier of (A) the date on which all Warrant Shares covered thereby have been resold or (B) the date on which all Warrant Shares covered thereby may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information;
(viii) furnish to the Buyers such number of copies of prospectuses in conformity with the requirements of the 1933 Act and such other documents as the Buyers may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Warrant Shares by the Buyers;
(ix) file such documents as may be required of McKinley for normal securities law clearance for the resale of the Warrant Shares in such states of the United States as may be reasonably requested by the Buyers and use its commercially reasonable efforts to maintain such blue sky qualifications during the period McKinley is required to maintain effectiveness of the Warrant Shares Registration Statement; provided, however, that McKinley shall not be required in connection with this clause (x) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;
(x) cause all Warrant Shares to be listed on each securities exchange, if any, on which Issuer Equity Interests are then listed; and
(xi) bear all expenses in connection with the procedures in this Section 5(dd) and the registration of the Warrant Shares on the Warrant Shares Registration Statement, including, without limitation, all registration, filing and qualification fees, printing expenses, escrow fees, fees and disbursements of counsel for McKinley, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration.
The indemnification and contribution provisions of Section 5(z) shall apply mutatis mutandis to the Warrant Shares Registration Statement and the Warrant Shares registered thereunder, with all references therein to the “Registration Statement” being deemed to include the Warrant Shares Registration Statement and all references to “Registrable Securities” being deemed to include the Warrant Shares. The suspension provisions of Section 5(aa) shall apply to the Warrant Shares Registration Statement and the Warrant Shares registered thereunder. The obligations of McKinley pursuant to this Section 5(dd) shall cease and terminate, with respect to any Warrant Shares, upon such time as such Warrant Shares (A) have been resold in a transaction pursuant to which all restrictive legends were removed from such securities or (B) may be freely sold pursuant to Rule 144 without volume limitations or any requirement for current public information.
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(ee) Not an Underwriter. Neither Space-Eyes, McKinley nor any Subsidiary or affiliate thereof shall identify any Buyer as being an underwriter or potentially being an "underwriter" in any disclosure to, or filing with, the SEC, Nasdaq or any other Eligible Market. No Buyer shall be required to agree or admit that it is, or may be, acting as an "underwriter" in connection with the transactions contemplated hereby or agree to be named as an underwriter or as potentially being an underwriter in any public disclosure or filing with the SEC, Nasdaq or any other Eligible Market, nor shall any Buyer be required to make any representations to, or undertake any obligations to, the SEC in connection with any registration statement filed by Space-Eyes or McKinley. Any Buyer being deemed an underwriter, or potentially to be an underwriter, by the SEC shall not relieve Space-Eyes or McKinley of any obligations it has under this Agreement or any other Transaction Document.
(ff) Return of Subsequent Closing Shares. Each Buyer hereby covenants and agrees that, on the Maturity Date (as defined in such Buyer’s Notes), after giving effect to all deductions of Subsequent Closing Shares from such Buyer’s Subsequent Closing Share Balance and all additions of Replenishment Shares to such Buyer’s Subsequent Closing Share Balance made pursuant to the terms of this Agreement and such Buyer’s Notes prior to or on the Maturity Date, such Buyer shall deliver, or cause to be delivered, to Space-Eyes (or, following the Merger Effective Date, to McKinley) all Subsequent Closing Shares (including any Replenishment Shares) then remaining in such Buyer’s Subsequent Closing Share Balance (the “Remaining Subsequent Closing Shares”) free and clear of any Liens on such Remaining Subsequent Closing Shares. The delivery of the Remaining Subsequent Closing Shares shall be effected by such Buyer instructing the Transfer Agent or the applicable depository or custodian to transfer such Remaining Subsequent Closing Shares to Space-Eyes or McKinley, as applicable (or its designee), by book-entry transfer, or by such other means as Space-Eyes or McKinley, as applicable, and such Buyer may mutually agree, in each case on or before the close of business on the Maturity Date (or, if the Maturity Date is not a Business Day, on the next succeeding Business Day). For the avoidance of doubt, the obligation of each Buyer to deliver the Remaining Subsequent Closing Shares pursuant to this Section 5(ff) shall survive each Closing and shall be binding upon each Buyer and its successors and assigns, and neither Space-Eyes nor McKinley shall have any obligation to pay any consideration to such Buyer in respect of the return of the Remaining Subsequent Closing Shares.
(gg) Replenishment of Subsequent Closing Shares.
(i) If any Buyer’s Subsequent Closing Share Balance pursuant to Section 1(e)(i) is reduced (such Buyer, a “Reduced Buyer” and such event, a “Reduction Event”), McKinley shall, at the request of any Buyer:
(A) allocate a number of shares of McKinley’s common stock equal to the number of shares of McKinley’s common stock by which such Reduction Buyer’s Subsequent Closing Share Balance was reduced in connection with the related Reduction Event (such shares of McKinley’s common stock, the “Initial Replenishment Shares”);
(B) calculate the aggregate number of shares of McKinley’s common stock (the “Aggregate Pro Rata Replenishment Shares”) to be issued to the Buyers such that, immediately following such issuance and after giving effect to the allocation of any Initial Replenishment Shares to the Reduction Buyer pursuant to Section 5(gg)(i)(A), the sum of all Buyers’ Subsequent Closing Share Balances shall equal 9.9% of the number of shares of McKinley’s common stock outstanding immediately after giving effect to the issuance of the Aggregate Pro Rata Replenishment Shares (the “Initial Replenishment Calculation”);
(C) allocate to each Buyer holding outstanding Notes a number of shares of McKinley’s common stock equal to such Buyer’s Pro Rata Portion of the Aggregate Pro Rata Replenishment Shares (determined as of the date of such Replenishment Event) (such shares of McKinley’s common stock with respect to each Buyer, the “Pro Rata Replenishment Shares”);
(D) on the first Trading Day following any Replenishment Event, issue and deliver to each applicable Buyer (or cause the Transfer Agent to credit to such Buyer’s account at DTC through its DWAC system) the sum of (i) such Buyer’s Initial Replenishment Shares (if any) and (ii) such Buyer’s Pro Rata Replenishment Shares; and
(E) immediately thereafter, provide written notice to each Buyer of the Initial Replenishment Calculation methodology and the number of Initial Replenishment Shares and Pro Rata Replenishment Shares issued to such Buyer.
(ii) On the first Trading Day following any Outstanding Share Increase Date, McKinley shall issue and deliver to each Buyer (or cause the Transfer Agent to credit to such Buyer’s account at DTC through its DWAC system), a number of shares of McKinley’s common stock (such shares, the “True-up Shares” and, together with the Initial Replenishment Shares and the Pro Rata Replenishment Shares, the “Replenishment Shares”) equal to such Buyer’s Pro Rata Portion of the Aggregate True-up Amount. For the purposes hereof (A) “Outstanding Share Increase Date” shall mean any date on which the number of outstanding shares of McKinley’s common stock increases such that the sum of all Buyers’ Subsequent Closing Share Balances is less than 9.9% of the number of shares of McKinley’s common stock outstanding as of such date and (B) “Aggregate True-up Amount” shall mean, as of any Outstanding Share Increase Date, a number of shares of McKinley’s common stock equal to 9.9% of the number of shares of McKinley’s common stock outstanding as of such Outstanding Share Increase Date less the sum of all Buyers’ Subsequent Closing Share Balances as of such Outstanding Share Increase Date.
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(iii) Upon issuance of any Replenishment Shares to a Buyer, such Buyer’s Subsequent Closing Share Balance shall be increased by the number of Replenishment Shares received by such Buyer. For the avoidance of doubt, Replenishment Shares issued pursuant to this Section 5(gg) shall constitute “Subsequent Closing Shares” for all purposes under this Agreement and the Transaction Documents (including, without limitation, for purposes of registration rights under Section 5(z), the share reserve under Section 5(x), legends under Section 6(c), removal of legends under Section 6(d), and the return of Remaining Subsequent Closing Shares under Section 5(ff)).
(iv) If, on any date, the number of outstanding shares of McKinley’s common stock decreases such that the sum of all Buyers’ Subsequent Closing Share Balances would exceed 9.9% of the number of shares of McKinley’s common stock outstanding as of such date (such date, an “Outstanding Share Decrease Date”), then a number of shares of McKinley’s common stock equal to each Buyer’s Pro Rata Portion of the Aggregate Abeyance Amount shall automatically, without any action required by such Buyer or McKinley, be deemed to be held in abeyance for the benefit of each such Buyer (such shares with respect to each Buyer, the “Abeyance Shares”). The “Aggregate Abeyance Amount” means, as of any Outstanding Share Decrease Date, a number of shares of McKinley’s common stock equal to the sum of all Buyers’ Subsequent Closing Share Balances as of such Outstanding Share Decrease Date (determined immediately prior to giving effect to this Section 5(gg)(iv)) less 9.9% of the number of shares of McKinley’s common stock outstanding as of such Outstanding Share Decrease Date. For the avoidance of doubt, any Abeyance Shares shall not be treated as issued, outstanding or held by the applicable Buyer for purposes of calculating such Buyer’s Subsequent Closing Share Balance or determining whether the sum of all Buyers’ Subsequent Closing Share Balances exceeds 9.9% of the number of shares of McKinley’s common stock outstanding. Abeyance Shares shall be released from abeyance and delivered to the applicable Buyer (or credited to such Buyer’s account at DTC through its DWAC system) incrementally, as and when doing so would not cause the sum of all Buyers’ Subsequent Closing Share Balances to exceed 9.9% of the number of shares of McKinley’s common stock outstanding, with such releases occurring automatically on the first Trading Day following any date on which the number of outstanding shares of McKinley’s common stock increases such that the sum of all Buyers’ Subsequent Closing Share Balances (after giving effect to the release of such Abeyance Shares) would not exceed 9.9% of the number of shares of McKinley’s common stock outstanding as of such date. Upon any such release from abeyance, each Buyer’s Subsequent Closing Share Balance shall be increased by the number of Abeyance Shares released to such Buyer, and such released shares shall be treated for all purposes under this Agreement and the Transaction Documents as if there had been no such limitation.
(v) For purposes of this Section 5(gg), the number of shares of McKinley’s common stock outstanding shall be determined in the same manner as the number of Issuer Equity Interests outstanding is determined for purposes of the beneficial ownership limitation set forth in Section 7(I) of the Notes (as such section may be amended, modified or supplemented from time to time).
(hh) Right to Participate. Until the date that is 12 months after such date as no Notes remain outstanding, neither Space-Eyes nor McKinley will, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or any Subsidiaries’ debt, equity, equity-linked or equity equivalent securities or securities convertible into or exercisable for equity, including without limitation any debt, preferred stock or other security (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”), unless Space-Eyes or McKinley, as applicable, shall have first complied with this Section 5(hh).
(i) Space-Eyes or McKinley, as applicable, shall deliver to each Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities or financing opportunity being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (v) include any offering documents and definitive documentation in connection with such Offer, (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the persons or entities to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Buyers up to the Applicable Percentage (as defined below) of the Offered Securities, allocated among such Buyers based on such Buyer’s pro rata portion of the aggregate Principal Amount (as defined in the Notes) then-outstanding (the “Basic Amount”). The terms and conditions upon which any Offer of the Offered Securities pursuant to any Offer Notice shall be identical for each Buyer. For the avoidance of doubt, each Buyer hereby acknowledges that any Offer Notice may constitute or contain material, non-public information, and each Buyer hereby consents to the receipt of any Offer Notice and any material, non-public information that may be included in an Offer Notice. If a Buyer notifies Space-Eyes or McKinley, as applicable, that it does not consent to the receipt of an Offer Notice and any material, non-public information that may be included in an Offer Notice, then such Buyer shall be deemed to have waived its right to participate in such Subsequent Placement, and Space-Eyes or McKinley, as applicable, shall be deemed to have complied with this Section 5(hh). “Applicable Percentage” means thirty percent (30%).
(ii) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to Space-Eyes or McKinley, as applicable, prior to the end of the second (2nd) Trading Day (as defined in the Notes) after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer, or an affiliate of such Buyer that it designates, elects to purchase and, if such Buyer or its designee shall elect to purchase all of its Basic Amount, the amount, if any, of the other Buyers’ allocations that such Buyer is offering to purchase in the event that such other Buyers do not elect to purchase their full Basic Amounts (in either case, the “Notice of Acceptance”). Notwithstanding anything to the contrary contained herein, if Space-Eyes or McKinley, as applicable, desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, Space-Eyes or McKinley, as applicable, may deliver to the Buyers a new Offer Notice and the Offer Period shall expire at the end of the second (2nd) Trading Day following such Buyer’s receipt of such new Offer Notice.
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(iii) Space-Eyes or McKinley, as applicable, shall have five (5) Business Days from the expiration of the Offer Period to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Buyers (the “Refused Securities”) pursuant to a definitive agreement (the “Subsequent Placement Agreement”), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to Space-Eyes or McKinley, as applicable, than those set forth in the Offer Notice and, to the extent the Offer occurs on or after the Merger Effective Date, to publicly announce (a) the execution of such Subsequent Placement Agreement and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall, if Space-Eyes or McKinley, as applicable, is McKinley, be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.
(iv) In the event Space-Eyes or McKinley, as applicable, shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 5(hh)(iii) above), then each Buyer may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Buyer or its designee elected to purchase pursuant to Section 5(hh)(ii) above multiplied by a fraction, (x) the numerator of which shall be the number or amount of Offered Securities Space-Eyes or McKinley, as applicable, actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers or their designees pursuant to Section 5(hh)(iii) above prior to such reduction, but giving effect to the Refused Securities that Space-Eyes or McKinley, as applicable, has determined not to issue, sell or exchange) and (y) the denominator of which shall be the original number or amount of the Offered Securities. In the event that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, Space-Eyes or McKinley, as applicable, may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities or financing opportunity have again been offered to the Buyers in accordance with Section 5(hh)(i) above.
(v) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers or their designees shall acquire from Space-Eyes or McKinley, as applicable, and Space-Eyes or McKinley, as applicable, shall issue to the Buyers, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 5(hh)(iv) above if the Buyers have so elected, upon the terms and conditions specified in the Offer. Notwithstanding anything to the contrary contained in this Agreement, if Space-Eyes or McKinley, as applicable, does not consummate the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, within five (5) Business Days of the expiration of the Offer Period, Space-Eyes or McKinley, as applicable, shall issue to the Buyers or their designees, the number or amount of Offered Securities specified in the Notice of Acceptance, as reduced pursuant to Section 5(hh)(iv) above if the Buyers have so elected, upon the terms and conditions specified in the Offer. The purchase by the Buyers of any Offered Securities is subject in all cases to the preparation, execution and delivery by Space-Eyes or McKinley, as applicable, and the Buyers of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Buyers and their respective counsel.
(vi) Any Offered Securities not acquired by the Buyers or other persons in accordance with Section 5(hh)(iii) above may not be issued, sold or exchanged until they are again offered to the Buyers under the procedures specified in this Section 5(hh).
(vii) Space-Eyes or McKinley, as applicable, and the Buyers agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto shall include any term or provisions whereby any Buyer shall be required to agree to any restrictions in trading as to any securities of the Issuer owned by such Buyer prior to such Subsequent Placement and (y) the Buyers or their designees shall be entitled to the same registration rights provided to other investors in the Subsequent Placement. Furthermore, no Subsequent Placement Agreement shall include any term or provisions more restrictive to the investors than those contained in the Transaction Documents. In addition, to the extent that the Offer occurs after the Merger Effective Date, Space-Eyes or McKinley, as applicable, and each Buyer agree that, in connection with a Subsequent Placement, the transaction documents related to the Subsequent Placement shall include a requirement for Space-Eyes or McKinley, as applicable, to issue a widely disseminated press release by 9:30 a.m. (New York City time) on the Trading Day of execution of the transaction documents in such Subsequent Placement (or, if the date of execution is not a Trading Day, or if the time of execution is after 4:00 p.m. (New York City time) on a Trading Day, on the immediately following Trading Day) that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Placement.
(viii) To the extent the Offer occurs after the Merger Effective Date, notwithstanding anything to the contrary in this Section 5(hh) and unless otherwise agreed to by the Buyers, Space-Eyes or McKinley, as applicable, shall either confirm in writing to the Buyers that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case in such a manner such that such Buyer will not be in possession of any material, non-public information, by the second (2nd) Trading Day following the date of delivery of the Offer Notice. If by such second (2nd) Trading Day no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by the Buyers, such transaction shall be deemed to have been abandoned and the Buyers shall not be deemed to be in possession of any material, nonpublic information with respect to Space-Eyes or McKinley, as applicable. Should Space-Eyes or McKinley, as applicable, decide to pursue such transaction with respect to the Offered Securities, Space-Eyes or McKinley, as applicable, shall provide each Buyer with another Offer Notice and each Buyer will again have the right of participation set forth in this Section 5(hh). Space-Eyes or McKinley, as applicable, shall not be permitted to deliver to the Buyers, in any 30-day period, more than one such Offer Notice, other than the Offer Notices contemplated by the last sentence of Section 5(hh)(ii) of this Agreement.
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(ix) The restrictions contained in this Section 5(hh) shall not apply in connection with any of the following: (w) Options, Space-Eyes Convertible Securities or McKinley Convertible Securities (together with the Space-Eyes Convertible Securities, the “Convertible Securities”) issued under any Approved Stock Plan, (x) the issuance of Issuer Equity Interests upon the exercise of Options or warrants, the settlement or vesting of restricted stock units, stock appreciation rights or restricted stock awards (including shares of Issuer Equity Interests withheld by Space-Eyes or McKinley, as applicable, for the purpose of paying on behalf of the holder thereof the exercise price of stock options or for paying taxes due as a result of such exercise or lapse of forfeiture restrictions), or the conversion of outstanding Convertible Securities which are outstanding on the Initial Closing Date or granted pursuant to an Approved Stock Plan after the Initial Closing Date (y) the issuance of Spaceport Bonds (as defined in the Notes) issued by the Company to finance qualified spaceport facilities of the applicable Project Financing Subsidiary (as defined in the Notes) or (z) Issuer Equity Interests issued pursuant to an Exempt Issuance (as defined in the Notes); provided, that, in the case of (x), such issuance of Offered Shares upon exercise of such Options or Convertible Securities is made pursuant to the terms of either: (I) such Approved Stock Plan or (II) such Options or Convertible Securities in effect on the Initial Closing Date and, in the case of (II), such Options or Convertible Securities are not amended, modified or changed on or after the Initial Closing Date to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities.
(x) Notwithstanding anything to the contrary pursuant to a Buyer’s (and its affiliates (as defined in Rule 405 of the 1933 Act) rights to its Basic Amount of the Offered Securities pursuant to this Section 5(hh), if the Issuer Equity Interests issuable to a Buyer (and its affiliates) pursuant to any proposed Subsequent Placement, when aggregated with all other Issuer Equity Interests beneficially owned by such Buyer (and its affiliates) at such time of such Subsequent Placement would result in such Buyer (and its affiliates) beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act) in excess of 9.99% (or, at the election of the Buyer, 4.99%) of the then issued and outstanding Issuer Equity Interests outstanding at the closing of the Subsequent Placement (the “Beneficial Ownership Maximum”), then in lieu of receiving Issuer Equity Interests in a Subsequent Placement that would result in such Buyer (and its affiliates) exceeding the Beneficial Ownership Maximum, such Buyer (and its affiliates) shall receive Space-Eyes Equity Equivalents or McKinley Equity Equivalents, as applicable (such as pre-funded common stock purchase warrants) with a beneficial ownership blocker in the form of Section 7(I) of the Notes, mutatis mutandis, in order for such Buyer (and its affiliates) to maintain a beneficial ownership at or below the Beneficial Ownership Maximum. “Space-Eyes Equity Equivalents” means any securities, options, warrants, or other rights that are convertible into, or exercisable or exchangeable for, Space-Eyes’ equity interests. “McKinley Equity Equivalents” means any securities, options, warrants, or other rights that are convertible into, or exercisable or exchangeable for, Issuer Equity Interests. This includes, without limitation, convertible debt instruments, convertible preferred stock, and any other rights or agreements that may result in the issuance of Space-Eyes’ equity interests or Issuer Equity Interests, as applicable, whether or not such securities are currently convertible, exercisable, or exchangeable.
(ii) Business Combination Agreement. Each of Space-Eyes and McKinley hereby agrees that (i) the Merger Effective Date is expected to occur, and each of Space-Eyes and McKinley shall use their best efforts to consummate the transactions set forth in the Business Combination Agreement, on or before the nine (9) month anniversary of the Initial Closing and (ii) the Merger shall be governed by the Business Combination Agreement, without any amendment, supplement or modification not otherwise consented to by the Required Holders, which consent may not be unreasonably withheld, conditioned or delayed.
(jj) Optional Increase of Initial Purchased Notes.
(i) At any time prior to the consummation of the transactions contemplated by the Business Combination Agreement, Space-Eyes, McKinley and the Required Holders may mutually agree (each in their sole discretion) in writing to increase the aggregate principal amount of the Initial Purchased Notes (any such increase, an “Initial Notes Increase”). Any such agreement shall specify the amount of such Initial Notes Increase and the allocation of such Initial Notes Increase among the Buyers.
(ii) The effectiveness of any Initial Notes Increase shall be subject to the satisfaction (or waiver by the applicable party or parties entitled to waive such condition) of conditions precedent substantially equivalent to those set forth in Section 7 and Section 8(A), mutatis mutandis, as if the closing of such Initial Notes Increase were a separate Closing for purposes of such conditions. Without limiting the generality of the foregoing, (i) each Buyer participating in such Initial Notes Increase shall have executed and delivered to Space-Eyes such additional Transaction Documents as may be reasonably required in connection therewith, (ii) the representations and warranties of the parties shall be true and correct as of the date of such Initial Notes Increase (except for such representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and (iii) Space-Eyes and McKinley shall have delivered to each participating Buyer such certificates, opinions, and other documents as are substantially equivalent to those required to be delivered pursuant to Section 8(A) with respect to the Initial Closing.
(iii) Upon the satisfaction (or waiver) of the conditions set forth in this Section 5(jj)(ii), Space-Eyes shall issue and sell to each participating Buyer, and each such Buyer shall purchase from Space-Eyes, additional Initial Purchased Notes in the aggregate principal amount allocated to such Buyer pursuant to the agreement described in Section 5(jj)(i), at a purchase price equal to the product of (x) such additional aggregate principal amount and (y) a fraction, the numerator of which is the Initial Notes Purchase Price applicable to such Buyer’s Initial Purchased Notes purchased at the Initial Closing and the denominator of which is the aggregate principal amount of such Buyer’s Initial Purchased Notes purchased at the Initial Closing. The Schedule of Buyers shall be deemed amended to reflect any such Initial Notes Increase, and all references herein to the “Initial Purchased Notes” shall include any additional Notes issued pursuant to this Section 5(jj).
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(kk) Lock-Up Agreements. Neither Space-Eyes nor McKinley shall amend, modify, waive or terminate any provision of any of the Lock-Up Agreements (or the Registration Rights and Lock-Up Agreement, as defined in the Business Combination Agreement, as applicable) and each shall enforce the provisions of each Lock-Up Agreement (or the Registration Rights and Lock-Up Agreement, as applicable) in accordance with its terms. If any party to a Lock-Up Agreement (or the Registration Rights and Lock-Up Agreement, as applicable) breaches any provision of a Lock-Up Agreement, Space-Eyes or McKinley, as applicable, shall promptly use its best efforts to seek specific performance of the terms thereof. In addition, neither Space-Eyes nor McKinley shall consent to any actions under the Lock-Up Agreements (or the Registration Rights and Lock-Up Agreement, as applicable) that would require the consent of Space-Eyes or McKinley, as applicable.
| 6. | REGISTER; TRANSFER AGENT INSTRUCTIONS. |
(a) Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities or Replenishment Shares), a register for registration of the Securities and the Replenishment Shares in which the Company shall record the name and address of the Person in whose name the Notes, Warrants, Subsequent Closing Shares and Replenishment Shares have been issued (including the name and address of each transferee), the aggregate amount of the Notes, Warrants, Subsequent Closing Shares and Replenishment Shares held by such Person and the number of the Underlying Shares issuable pursuant to the terms of the Notes and the Warrants held by such Person. Space-Eyes shall keep such register open and available at all times during business hours for inspection of any Buyer or its legal representatives. This provision shall be construed such that the Securities, the Notes, the Warrants, the Subsequent Closing Shares and the Replenishment Shares are at all times maintained in “registered form” within the meanings of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any Treasury Regulations promulgated thereunder.
(b) Transfer Agent Instructions. Upon the completion of the Merger, McKinley shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent (as applicable) (the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to credit shares to each such Buyer’s (or its designee’s) account at DTC through its Deposit/Withdrawal At Custodian (“DWAC”) System, provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program (“FAST”) and the shares are then eligible for transfer through the DWAC System, or, if the Transfer Agent is not participating in FAST or if the shares are not then eligible for transfer through the DWAC system, issue and dispatch by overnight courier to the address as specified in (x) the conversion notice of the Notes, (y) the exercise notice of the Warrants or (z) the notice that McKinley is electing to issue Issuer Equity Interests pursuant to the terms of the Notes or the Warrants or that the Buyers are electing to receive Issuer Equity Interests pursuant to the Notes or the Warrants, a certificate, registered in the name of such Buyer or its designee, for the applicable number of Underlying Shares to which the Buyer is entitled, for the applicable Underlying Shares in such amounts as specified from time to time by McKinley or the Buyers, as the case may be, pursuant to the terms of the Notes or the Warrants. The Irrevocable Transfer Agent Instructions shall also authorize and direct the Transfer Agent to issue and deliver Replenishment Shares in accordance with Section 5(gg). No instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 6(b) will be given by McKinley to the Transfer Agent with respect to the Underlying Shares and Replenishment Shares, and the Underlying Shares and Replenishment Shares shall otherwise be freely transferable on the books and records of McKinley, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Underlying Shares or Replenishment Shares in accordance with Section 2(h), McKinley shall permit the transfer and shall promptly instruct the Transfer Agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Underlying Shares or Replenishment Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the Transfer Agent shall issue such Underlying Shares or Replenishment Shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 6(d). McKinley and Space-Eyes each acknowledges that a breach by Space-Eyes or McKinley of their obligations hereunder will cause irreparable harm to a Buyer. Accordingly, McKinley and Space-Eyes each acknowledges that the remedy at law for a breach of their obligations under this Section 6(b) will be inadequate and agrees, in the event of a breach or threatened breach by McKinley or Space-Eyes of the provisions of this Section 6(b), that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. Any fees (with respect to the Transfer Agent, counsel to McKinley or Space-Eyes or otherwise) associated with the removal of any legends on any of the Securities shall be borne by McKinley or Space-Eyes (as applicable).
(c) Legends. Each Buyer understands that the Space-Eyes Securities have been issued (or may be issued in the case of the Underlying Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth herein, the Space-Eyes Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates in violation of the applicable legend):
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Space-Eyes Note Legend
THE ISSUANCE AND SALE OF NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES THAT MAY BE ISSUABLE PURSUANT TO THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. UNTIL THE DATE THAT IS ONE (1) YEAR AFTER THE ISSUE DATE (AS DEFINED ON THE REVERSE OF THIS NOTE), THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS-DELIVERY REQUIREMENTS OF THE SECURITIES ACT.
Space-Eyes Note Shares Legend
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Space-Eyes Warrant Legend
THE ISSUANCE AND SALE OF NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES THAT MAY BE ISSUABLE PURSUANT TO THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. UNTIL THE DATE THAT IS ONE (1) YEAR AFTER THE ISSUE DATE (AS DEFINED IN THIS WARRANT), THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS-DELIVERY REQUIREMENTS OF THE SECURITIES ACT.
Space-Eyes Warrant Shares Legend
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Space-Eyes Subsequent Closing Shares Legend
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
For the avoidance of doubt, the Company shall use its commercially reasonable efforts to cause the McKinley Notes (and the Underlying Shares issuable pursuant thereto), McKinley Warrants (and the Underlying Shares issuable pursuant thereto), McKinley Subsequent Closing Shares, and the Replenishment Shares to be Freely Tradeable and not to bear any legends.
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(d) Removal of Legends. Certificates evidencing Space-Eyes Securities (which, for the purposes of this Section 6(d), shall be deemed to include the Excluded Registrable Securities) shall not be required to contain the legend set forth in Section 6(c) or any other legend (i) while a registration statement covering the resale of such Space-Eyes Securities is effective under the 1933 Act, (ii) following any sale of such Space-Eyes Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), provided that a Buyer furnishes the Company with reasonable assurances that such Space-Eyes Securities are eligible for sale, assignment or transfer under Rule 144, which shall not include an opinion of Buyer’s counsel, (iii) if such Space-Eyes Securities are eligible to be sold, assigned or transferred under Rule 144 free of the current public information reporting requirement contained in Rule 144(c)(1), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Space-Eyes Securities may be made without registration under the applicable provisions of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than one (1) Business Day (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Space-Eyes Securities to the Company) following the delivery by a Buyer to the Company or the Transfer Agent (with notice to the Company as applicable), as applicable, of a legended certificate representing such Space-Eyes Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be reasonably required above in this Section 6(d) (such date, the “Legend Removal Date”), as directed by such Buyer, either: (A) with respect to the Underlying Shares, Subsequent Closing Shares and Replenishment Shares, provided that the Transfer Agent is participating in FAST, credit the applicable number of Issuer Equity Interests to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its DWAC system or (B) with respect to the Underlying Shares, Subsequent Closing Shares and Replenishment Shares, if the Transfer Agent is not participating in FAST, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Issuer Equity Interests that is free from all restrictive and other legends, registered in the name of such Buyer or its designee. The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Space-Eyes Securities or the removal of any legends with respect to such Space-Eyes Securities in accordance herewith and the Buyer shall not be required to deliver or cause to be delivered a legal opinion in connection with a sale of such Space-Eyes Securities pursuant to Rule 144. In addition, from and after the date that is twelve (12) months following the filing of the Current Report on Form 8-K filed in connection with the consummation of the Merger, with respect to the Note Shares and Warrant Shares, the Company shall, if the Buyer has provided a customary representation letter which includes a written confirmation that the Buyer is not an affiliate of the Company, deliver to such Buyer an opinion of counsel to the Company, at the Company’s expense and in a form reasonably acceptable to such Buyer, that a sale of such Note Shares or Warrant Shares may be made in accordance with the terms of Rule 144. Notwithstanding the foregoing, from and after the date that is twelve (12) months following (x) the date hereof with respect to the Initial Purchased Notes and (y) the Subsequent Closing Date with respect to the Subsequently Purchased Notes and the Purchased Warrants, at the request of any Buyer, the Company shall, if Space-Eyes is then in compliance with Section 5(d) hereof, and if the Buyer has provided a customary representation letter which includes a written confirmation that the Buyer is not an affiliate of the Company, deliver to the Company’s transfer agent an opinion of counsel to the Company, at the Company’s expense and in a form reasonably acceptable to such Buyer, that a sale of the applicable Securities may be made in accordance with the terms of Rule 144.
(e) If McKinley or the Transfer Agent, as applicable, fails to deliver the applicable securities to a Buyer or an applicable assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 2(h), Section 6(b) or Section 6(d), as applicable, then in addition to such Buyer’s other available remedies hereunder, McKinley shall pay to such Buyer, in cash, (1) as partial liquidated damages and not as a penalty, for each $1,000 of the Underlying Shares, Subsequent Closing Shares or Replenishment Shares, as applicable (based on the Daily VWAP (as defined in the Notes) on the date that the Buyer delivered notice of its entitlement to such securities) for which McKinley or the Transfer Agent, as applicable, fails to deliver the applicable securities without any restrictive legend an amount equal to $10 per Trading Day (as defined in the Notes), increasing to $20 per Trading Day on the fifth (5th) Trading Day after such damages have begun to accrue, for each Trading Day after the applicable Required Delivery Date (as defined below) until such undelivered securities are delivered without a legend; and (2) if McKinley is obligated to deliver securities without restrictive legends pursuant to Section 6(b), Section 6(c) or Section 6(d), as applicable, but fails to (a) issue and deliver (or cause to be delivered) the applicable securities to a Buyer by the applicable Required Delivery Date that are free from all restrictive and other legends and (b) if after the applicable Required Delivery Date a Buyer purchases (in an open market transaction or otherwise) securities to deliver in settlement of a sale by the Buyer of all or any portion of the unlegended securities to which such Buyer was entitled to receive, or a sale of an amount of securities equal to all or any portion of the amount of unlegended securities that the Buyer anticipated receiving from McKinley without any restrictive legend, then an amount equal to the excess of the Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the securities so purchased (including brokerage commissions and other out-of-pocket expenses, if any) over the product of (A) such number of unlegended securities that McKinley was required to deliver to the Buyer by the applicable Required Delivery Date multiplied by (B) the price at which the sell order giving rise to such purchase obligation was executed. “Required Delivery Date” means, with respect to any securities required to be delivered to a Buyer, (x) in the case of Space-Eyes Securities, the Legend Removal Date, and (y) in the case of McKinley Notes (and the Underlying Shares issuable pursuant thereto), the McKinley Warrants (and the Underlying Shares issuable pursuant thereto), the McKinley Subsequent Closing Shares and the Replenishment Shares, the date on which delivery is required pursuant to the terms hereof or the applicable Transaction Document, as the case may be. For avoidance of doubt, this Section 6(e) shall not be duplicative with any provisions in the Notes or the Warrants addressing any failure to deliver shares without restrictive legends. For purposes of this Agreement any Subsequent Closing Shares or Replenishment Shares deducted from a Buyer’s Subsequent Closing Share Balance shall constitute Note Shares.
(f) FAST Compliance. Following the Merger, while any Notes or Warrants remain outstanding, McKinley shall maintain a transfer agent that participates in FAST.
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| 7. | CONDITIONS TO SPACE-EYES’ OBLIGATION TO ISSUE THE SECURITIES. |
(a) The obligation of Space-Eyes hereunder to issue the Securities to each Buyer at the Initial Closing and the Subsequent Closing is subject to the satisfaction, at or before the Initial Closing Date and the Subsequent Closing Date of each of the following conditions, provided that these conditions are for Space-Eyes’ sole benefit and may be waived by Space-Eyes at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to Space-Eyes.
(ii) Such Buyer and each other Buyer shall have delivered to Space-Eyes the applicable purchase price for the Securities being purchased by such Buyer at such Initial Closing or the Subsequent Closing, as applicable, by wire transfer of immediately available funds in accordance with a Flow of Funds Letter with respect to the Securities to be issued at such Initial Closing or the Subsequent Closing, as applicable.
(iii) The representations and warranties of such Buyer shall be true and correct in all material respects (except for such representations and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the date when made and as of the date of such Initial Closing or the Subsequent Closing, as applicable, as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the date of such Initial Closing or the Subsequent Closing, as applicable.
| 8. | CONDITIONS TO EACH BUYER’S OBLIGATION TO ACQUIRE THE SECURITIES. |
(a) The obligation of each Buyer hereunder to purchase its Initial Purchased Notes at the Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing Space-Eyes and McKinley with prior written notice thereof:
(i) Space-Eyes, McKinley and each of their respective Subsidiaries (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and Space-Eyes shall have duly executed and delivered to such Buyer the Initial Purchased Notes set forth across from such Buyer’s name on the Schedule of Buyers at the Initial Closing pursuant to this Agreement.
(ii) McKinley and Space-Eyes shall have filed the Registration Statement (as defined in the Business Combination Agreement), which shall include the registration of the Registrable Securities, with the SEC and Space-Eyes shall have delivered to McKinley and the Buyers the PCAOB 2025 Audited Financials (as defined in the Business Combination Agreement).
(iii) Such Buyer shall have received the opinion of Troutman Pepper Locke LLP, Space-Eyes’ counsel, dated as of the Initial Closing Date, in the form reasonably acceptable to such Buyer.
(iv) Such Buyer shall have received the opinion of Forbes Hare, McKinley’s Cayman Islands counsel, dated as of the Initial Closing Date, in the form reasonably acceptable to such Buyer.
(v) McKinley shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, dated as of the Initial Closing Date, in the form acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the Transfer Agent.
(vi) Space-Eyes shall have delivered to such Buyer a certificate evidencing the formation and good standing of Space-Eyes and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Initial Closing Date, along with a bring-down letter certifying the good standing of Space-Eyes and each of its Subsidiaries as of the Initial Closing Date.
(vii) McKinley shall have delivered to such Buyer a certificate evidencing the formation and good standing of McKinley and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Cayman Islands Registrar of Companies or the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Initial Closing Date, along with a bring-down letter certifying the good standing of McKinley and each of its Subsidiaries as of the Initial Closing Date.
(viii) Space-Eyes shall have delivered to such Buyer a certified copy of the certificate of incorporation of Space-Eyes as certified by the Secretary of State of the State of Delaware within ten (10) days of the Initial Closing Date.
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(ix) McKinley shall have delivered to such Buyer a certified copy of the McKinley Charter as certified by the Cayman Islands General Registry within ten (10) days of the Initial Closing Date.
(x) Space-Eyes shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of Space-Eyes and dated as of the Initial Closing Date, as to (A) the resolutions consistent with Section 3(b) as adopted by Space-Eyes’ Board of Directors in a form reasonably acceptable to such Buyer, (B) the Space-Eyes Charter, as in effect at the Initial Closing Date.
(xi) McKinley shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Chief Executive Officer or Chief Financial Officer of McKinley and dated as of the Initial Closing Date, as to (A) the resolutions consistent with Section 4(b) as adopted by McKinley’s Board of Directors or a duly authorized committee thereof in a form reasonably acceptable to such Buyer and (B) the McKinley Charter, each as in effect at the Initial Closing Date.
(xii) Each and every representation and warranty of Space-Eyes in Section 3 shall be true and correct in all material respects (except for such representations and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the date when made and as of the Initial Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and Space-Eyes shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by Space-Eyes at or prior to the Initial Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer or Chief Financial Officer of Space-Eyes, dated as of the Initial Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(xiii) Each and every representation and warranty of McKinley in Section 4 shall be true and correct in all material respects (except for such representations and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the date when made and as of the Initial Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and McKinley shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by McKinley at or prior to the Initial Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer or Chief Financial Officer of McKinley, dated as of the Initial Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(xiv) McKinley shall have delivered to such Buyer a letter from the Transfer Agent certifying the McKinley Shares outstanding on the Initial Closing Date immediately prior to the Initial Closing.
(xv) The McKinley Shares (A) shall be designated for quotation or listed (as applicable) on Nasdaq and (B) shall not have been suspended, as of the Initial Closing Date, by the SEC or Nasdaq from trading on Nasdaq nor shall suspension by the SEC or Nasdaq have been threatened, as of the Initial Closing Date, either (1) in writing by the SEC or Nasdaq or (2) by falling below the minimum maintenance requirements of Nasdaq.
(xvi) Space-Eyes shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Initial Purchased Notes.
(xvii) McKinley shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Underlying Shares, including without limitation, Nasdaq having raised no objection to any of the transactions contemplated by the Transaction Documents.
(xviii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(xix) Since the date of execution of this Agreement, no event or series of events shall have occurred that would have or result in a Space-Eyes Material Adverse Effect or McKinley Material Adverse Effect that is continuing.
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(xx) Space-Eyes shall have delivered any Control Agreements (as defined in the Notes), in form and substance reasonably satisfactory to the Collateral Agent.
(xxi) Such Buyer shall have received a letter on the letterhead of Space-Eyes, duly executed by the Chief Executive Officer or Chief Financial Officer of Space-Eyes, setting forth the wire amounts of each Buyer and the wire transfer instructions of Space-Eyes (a “Flow of Funds Letter”) with respect to the Initial Purchased Notes.
(xxii) Space-Eyes shall have delivered to such Buyer the results of a recent lien, bankruptcy and judgment search in each relevant jurisdiction with respect to Space-Eyes and its Subsidiaries and such search shall reveal no Liens on any of the Pledged Collateral (as such term is defined in Space-Eyes Security Agreements) or other assets of Space-Eyes and its Subsidiaries except, in the case of assets other than Pledged Collateral, for Permitted Liens (as such term is defined in the Notes) and except for Liens to be discharged on or prior to the Initial Closing Date pursuant to documentation reasonably satisfactory to the Buyer.
(xxiii) McKinley shall have delivered to such Buyer the results of a recent lien, bankruptcy and judgment search in each relevant jurisdiction with respect to McKinley and its Subsidiaries and such search shall reveal no Liens on any of the Pledged Collateral (as such term is defined in the McKinley Security Agreements) or other assets of McKinley and its Subsidiaries except, in the case of assets other than Pledged Collateral, for Permitted Liens (as such term is defined in the Notes) and except for Liens to be discharged on or prior to the Initial Closing Date pursuant to documentation reasonably satisfactory to the Buyer.
(xxiv) Space-Eyes shall have delivered to Buyer a duly completed and executed perfection certificate dated no earlier than five (5) days prior to the Initial Closing Date, in the form attached hereto as Exhibit F, with such schedules and exhibits attached thereto in form and substance acceptable to the Required Holders.
(xxv) McKinley shall have delivered to Buyer a duly completed and executed perfection certificate dated no earlier than five (5) days prior to the Initial Closing Date, in the form attached hereto as Exhibit F, with such schedules and exhibits attached thereto in form and substance acceptable to the Required Holders.
(xxvi) Space-Eyes and McKinley shall have delivered to such Buyer executed copies of the Lock-Up Agreements (in the form attached hereto as Exhibit E) executed by each of the parties set forth on Exhibit D.
(xxvii) All costs, fees, expenses (including, without limitation, legal fees and expenses) contemplated hereby to be payable to the Buyers shall have been paid to the extent due and, in the case of expenses of the Buyers that are reimbursable in accordance herewith, invoiced at least one day prior to the Initial Closing Date.
(xxviii) The Business Combination Agreement shall have been executed and shall not have been amended, supplemented or modified without written consent by the Required Holders.
(xxix) An intercreditor and subordination agreement (the “Intercreditor Agreement”), dated as of or prior to the Initial Closing Date, among the Collateral Agent (on behalf of the Buyers), Christopher Carlin, as agent for the holders of Existing Secured Notes and the Company, in a form satisfactory to the Buyers in their sole discretion, shall have been executed and shall not have been amended, supplemented or modified without the written consent by the Required Holders and shall remain in full force and effect. “Existing Secured Notes” means those certain secured promissory notes issued by the Company to certain holders pursuant to (a) the Securities Purchase Agreement, dated as of August 19, 2025, and accepted by Space-Eyes, as to the Purchasers (as defined therein) on August 19, 2025, September 2, 2025, September 15, 2025, September 29, 2025, and (b) the Securities Purchase Agreement, dated as of April 20, 2026, and accepted by Space-Eyes, as to the Purchasers (as defined therein) on April 20, 2026, in each case as in effect on the Initial Closing Date.
(xxx) Space-Eyes (and any of its Subsidiaries or guarantors identified by the Buyers in their sole discretion) and each Buyer shall have executed and delivered the Space-Eyes Security Agreements, in a form satisfactory to the Buyers in their sole discretion.
(xxxi) McKinley shall have executed and delivered the McKinley Security Agreements, in a form satisfactory to the Buyers in their sole discretion.
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(xxxii) Space-Eyes, McKinley and their respective Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated by the Transaction Documents as such Buyer or its counsel may reasonably request.
(b) The obligation of each Buyer hereunder to purchase the Subsequently Purchased Notes and Purchased Warrants at the Subsequent Closing is subject to the satisfaction, at or before the Subsequent Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by providing Space-Eyes with prior written notice thereof:
(i) Space-Eyes, McKinley and each of their respective Subsidiaries (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents to which it is a party and Space-Eyes shall have duly executed and delivered to such Buyer the Subsequently Purchased Notes, Purchased Warrants and Subsequent Closing Shares set forth opposite such Buyer’s name on the Schedule of Buyers, and McKinley shall have delivered to such Buyer the Subsequent Closing Shares.
(ii) McKinley and Space-Eyes shall have filed the Registration Statement, which shall include the registration of the Registrable Securities, with the SEC and such Registration Statement shall be effective.
(iii) All conditions to the Closing (as defined in the Business Combination Agreement) set forth in Article IX of the Business Combination Agreement shall have been satisfied (other than those conditions that by their nature are to be satisfied at the Closing (as defined in the Business Combination Agreement)) and the parties to such Closing shall be ready and planning to complete such Closing immediately following the Subsequent Closing.
(iv) Such Buyer shall have received the opinion of Troutman Pepper Locke LLP, Space-Eyes’ counsel, dated as of the applicable Subsequent Closing Date, in the form reasonably acceptable to such Buyer.
(v) Such Buyer shall have received the opinion of Forbes Hare, McKinley’s Cayman Islands counsel, dated as of the applicable Subsequent Closing Date, in the form reasonably acceptable to such Buyer.
(vi) Space-Eyes shall have delivered to such Buyer a certificate evidencing the formation and good standing of Space-Eyes and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of applicable Subsequent Closing Date, along with a bring-down letter certifying the good standing of Space-Eyes and each of its Subsidiaries as of the applicable Subsequent Closing Date.
(vii) McKinley shall have delivered to such Buyer a certificate evidencing the formation and good standing of McKinley and each of its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the applicable Subsequent Closing Date, along with a bring-down letter certifying the good standing of McKinley and each of its Subsidiaries as of the applicable Subsequent Closing Date.
(viii) Space-Eyes shall have delivered to such Buyer a certified copy of the certificate of incorporation of Space-Eyes as certified by the Secretary of State of the State of Delaware within ten (10) days of the applicable Subsequent Closing Date.
(ix) McKinley shall have delivered to such Buyer a certified copy of the McKinley Charter as certified by the Cayman Islands General Registry within ten (10) days of the applicable Subsequent Closing Date.
(x) Space-Eyes shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of Space-Eyes and dated as of the applicable Subsequent Closing Date, as to (A) the resolutions consistent with Section 3(b) as adopted by Space-Eyes’ Board of Directors in a form reasonably acceptable to such Buyer, (B) the Space-Eyes Charter, as in effect at such Subsequent Closing Date.
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(xi) McKinley shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Chief Executive Officer or Chief Financial Officer of McKinley and dated as of the applicable Subsequent Closing Date, as to (A) the resolutions consistent with Section 4(b) as adopted by McKinley’s Board of Directors or a duly authorized committee thereof in a form reasonably acceptable to such Buyer and (B) the McKinley Charter, as in effect at such Subsequent Closing Date.
(xii) Each and every representation and warranty of Space-Eyes shall be true and correct in all material respects (except for such representations and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the date when made and as of the applicable Subsequent Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and Space-Eyes shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by Space-Eyes at or prior to the applicable Subsequent Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer or Chief Financial Officer of Space-Eyes, dated as of the applicable Subsequent Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(xiii) Each and every representation and warranty of McKinley shall be true and correct in all material respects (except for such representations and warranties that are qualified by materiality or material adverse effect, which shall be true and correct in all respects) as of the date when made and as of the Subsequent Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date) and McKinley shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by McKinley at or prior to the Subsequent Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer or Chief Financial Officer of McKinley, dated as of the Subsequent Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(xiv) McKinley shall have delivered to such Buyer a letter from the Transfer Agent certifying the number of McKinley Shares outstanding on the applicable Subsequent Closing Date immediately prior to such Subsequent Closing Date.
(xv) The McKinley Shares (A) shall be designated for quotation or listed (as applicable) on Nasdaq and (B) shall not have been suspended, as of the applicable Subsequent Closing Date, by the SEC or Nasdaq from trading on Nasdaq nor shall suspension by the SEC or Nasdaq have been threatened, as of such Subsequent Closing Date, either (1) in writing by the SEC or Nasdaq or (2) by falling below the minimum maintenance requirements of Nasdaq.
(xvi) Space-Eyes shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the sale of the Subsequently Purchased Notes and Purchased Warrants.
(xvii) McKinley shall have obtained all governmental, regulatory or third-party consents and approvals, if any, necessary for the sale of the Subsequently Purchased Notes, Purchased Warrants and Underlying Shares, including without limitation, Nasdaq having raised no objection to any of the transactions contemplated by the Transaction Documents.
(xviii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.
(xix) Since the date of execution of this Agreement, no event or series of events shall have occurred that would have or result in a Space-Eyes Material Adverse Effect or McKinley Material Adverse Effect.
(xx) Such Buyer shall have received a Flow of Funds Letter with respect to the Subsequently Purchased Notes and Purchased Warrants.
(xxi) Space-Eyes shall have delivered to such Buyer the results of a recent lien, bankruptcy and judgment search in each relevant jurisdiction with respect to Space-Eyes and its Subsidiaries and such search shall reveal no Liens on any of the Pledged Collateral (as such term is defined in Space-Eyes Security Agreements) or other assets of Space-Eyes and its Subsidiaries except, in the case of assets other than Pledged Collateral, for Permitted Liens (as such term is defined in the Notes) and except for Liens to be discharged on or prior to the Subsequent Closing Date pursuant to documentation reasonably satisfactory to the Buyer.
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(xxii) McKinley shall have delivered to such Buyer the results of a recent lien, bankruptcy and judgment search in each relevant jurisdiction with respect to McKinley and its Subsidiaries and such search shall reveal no Liens on any of the Pledged Collateral (as such term is defined in the McKinley Security Agreements) or other assets of McKinley and its Subsidiaries except, in the case of assets other than Pledged Collateral, for Permitted Liens (as such term is defined in the Notes) and except for Liens to be discharged on or prior to the Subsequent Closing Date pursuant to documentation reasonably satisfactory to the Buyer.
(xxiii) Space-Eyes shall have delivered to Buyer a duly completed and executed perfection certificate dated no earlier than five (5) days prior to the Subsequent Closing Date, in the form attached hereto as Exhibit F, with such schedules and exhibits attached thereto in form and substance acceptable to the Required Holders.
(xxiv) McKinley shall have delivered to Buyer a duly completed and executed perfection certificate dated no earlier than five (5) days prior to the Subsequent Closing Date, in the form attached hereto as Exhibit F, with such schedules and exhibits attached thereto in form and substance acceptable to the Required Holders.
(xxv) The Business Combination Agreement shall not have been amended, supplemented or modified without written consent by the Required Holders.
(xxvi) The Intercreditor Agreement shall have remained in full force and effect and shall not have been amended, supplemented or modified without written consent by the Required Holders.
(xxvii) All costs, fees, expenses (including, without limitation, legal fees and expenses) contemplated hereby to be payable to the Buyers shall have been paid to the extent due and, in the case of expenses of the Buyers that are reimbursable in accordance herewith, invoiced at least one day prior to the Subsequent Closing Date.
| 9. | TERMINATION. |
(a) In the event that the Initial Closing shall not have occurred with respect to a Buyer within the earlier to occur of (i) fifteen (15) Business Days of the date hereof and (ii) such date as the Business Combination Agreement shall have terminated without the transactions contemplated therein having been consummated then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 9 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the transactions contemplated hereby shall be applicable only to such Buyer providing such written notice; provided further that no such termination shall affect any obligation of Space-Eyes under this Agreement to reimburse such Buyer for the expenses described in Section 5(j) above. Nothing contained in this Section 9 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents, to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents, or to limit any Buyer’s rights under Section 10.
(b) In the event that the Subsequent Closing shall not have occurred with respect to a Buyer within the earlier to occur of (i) six (6) months after the Initial Closing Date and (ii) such date as the Business Combination Agreement shall have terminated without the transactions contemplated therein having been consummated, then such Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 9 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the transactions contemplated hereby shall be applicable only to such Buyer providing such written notice; provided further that no such termination shall affect any obligation of Space-Eyes under this Agreement to reimburse such Buyer for the expenses described in Section 5(j) above.
| 10. | SELLER TERMINATION FEE. |
(a) Termination Fee. In the event that (i)(A) the Initial Closing shall not have occurred on or prior to the date that is fifteen (15) Business Days after the date hereof or (B) the Subsequent Closing shall not have occurred on or prior to the date that is six (6) months after the Initial Closing Date (the “Outside Date”), and (ii) such failure is primarily attributable to (A) a willful and material breach by Space-Eyes or McKinley of any representation, warranty, covenant or agreement contained in this Agreement or any other Transaction Document, (B) the failure by Space-Eyes or McKinley to satisfy (or obtain a waiver of) any condition to Closing set forth in Section 8 that is within the control of Space-Eyes or McKinley, or (C) Space-Eyes’s or McKinley’s refusal to consummate the Closing when all conditions to Closing set forth in Section 7 have been satisfied or waived (each of (A), (B) and (C), a “Seller Termination Event”), then Space-Eyes and McKinley shall, jointly and severally, pay to each Buyer, within five (5) Business Days following written demand therefor from such Buyer, an amount in cash equal to such Buyer’s Pro Rata Portion of the Termination Fee (as defined below); provided, however, that no Termination Fee shall be payable if, as of the Outside Date, the Business Combination Agreement has been terminated, other than as a result of (A) a willful and material breach by Space-Eyes or McKinley of any representation, warranty, covenant or agreement contained in Business Combination Agreement, (B) the failure by Space-Eyes or McKinley to satisfy (or obtain a waiver of) any condition to the closing of the Business Combination Agreement that is within the control of Space-Eyes or McKinley, or (C) Space-Eyes’s or McKinley’s refusal to consummate the closing of the Business Combination Agreement when all conditions to closing set forth therein have been satisfied or waived.
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(b) Termination Fee Amount. The “Termination Fee” shall equal five percent (5.0%) of the sum of (i) the aggregate principal amount of all Initial Purchased Notes set forth in column (3) on the Schedule of Buyers and (ii) the aggregate principal amount of all Subsequently Purchased Notes set forth in column (5) on the Schedule of Buyers.
(c) Liquidated Damages. The parties acknowledge and agree that (i) the agreements contained in this Section 10 are an integral part of the transactions contemplated by this Agreement, (ii) the damages resulting from a Seller Termination Event are difficult to ascertain and the Termination Fee is a reasonable estimate of such damages, and (iii) the Termination Fee shall constitute liquidated damages and not a penalty. Each of Space-Eyes and McKinley acknowledges that the Termination Fee is reasonable in light of the anticipated harm caused by a Seller Termination Event, the difficulty of proof of loss, and the inconvenience and infeasibility of otherwise obtaining an adequate remedy.
(d) Non-Exclusive Remedy; Specific Performance. Notwithstanding anything to the contrary in this Agreement, the payment of the Termination Fee pursuant to this Section 10 shall not be the sole and exclusive remedy of the Buyers with respect to a Seller Termination Event. Each Buyer shall retain all rights and remedies available under this Agreement, the other Transaction Documents and applicable law, including, without limitation, (i) the right to seek specific performance of the obligations of Space-Eyes and McKinley under this Agreement and the other Transaction Documents in accordance with Section 11(m), and (ii) the right to recover actual damages incurred by such Buyer as a result of any willful and material breach by Space-Eyes or McKinley of this Agreement or any other Transaction Document (it being understood that any Termination Fee actually paid shall be credited against any such damages award). For the avoidance of doubt, in no event shall any Buyer be entitled to receive both a grant of specific performance requiring Space-Eyes and McKinley to consummate the Closing and payment of the Termination Fee.
(e) Interest. Any Termination Fee not paid when due pursuant to Section 8(a) shall accrue interest from the date such payment was due until the date of actual payment at a rate per annum equal to the prime rate as published in The Wall Street Journal on the date such payment was due plus five percent (5%).
| 11. | MISCELLANEOUS. |
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Space-Eyes and McKinley each hereby irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, provided that if the Court of Chancery of the State of Delaware does not have jurisdiction, then to the other courts of the State of Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any party from bringing suit or taking other legal action against another party in any other jurisdiction to collect on such party’s obligations to the other party or to enforce a judgment or other court ruling in favor of such party. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts; Electronic Signatures. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof. A party’s electronic signature (complying with the Uniform Electronic Transactions Act (6 Del. C. §§ 12A-101 et seq.), as amended from time to time, or other applicable law) of this Agreement shall have the same validity and effect as a signature affixed by the party’s hand.
(c) Headings; Gender; Interpretation. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Schedules and Exhibits mean the Articles and Sections of, and Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder.
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(d) Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and value paid by Space-Eyes and/or any of its Subsidiaries (as the case may be) or McKinley and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such Buyer, Space-Eyes and its Subsidiaries (or by mutual mistake of such Buyer, McKinley and its Subsidiaries) and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
(e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, Space-Eyes, its Subsidiaries, McKinley, its Subsidiaries, their respective affiliates and Persons acting on their behalf, including any transactions by any Buyer with respect to ordinary shares or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, Space-Eyes or any of its Subsidiaries, or McKinley or any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Buyer in Space-Eyes or McKinley, as the case may be, or (ii) waive, alter, modify or amend in any respect any obligations of each Buyer, Space-Eyes or any of its Subsidiaries or of McKinley or any of its Subsidiaries, or any rights of or benefits to any Buyer, Space-Eyes, McKinley, or any other Person, in any agreement entered into prior to the date hereof between or among Space-Eyes and/or any of its Subsidiaries and any Buyer or between or among McKinley and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from Space-Eyes or McKinley and/or any of its respective Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein, neither Space-Eyes, McKinley nor any Buyer makes any representation, warranty, covenant or undertaking. For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in writing signed by Space-Eyes, McKinley and the Required Holders, and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 11(e) shall be binding on all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 11(e) shall be binding on all Buyers and holders of Securities, as applicable, provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents and all holders of the Securities. From the date hereof and while any Securities are outstanding, neither Space-Eyes nor McKinley shall be permitted to receive any consideration from a Buyer or a holder of Securities that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce Space-Eyes or McKinley or any Subsidiary thereof (i) to treat such Buyer or holder of Securities in a manner that is more favorable than to other similarly situated Buyers or holders of Securities, or (ii) to treat any Buyer(s) or holder(s) of Securities in a manner that is less favorable than the Buyer or holder of Securities that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less favorably than another Buyer shall disregard any securities of Space-Eyes or McKinley purchased or sold by any Buyer. Neither Space-Eyes nor McKinley has, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, Space-Eyes and McKinley each confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to Space-Eyes, or McKinley, any or their respective Subsidiaries or otherwise. As a material inducement for each Buyer to enter into this Agreement, Space-Eyes and McKinley each expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, Space-Eyes’ or McKinley’s representations and warranties contained in this Agreement or any other Transaction Document and (y) nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, Space-Eyes’ or McKinley’s representations and warranties contained in this Agreement or any other Transaction Document.
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(f) Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s e-mail server that such e-mail could not be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and e-mail addresses for such communications shall be:
If to Space-Eyes:
Space-Eyes, Inc.
1200 Brickell Avenue
Penthouse 2010
Miami, FL 33131
Attention: Jatinder S. Bains
E-Mail: [email protected]
With a copy (for informational purposes only) to:
Troutman Pepper Locke LLP
400 Berwyn Park Rd
Berwyn, PA 19312
Attention: Thomas Dwyer
E-Mail: [email protected]
If to McKinley:
McKinley Acquisition Corp.
75 Second Ave., Suite 605
Needham, MA 02494
Attention: Peter Wright, Chief Executive
Officer
E-Mail: [email protected]
With a copy (for informational purposes only) to:
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attention: Giovanni Caruso
E-Mail: [email protected]
If to the Transfer Agent:
Odyssey Transfer and Trust Company
860 Blue Gentian Rd, Suite 320
Eagan, MN 55121
Attention: Becky Paulson
E-Mail: [email protected]
If to a Buyer, to (i) its e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers and (ii) to Hudson Bay Capital Management LP, Attn: DI Team, 28 Havemeyer Pl, 2nd Floor, Greenwich, CT 06830.
with a copy (for informational purposes only) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, CA 92130
Telephone: (858) 523-5400
Attention: Michael E. Sullivan
E-Mail: [email protected]
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or to such other address, e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) electronically generated by the sender’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers or transferees of any of the Securities. Neither Space-Eyes nor McKinley shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders, including by way of a Fundamental Change (as defined in the Notes) unless Space-Eyes or McKinley, as applicable, is in compliance with the applicable provisions governing Fundamental Changes set forth in the Notes. A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of Space-Eyes or McKinley, provided such assignee agrees in writing to be bound by the provisions hereof that apply to Buyers in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No Third-Party Beneficiaries. Each Placement Agent, its affiliates and their respective representatives (the “Placement Agent Parties”) shall be express third-party beneficiaries of the representations and warranties of Space-Eyes, McKinley and each Buyer contained in this Agreement and the other Transaction Documents, and shall be entitled to rely upon and enforce the same as if such representations and warranties were made directly to the Placement Agent Parties. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than (i) with respect to the Placement Agent Parties, as set forth in this Section 11(h) and Section 11(u), (ii) with respect to the Collateral Agent, Section 11(t) and (iii) as otherwise set forth in Sections 5(aa) and 11(k).
(i) Survival. The representations, warranties, agreements and covenants shall survive the Initial Closing and the Subsequent Closing. Each party shall be responsible only for its own representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification.
(i) In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of Space-Eyes’ other obligations under the Transaction Documents, Space-Eyes shall defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims (including causes of action, suits or claims asserted directly by or between an Indemnitee and Space-Eyes), losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by Space-Eyes or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of Space-Eyes or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of Space-Eyes or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents (including any hedging or similar activities in connection therewith), or (B) the status of such Buyer or holder of the Securities either as an investor in Space-Eyes pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including any hedging or similar activities in connection therewith or as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief); provided, however, that Space-Eyes will not be liable in any such case to a Buyer or its related Indemnitees to the extent that any such claim, loss, damage, liability or expense arises primarily out of or is based primarily upon the inaccuracy of any representations and warranties made by such Buyer herein. To the extent that the foregoing undertaking by Space-Eyes may be unenforceable for any reason, Space-Eyes shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
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(ii) In consideration of each Buyer’s and Space-Eyes’ execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of McKinley’s other obligations under the Transaction Documents, McKinley shall defend, protect, indemnify and hold harmless the Indemnitees from and against any and all Indemnified Liabilities, incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by McKinley or any McKinley Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of McKinley or any McKinley Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim (including causes of action, suits or claims asserted directly by or between an Indemnitee and McKinley) brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of McKinley or any Subsidiary); provided, however, that McKinley will not be liable in any such case to a Buyer or its related Indemnitees to the extent that any such claim, loss, damage, liability or expense arises out of or is based upon the inaccuracy of any representations and warranties made by such Buyer herein. To the extent that the foregoing undertaking by McKinley may be unenforceable for any reason, McKinley shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
(iii) Promptly after receipt by an Indemnitee under this Section 11(k) of notice of the commencement of any action or proceeding (including, without limitation, any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 11(k), deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense of such Indemnified Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability; or (iii) the named parties to any such Indemnified Liability (including, without limitation, any impleaded parties) include both such Indemnitee and the indemnifying party, and such Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnitee and the indemnifying party (in which case, if such Indemnitee notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party), provided further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnitee. The Indemnitee shall reasonably cooperate with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee which relates to such Indemnified Liability. The indemnifying party shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liability, and such settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 11(k), except to the extent that the indemnifying party is materially and adversely prejudiced in its ability to defend such action. The indemnification required by this Section 11(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Liabilities are incurred. The indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnitees against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. For the avoidance of doubt, the obligations of the Indemnitee contained in this Section 11(k)(iii) shall apply to third party claims only, and shall not apply to direct claims by or between an Indemnitee and Space-Eyes and/or McKinley.
(iv) Notwithstanding anything in this Agreement to the contrary, nothing in this Article XI or otherwise shall limit or restrict any of the rights of the parties hereto to bring, maintain or recover any amounts in connection with any action or claim based upon fraud in connection with this Agreement or the transactions consummated in connection herewith.
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(v) Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, ordinary shares, common stock and any other numbers in this Agreement that relate to the ordinary shares or common stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the ordinary shares or common stock after the date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of Space-Eyes or McKinley in order for such Buyer (or its broker or other financial representative) to effect short sales or similar transactions in the future.
(l) Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, each of Space-Eyes and McKinley recognizes that in the event that it or any of its Subsidiaries fails to perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy at law would be inadequate relief to the Buyers. Each of Space-Eyes and McKinley therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief). Without limiting the foregoing, upon the occurrence of a Seller Termination Event (as defined in Section 10), each Buyer shall be entitled to payment of the Termination Fee in accordance with Section 9, which right shall be in addition to (and not in lieu of) the remedies set forth in this Section 11(l).
(m) Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and Space-Eyes or any of its Subsidiaries or McKinley or any of its Subsidiaries does not timely perform its related obligations within the periods therein provided or if no period is prescribed, within a reasonable period of time, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to Space-Eyes, McKinley or such Subsidiary (as the case may be), any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(n) Payment Set Aside; Currency. To the extent that Space-Eyes or McKinley makes a payment or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to Space-Eyes or McKinley, as applicable, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.
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(o) Judgment Currency.
(i) If for the purpose of obtaining or enforcing judgment against Space-Eyes or McKinley in connection with this Agreement or any other Transaction Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 11(p) referred to as the “Judgment Currency”) an amount due in U.S. Dollars under this Agreement, the conversion shall be made at the Exchange Rate prevailing on the Business Day immediately preceding:
(1) the date actual payment of the amount due, in the case of any proceeding in the Court of Chancery of the State of Delaware or in the courts of any other jurisdiction that will give effect to such conversion being made on such date; or
(2) the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 11(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
(ii) If in the case of any proceeding in the court of any jurisdiction referred to in Section 11(p)(i)(2), there is a change in the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any amount due from Space-Eyes or McKinley under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(p) Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and Space-Eyes and McKinley each acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers are in any way acting in concert or as a group or entity, and neither Space-Eyes nor McKinley shall assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters, and Space-Eyes and McKinley each acknowledges that the Buyers are not acting in concert or as a group, and neither Space-Eyes nor McKinley shall assert any such claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents. The Company, McKinley and each Buyer confirms that each Buyer has independently participated with Space-Eyes and its Subsidiaries and McKinley and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of Space-Eyes and McKinley, not the action or decision of any Buyer, and was done solely for the convenience of Space-Eyes and its Subsidiaries and McKinley and its Subsidiaries and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between Space-Eyes, each of its Subsidiaries and a Buyer, solely, and between McKinley, each of its Subsidiaries and a Buyer, solely, and not between Space-Eyes, its Subsidiaries, McKinley, its Subsidiaries and the Buyers collectively and not between and among the Buyers.
(q) Performance Date. If the date by which any obligation under any of the Transaction Documents must be performed occurs on a day other than a Business Day, then the date by which such performance is required shall be the next Business Day following such date.
(r) Enforcement Fees. The Company agrees to pay all costs and expenses of the Buyers incurred as a result of enforcement of the Transaction Documents and the collection of any amounts owed to the Buyers hereunder (whether in cash, equity or otherwise), including, without limitation, reasonable attorneys’ fees and expenses.
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(s) Collateral Agent.
(i) Appointment; Authorization. The Buyers, together with any successors or assigns thereof, hereby irrevocably appoint, designate and authorize HBC Collateral Agent LLC as collateral agent to take such action on their behalf under the provisions of the Notes, each Security Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of each Security Document, together with such powers as are reasonably incidental thereto. The provisions of this Section 11(t) are solely for the benefit of the Collateral Agent, and neither Space-Eyes nor McKinley shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any Security Document (or any other similar term) with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties. Notwithstanding any provision to the contrary contained elsewhere in the Notes, any Security Document or any other agreement, instrument or document related hereto or thereto, the Collateral Agent shall not have any duty or responsibility except those expressly set forth herein, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into the Notes, any Security Document or any other agreement, instrument or document related hereto or thereto or otherwise exist against the Collateral Agent.
(ii) Delegation of Duties. The Collateral Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any Security Document by or through any one or more sub-agents appointed by the Collateral Agent. The Collateral Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through its Affiliates (as defined in the Notes), partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives, or the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of any of its Affiliates (collectively, the “Related Parties”). The exculpatory provisions of this Section 11(t) shall apply to any such sub-agent and to the Related Parties of the Collateral Agent and any such sub-agent. The Collateral Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Collateral Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
(iii) Exculpatory Provisions.
(A) The Collateral Agent shall not have any duties or obligations except those expressly set forth in the Security Documents, and its duties shall be administrative in nature. Without limiting the generality of the foregoing, the Collateral Agent: (i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default (as defined in the Notes) has occurred and is continuing or an Event of Default (as defined in the Notes) has occurred; (ii) shall not have any duty to take any discretionary action or exercise any discretionary powers; and (iii) shall not, except as expressly set forth in the Security Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Space-Eyes or any of its Affiliates or McKinley or any of its Affiliates that is communicated to or obtained by the Collateral Agent or any of its Affiliates in any capacity.
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(B) The Collateral Agent shall not be liable for any action taken or not taken by it in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. The Collateral Agent shall be deemed not to have knowledge of any Default or Event of Default (as defined in the Notes) unless and until notice describing such Default or Event of Default is given to the Collateral Agent in writing by Space-Eyes or McKinley.
(C) The Collateral Agent shall not be responsible for or have any duty to ascertain or inquire into (a) any statement, warranty or representation made in or in connection with the Notes, any Security Document or any other agreement, instrument or document related hereto or thereto, (b) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (c) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (d) the validity, enforceability, effectiveness or genuineness of the Notes, any Security Document or any other agreement, instrument or document related to the Notes or Security Documents, or (e) any failure of Space-Eyes, McKinley or any other party to the Notes, any Space-Eyes Security Agreement or the McKinley Security Agreements or any other agreement, instrument or document related to the Notes or Security Documents to perform its obligations thereunder. The Collateral Agent shall not be under any obligation to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Notes, any Security Document or any other agreement, instrument or document related to the Notes or Security Documents, or to inspect the properties, books or records of Space-Eyes or any Affiliate of Space-Eyes or of McKinley or any Affiliate of McKinley.
(iv) Reliance by Collateral Agent. The Collateral Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Collateral Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. The Collateral Agent may consult with legal counsel, independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
(v) Successor Agent. The Collateral Agent may resign as the Collateral Agent at any time upon ten (10) days’ prior notice to the Buyers, Space-Eyes and McKinley. If the Collateral Agent resigns under the Notes, the Required Holders shall appoint a successor agent. If no successor agent is appointed prior to the effective date of the resignation of the Collateral Agent, the Collateral Agent may appoint a successor Collateral Agent on behalf of the Buyers after consulting with the Buyers. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Collateral Agent and the term “the Collateral Agent” shall mean such successor agent, and the retiring Collateral Agent’s appointment, powers and duties as the Collateral Agent shall be terminated. After the Collateral Agent’s resignation hereunder as the Collateral Agent, the provisions of this Section 11(t) shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent. If no successor agent has accepted appointment as the Collateral Agent by the date which is thirty (30) days following a retiring Collateral Agent’s notice of resignation, a retiring Collateral Agent’s resignation shall nevertheless thereupon become effective and the Buyers, shall perform all of the duties of the Collateral Agent hereunder until such time as Required Holders shall appoint a successor agent as provided for above.
(vi) Non-Reliance on the Collateral Agent. The Buyers acknowledge that they have, independently and without reliance upon the Collateral Agent or any of its Related Parties and based on such documents and information as they have deemed appropriate, made their own credit analysis and decision to invest in the Notes. The Buyers also acknowledge that they will, independently and without reliance upon the Collateral Agent or any of its Related Parties and based on such documents and information as they shall from time to time deem appropriate, continue to make their own decisions in taking or not taking action under or based upon the Notes, any Security Document or any related agreement or any document furnished hereunder or thereunder.
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(vii) Collateral Matters. The Buyers irrevocably authorize the Collateral Agent to release any Lien (as defined in the Notes) granted to or held by the Collateral Agent under any Security Document (i) when all Secured Obligations (as defined in Space-Eyes Security Agreements or the McKinley Security Agreements, as applicable) have been paid in full; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any sale or other disposition permitted under the Notes and each other agreement, instrument or document related thereto (it being agreed and understood that the Collateral Agent may conclusively rely without further inquiry on a certificate of an officer of Space-Eyes or McKinley, as applicable, as to the sale or other disposition of property being made in compliance with the Notes and each other agreement, instrument or document related thereto); or (iii) if approved, authorized or ratified in writing by the Buyers. The Collateral Agent shall have the right, in accordance with the Security Documents to sell, lease or otherwise dispose of any Pledged Collateral for cash, credit or any combination thereof, and the Collateral Agent may purchase any Pledged Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and setoff the amount of such price against the Secured Obligations.
(viii) Reimbursement by Buyers. To the extent that Space-Eyes or McKinley, as applicable, for any reason fails to indefeasibly pay any amount required under Sections 5(j) or 11(k) to be paid by it to the Collateral Agent (or any sub-agent thereof) or any Related Party of the Collateral Agent (or any sub-agent thereof), the Buyers hereby agree, jointly and severally, to pay to the Collateral Agent (or any such sub-agent) or such Related Party of the Collateral Agent (or any sub-agent thereof), as the case may be, such unpaid amount.
(ix) Marshaling; Payments Set Aside. Neither the Collateral Agent nor the Buyers shall be under any obligation to marshal any assets in favor of Space-Eyes, McKinley or any other Person or against or in payment of any or all of the Secured Obligations. To the extent that Space-Eyes or McKinley makes a payment or payments to the Collateral Agent, or the Collateral Agent enforces its Liens or exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Collateral Agent in its discretion) to be repaid to a trustee, receiver or any other party in connection with any bankruptcy, insolvency or similar proceeding, or otherwise, then (i) to the extent of such recovery, the obligation under the Notes intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred and (ii) the Buyers agree to pay to the Collateral Agent upon demand its share of the total amount so recovered from or repaid by the Collateral Agent to the extent paid to the Buyers.
(t) Exculpation of the Placement Agents. Space-Eyes, McKinley and each Buyer acknowledge and agree that:
(i) Each Placement Agent is acting as placement agent for Space-Eyes solely in connection with the sale of the Securities and is not acting in any other capacity and is not and shall not be construed as a fiduciary for any Buyer or any other person or entity in connection with the sale of Securities. Each Buyer acknowledges that no Placement Agent Party has made any representation or warranty, express or implied, to such Buyer regarding Space-Eyes, McKinley, the Securities, the transactions contemplated hereby, or the accuracy or completeness of any information provided to such Buyer. Each Buyer further acknowledges that it has not relied on any Placement Agent Party in making its investment decision, has conducted its own independent investigation and evaluation of Space-Eyes, McKinley and the Securities, and has consulted such legal, tax, financial and other advisors as it has deemed necessary. No Placement Agent Party shall have any liability for any claim arising out of or relating to such Buyer’s purchase of the Securities, except to the extent such liability is finally judicially determined by a court of competent jurisdiction to have resulted from such Placement Agent Party’s gross negligence, willful misconduct or fraud.
(ii) No Placement Agent Party: (A) shall be liable for any improper payment made in accordance with the information provided by Space-Eyes or McKinley; (B) has made or will make any representation or warranty, express or implied, of any kind or character, and has not provided any recommendation in connection with the purchase or sale of the Securities; (C) has any responsibilities as to the validity, accuracy, completeness, value or genuineness, as of any date, of any information, certificates or documentation delivered by or on behalf of Space-Eyes or McKinley pursuant to this Agreement, the other Transaction Documents, or in connection with any of the transactions contemplated by such agreements; or (D) shall be liable or have any obligation (including, without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by any Buyer, Space-Eyes, McKinley or any other Person or entity), whether in contract, tort or otherwise to any Buyer or to any person claiming through such Buyer, (x) for any action taken, suffered or omitted by any of them in good faith and reasonably believed to be authorized or within the discretion or rights or powers conferred upon it by this Agreement or any other Transaction Document, (y) for anything which any of them may do or refrain from doing in connection with this Agreement or any other Transaction Document, or (z) for anything otherwise in connection with the purchase and sale of the Securities, except in each case for such party’s own gross negligence, willful misconduct or fraud. Each of Space-Eyes and McKinley jointly and severally shall indemnify, defend and hold harmless the Placement Agent Parties from and against any and all losses, claims, damages, liabilities and expenses, including reasonable and documented attorneys’ fees and expenses, arising out of or relating to the offer and sale of the Securities, or the Placement Agents’ engagement as placement agents, except to the extent such expenses are finally judicially determined by a court of competent jurisdiction to have resulted from the gross negligence, willful misconduct or fraud of the applicable Placement Agent Party. The obligations of Space-Eyes and McKinley under this paragraph shall be in addition to, and not in limitation of, any indemnification or contribution rights the Placement Agent Parties may have under any engagement letter, placement agency agreement or other agreement with Space-Eyes, McKinley or any of their respective Affiliates.
(iii) No amendment, modification, waiver or termination of this Section 11(u), or of any provision of this Agreement or any other Transaction Document that adversely affects the rights, protections, indemnities or immunities of any Placement Agent Party, shall be effective without the prior written consent of each Placement Agent adversely affected thereby. The rights and protections afforded to the Placement Agent Parties under this Section 11(u) shall survive the Closing, any termination of this Agreement and the completion of the transactions contemplated hereby.
[signature pages follow]
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IN WITNESS WHEREOF, each Buyer, Space-Eyes and McKinley have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| COMPANY: | |||
| SPACE-EYES, INC. | |||
| By: | /s/ Jatin Baines | ||
| Name: | Jatinder Batins | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer, the Company and McKinley have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| COMPANY: | |||
| MCKINLEY ACQUISITION CORPORATION | |||
| By: | /s/ Peter Wright | ||
| Name: | Peter Wright | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer, the Company and McKinley have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
| BUYER: | |||
| HBC INVESTMENT LTD. | |||
| By: | /s/ Richard Allison | ||
| Name: | Richard Allison | ||
| Title: | Authorized Signatory* | ||
| *Authorized Signatory Hudson Bay Capital Management LP not individually, but solely as Investment Advisor to HBC Investment Ltd. | |||
[Signature Page to Securities Purchase Agreement]
SCHEDULE OF BUYERS
| (1) | (2) | (3) | (4) | (5) | (6) | (9) | ||||||||||||||||||
| Buyer | Address | Aggregate Principal Amount of Initial Purchased Notes | Aggregate Purchase Price of Initial Purchased Notes | Aggregate Principal Amount of Subsequently Purchased Notes | Aggregate Purchase Price of Subsequently Purchased Notes | Legal Representative’s Address | ||||||||||||||||||
| HBC Investment Ltd. | c/o Hudson Bay Capital Management LP 290 Harbor Drive 3rd Floor Stamford, CT 06902 | $ | 5,882,352.94 | $ | 5,000,000 | $ | 77,777,777.78 | $ | 70,000,000 | Latham & Watkins LLP 12670 High Bluff Drive San Diego, CA 92130 Telephone: (858) 523-5400 Attention: Michael E. Sullivan | ||||||||||||||
| TOTAL | $ | 5,882,352.94 | $ | 5,000,000 | $ | 77,777,777.78 | $ | 70,000,000 |
Exhibit A
Form of Business Combination Agreement
Exhibit B
Form of Senior Secured Convertible Note
Exhibit C
Form of Warrant
Exhibit D
Lock-Up Agreement Parties
| 1. | Jatinder Bains |
| 2. | Dylan Monroe |
| 3. | Dr. Haribir Singh |
Exhibit E
Form of Lock-Up Agreement
Exhibit F
Form of Perfection Certificate
Exhibit 10.5
SPACE-EYES, INC.
Senior Secured Convertible Note due 2031
THE ISSUANCE AND SALE OF NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES THAT MAY BE ISSUABLE PURSUANT TO THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. UNTIL THE DATE THAT IS ONE (1) YEAR AFTER THE ISSUE DATE (AS DEFINED ON THE REVERSE OF THIS NOTE), THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS-DELIVERY REQUIREMENTS OF THE SECURITIES ACT.
SPACE-EYES, INC.
Senior Secured Convertible Note due 2031
Certificate No. A-[●]
Space-Eyes, Inc., a Delaware corporation, for value received, promises to pay to [ ● ] (the “Initial Holder”), or its registered assigns, the principal sum of [five million eight hundred eighty two thousand three hundred fifty three dollars]/[five million eight hundred eighty two thousand three hundred fifty three dollars]/[seventy seven million seven hundred seventy thousand seven hundred seventy eight dollars] [$5,882,353]/[$5,882,353]/[$77,777,778]) (such principal sum, the “Principal Amount”) on [●], 2031, and to pay any outstanding interest thereon, as provided in this Note, in each case, as provided in and subject to the other provisions of this Note, including the earlier redemption, repurchase or conversion of this Note.
Unless otherwise indicated, references herein to “dollars” or “$” are to U.S. dollars.
Additional provisions of this Note are set forth on the other side of this Note.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, Space-Eyes, Inc. has caused this instrument to be duly executed as of the date set forth below.
| SPACE-EYES, INC. | |||
| Date: [ ● ] | By: | ||
| Name: | [ ● ] | ||
| Title: | [ ● ] | ||
(Signature Page to Senior Secured Convertible Note due 2031, Certificate No. A-[●])
SPACE-EYES, INC.
Senior Secured Convertible Note due 2031
This Note (this “Note” and, collectively with any Note issued in exchange therefor or in substitution thereof, the “Notes”) is issued by Space-Eyes, Inc., a Delaware corporation, and designated as its “Senior Secured Convertible Notes due 2031.”
Section 1. Definitions.
“Accelerated Amortization Payments” has the meaning set forth in Section 5(C)(iii).
“Adjustment Period” has the meaning set forth in Section 7(F)(ii)(1)(d).
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7(F)(ii)) of Issuer Equity Interests that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
“Affiliate” has the meaning set forth in Rule 144 under the Securities Act.
“Amortization Acceleration Notice” has the meaning set forth in Section 5(C)(iii).
“Amortization Conversion Price” means, as of any Amortization Stock Payment Date, the greater of (i) the Amortization Conversion Price Floor and (ii) ninety percent (90%) of the lower of (A) the Last Reported Sale Price of the Issuer Equity Interests on the Trading Day immediately prior to such Amortization Stock Payment Date and (B) the average of the lowest two Daily VWAPs in the ten (10) Trading Day period ending on and including the Trading Day immediately prior to such Amortization Stock Payment Date.
“Amortization Conversion Price Floor” shall mean five dollars ($5.00), provided that, for any Amortization Stock Payment Date, the Company may elect to reduce the Amortization Conversion Price Floor for the applicable Amortization Payment by providing written notice thereof to the Holder, which election may not be revoked.
“Amortization Date” means, with respect to this Note, (A) the [●]1 calendar day of each month beginning on [●], 20262 and (B) if not otherwise included in clause (A), the Maturity Date.
“Amortization Notice” has the meaning set forth in Section 4(A).
“Amortization Notice Period” means the period beginning on and including the date that any Amortization Notice is delivered pursuant to Section 4(A) and ending on and including the date immediately prior to the related Amortization Date.
“Amortization Payment” means with respect to any Amortization Date, an amount in cash equal to the lesser of (i) the quotient of (x) the sum of the outstanding Principal Amount of this Note on the Issue Date plus the sum of all PIK Amounts added to the Principal Amount pursuant to Section 4(C) up to and including the date of the applicable Amortization Notice divided by (y) twenty-four (24) minus the number of Amortization Payments previously made with respect to this Note (but in no event less than one (1)) and (ii) the then-outstanding Principal Amount of this Note, plus accrued and unpaid interest on this Note.
| 1 | NTD: To be the calendar day of the Initial Closing Date. |
| 2 | NTD: To be the two month anniversary of the Initial Closing Date. |
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“Amortization Payment Shares” has the meaning set forth in Section 5(C)(iv).
“Amortization Stock Payment Date” has the meaning set forth in Section 5(C)(iv).
“Amortization Stock Payment Delivery Date” has the meaning set forth in Section 5(C)(iv).
“Amortization Stock Payment Notice” has the meaning set forth in Section 5(C)(i).
“Amortization Stock Payment Period” has the meaning set forth in Section 5(C)(iv).
“Anti-Corruption Laws” means all Requirements of Law concerning or relating to bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act of 2010, the Corruption of Foreign Public Officials Act (Canada), the UK Terrorism Act 2000, the UK Proceeds of Crime Act 2002 and the anti-bribery and anti-corruption laws and regulations of those jurisdictions in which the Company and its Subsidiaries do business.
“Anti-Money Laundering Laws” means all Requirements of Law concerning or relating to terrorism or money laundering, including, without limitation, the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956-1957), the USA PATRIOT Act and the Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5332 and 12 U.S.C. §§ 1818(s), 1820(b) and §§ 1951-1959) and the rules and regulations thereunder, and any law prohibiting or directed against the financing or support of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), Parts II.1 and XII.2 and Section 354 of the Criminal Code, the United Nations Act (Canada), Special Economic Measures Act (Canada), Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (Canada), and Freezing Assets of Corrupt Foreign Officials Act (Canada).
“Applicable Price” has the meaning set forth in Section 7(F)(ii)(1).
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issue Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Issuer Equity Interests would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
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“Authorized Denomination” means, with respect to the Notes, a Principal Amount thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof, or, if such Principal Amount then outstanding is less than $1,000, then such outstanding Principal Amount.
“Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal or state or non-U.S. law for the relief of debtors.
“Base Amount” means, as of any date, an amount equal to the then-outstanding Principal Amount of this Note less the product of (i) a fraction (expressed as a percentage), the numerator of which is the then-outstanding Principal Amount of this Note and the denominator of which is the aggregate then-outstanding Principal Amount of this Note and all Other Notes then-outstanding multiplied by (ii) the balance of Cash and Cash Equivalents then-held in the Controlled Cash Accounts on such date. For the avoidance of doubt, Stated Interest shall accrue solely on the Base Amount, and no Stated Interest shall accrue on any portion of the Principal Amount that corresponds to Cash and Cash Equivalents then-held in the Controlled Cash Accounts.
“Business Combination Event” has the meaning set forth in Section 9.
“Business Day” means any day other than a Saturday, a Sunday or any day on which commercial banks in The City of New York are authorized or required by law or executive order to close or be closed; provided, however, for clarification, commercial banks in The City of New York shall not be deemed to be authorized or required by law or executive order to close or be closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are open for use by customers on such day.
“Capital Lease” means, with respect to any Person, any leasing or similar arrangement conveying the right to use any property, whether real or personal property, or a combination thereof, by that Person as lessee that, in conformity with GAAP, is required to be accounted for as a capital lease on the balance sheet of such Person.
“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a Capital Lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.
“Capital Stock” of any Person means any and all shares of, interests (including, for the avoidance of doubt, partnership interests, limited partnership interests or other membership interests) in, rights to purchase, warrants or options for, participations in, or other equivalents of, in each case however designated, the equity of such Person, but excluding any debt securities convertible into such equity.
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“Cash” means all cash and liquid funds.
“Cash Collateral Release Conditions” will be deemed to be satisfied as of any date if: (i) the SPAC Transaction Effective Date has occurred on or prior to such date, (ii) no Event of Default will have occurred that has not been waived and no Default will have occurred and be continuing which has not been waived, (iii) the Equity Conditions are satisfied as of such date and (iv) the aggregate then-outstanding Principal Amount under this Note and all Other Notes, together with all accrued and unpaid interest thereon, less the balance of the Cash and Cash Equivalents in the Controlled Cash Account as of such date, does not exceed the lesser of (A) thirty five million dollars ($35,000,000) and (B) twenty percent (20%) of the Company’s Total Market Capitalization as of such date.
“Cash Equivalents” means, as of any date of determination, any of the following: (A) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government, or (ii) issued by any agency of the United States Government, the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one (1) year after such date; (B) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one (1) year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s Investors Service; (C) commercial paper maturing no more than one (1) year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s Investors Service; (D) certificates of deposit or bankers’ acceptances maturing within one (1) year after such date and issued or accepted by any commercial bank organized under the laws of the United States or any state thereof, or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary federal banking regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not less than $5,000,000,000; and (E) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (A) and (B) above, (ii) has net assets of not less than $5,000,000,000, and (iii) has the highest rating obtainable from either Standard & Poor’s Corporation or Moody’s Investors Service.
“Close of Business” means 5:00 p.m., New York City time.
“Collateral” has the meaning set forth in the Security Agreements.
“Collateral Agent” means HBC Collateral Agent LLC in its capacity as collateral agent for the Holder and each Other Holder, together with any successor thereto in such capacity.
“Commission” means the U.S. Securities and Exchange Commission.
“Common Equity” means (i) prior to the SPAC Transaction Effective Date, the shares of common stock, par value $0.001 per share, of the Company and (ii) on and after the SPAC Transaction Effective Date, the Issuer Equity Interests, in each case subject to Section 7(I).
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“Company” means (i) prior to the SPAC Transaction Effective Date, Space-Eyes, Inc., a Delaware corporation and (ii) upon and following the SPAC Transaction Effective Date, the SPAC.
“Company Redemption Certification” has the meaning set forth in Section 4(F)(iii).
“Company Redemption Compliance Period” has the meaning set forth in Section 4(F)(iii).
“Company Redemption Date” has the meaning set forth in Section 4(F)(i).
“Company Redemption Notice” has the meaning set forth in Section 4(F)(i).
“Company Redemption Price” means a cash amount equal to one hundred twenty five percent (125%) of the greater of (i) the then outstanding Principal Amount of this Note, plus accrued and unpaid interest on this Note and (ii) an amount equal to the product of (x) the number of Issuer Equity Interests that would be issued to the Holder pursuant to Section 7 if the Company converted this Note in full pursuant to Section 7 (without giving effect to the beneficial ownership limitations set forth in Section 7(I)) and, for such purposes, the Company Redemption Date was the Conversion Date, multiplied by (y) the greater of the Last Reported Sale Price on the date of the related Company Redemption Notice and the Last Reported Sale Price on the Trading Day immediately preceding the Company Redemption Date; provided, however, that if an aggregate amount of Cash equal to twenty million dollars ($20,000,000) has not been released from the Controlled Cash Account within twelve (12) months of the Issue Date, then, for so long as an aggregate amount of Cash equal to twenty million dollars ($20,000,000) has not been released from the Controlled Cash Account, the Company Redemption Price shall be calculated solely by reference to clause (i) above (and clause (ii) shall not apply).
“Compliance Certification” has the meaning set forth in Section 8(K)(ii).
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (A) any Indebtedness or other obligations of another Person, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (B) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (C) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
“Control Agreement” has the meaning set forth in the Security Agreements.
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“Controlled Cash Account” has the meaning set forth in Section 8(Z)(i).
“Conversion Consideration” has the meaning set forth in Section 7(D)(i).
“Conversion Date” means the first Business Day on which the requirements set forth in Section 7(C)(i) to convert this Note are satisfied.
“Conversion Price” means, as of any time, an amount equal to (A) one thousand dollars ($1,000) divided by (B) the Conversion Rate in effect at such time.
“Conversion Rate” initially means a number of Issuer Equity Interests per $1,000 Principal Amount of Notes equal to one thousand dollars ($1,000) divided by the lower of (i) twelve dollars ($12.00) and (ii) one hundred twenty percent (120%) of the Last Reported Sale Price of the Issuer Equity Interests on the SPAC Transaction Effective Date (or, if such date is not a Trading Day, the Last Reported Sale Price of the Issuer Equity Interests on the Trading Day immediately following the SPAC Transaction Effective Date), provided, however, that on the Reset Date, the Conversion Rate shall be reset (but only if such reset would result in an upward adjustment to the Conversion Rate) to the Reset Conversion Rate; provided, however, that the Conversion Rate is subject to adjustment pursuant to Section 7; provided, further, that whenever this Note refers to the Conversion Rate as of a particular date without setting forth a particular time on such date, such reference will be deemed to be to the Conversion Rate immediately after the Close of Business on such date.
“Conversion Settlement Date” has the meaning set forth in Section 7(D)(iii).
“Convertible Securities” means any Capital Stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Issuer Equity Interests.
“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by the Company or in which the Company now holds or hereafter acquires any interest.
“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, or of any other country.
“Covering Price” has the meaning set forth in Section 7(D)(iv)(1).
“Daily VWAP” means, for any VWAP Trading Day, the per share volume-weighted average price of the Issuer Equity Interests on the applicable tier of The Nasdaq Stock Market LLC (“Nasdaq”) (or the principal, in terms of volume, Eligible Exchange on which the Issuer Equity Interests are listed for trading) as displayed under the heading “Bloomberg VWAP” on the Bloomberg page “CUAS <EQUITY> VAP” (or its successor page if such page is not available or if the Company changes its ticker symbol) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or, if such volume-weighted average price is unavailable, the market value of one Issuer Equity Interest on such VWAP Trading Day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm selected by the Company). The Daily VWAP will be determined without regard to after-hours trading or any other trading outside of the regular trading session.
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“Default” means any event that is (or, after notice, passage of time or both, would be) an Event of Default.
“Default Interest” has the meaning set forth in Section 10(D).
“Deferred Amortization Payment” has the meaning set forth in Section 4(A).
“Deferred Holder Redemption Payment” has the meaning set forth in Section 4(B).
“Dilutive Issuance” has the meaning set forth in Section 7(F)(ii)(1).
“Directors” means (i) prior to the SPAC Transaction Effective Date, the board of directors of the Company and (ii) upon and following the SPAC Transaction Effective Date, the board of directors of the SPAC.
“Disqualified Stock” means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(A) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;
(B) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the option of the Company or a Subsidiary of the Company; provided that any such conversion or exchange will be deemed an incurrence of Indebtedness or Disqualified Stock, as applicable); or
(C) is redeemable at the option of the holder thereof, in whole or in part,
(D) in the case of each of clauses (A), (B) and (C), at any point prior to the one hundred eighty-first (181st) day after the Maturity Date.
“DTC” means The Depository Trust Company.
“Eligible Exchange” means any of the New York Stock Exchange, the NYSE American LLC, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (or any of their respective successors).
“Equipment” means all “equipment” as defined in the UCC with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.
“Equity Change Event” has the meaning set forth in Section 7(H)(i).
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“Equity Conditions” will be deemed to be satisfied as of any date if all of the following conditions are satisfied as of such date and on each of the twenty five (25) previous Trading Days: (A) the Issuer Equity Interests issuable pursuant to this Note are Freely Tradable; (B) the Holder is not in possession of any material non-public information; (C) the issuance of such Issuer Equity Interests will not be limited by Section 7(I); (D) such Issuer Equity Interests will satisfy Section 7(F)(i); (E) no pending, proposed or intended Fundamental Change has occurred that has not been abandoned, terminated or consummated; (F) the Daily VWAP per Issuer Equity Interest on Nasdaq is not less than seven dollars ($7.00) per Issuer Equity Interest (subject to proportionate adjustments for events of the type set forth in Section 7(F)(i)(1)); (G) the daily dollar trading volume (as reported on Bloomberg) of the Issuer Equity Interests on Nasdaq is not less than five million dollars ($5,000,000); (H) no delisting or suspension by the principal, in terms of volume, Eligible Exchange on which the Company is then listed or traded has been threatened (with a reasonable prospect of delisting or suspension occurring after giving effect to all applicable notice, appeal, compliance and hearing periods) or is reasonably likely to occur or pending as evidenced by (x) a writing by such Eligible Exchange or (y) the Company falling below the minimum listing maintenance requirements, if applicable, of such Eligible Exchange; and (I) no Event of Default will have occurred that has not been waived and no Default will have occurred and be continuing which has not been waived.
“Equity Interest” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including preferred stock or membership interests (however designated, whether voting or non-voting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act), and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership.
“Equity Interest Payment Determination Date” means (i) with respect to an Amortization Payment in Issuer Equity Interests, the applicable Amortization Date, (ii) with respect to a payment of Stated Interest in Issuer Equity Interests in accordance with Section 5(B), the related Interest Payment Date, (iii) with respect to an Event of Default Equity Payment, the date of delivery of the related Event of Default Equity Payment Notice, and (iv) with respect to the delivery of Conversion Consideration, the related Conversion Date.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Event of Default” has the meaning set forth in Section 10(A).
“Event of Default Acceleration Amount” means, with respect to the delivery of a notice pursuant to Section 10(B)(ii) declaring this Note to be due and payable immediately on account of an Event of Default, a cash amount equal to (x) if the Event of Default Notice is delivered before the SPAC Transaction Effective Date, the sum of (A) one hundred twenty-five percent (125%) of the then outstanding Principal Amount of this Note (or such lesser principal amount accelerated pursuant to such notice) and (B) the accrued and unpaid interest on this Note and (y) if the Event of Default Notice is delivered on or after the SPAC Transaction Effective Date, the greater of (A) the sum of (i) one hundred twenty-five percent (125%) of the then outstanding Principal Amount of this Note (or such lesser principal amount accelerated pursuant to such notice) and (ii) the accrued and unpaid interest on this Note and (B) the sum of (i) one hundred twenty-five percent (125%) of the product of (a) the Conversion Rate in effect as of the Trading Day immediately preceding the date that the Holder delivers such notice pursuant to Section 10(B)(ii); (b) the total then outstanding Principal Amount (expressed in thousands) of this Note; and (c) the greater of (x) the highest Daily VWAP per Issuer Equity Interest occurring during the thirty (30) consecutive VWAP Trading Days ending on, and including, the VWAP Trading Day immediately before the date the Holder delivers such notice pursuant to Section 10(B)(ii) and (y) the highest Daily VWAP per Issuer Equity Interest occurring during the thirty (30) consecutive VWAP Trading Days ending on, and including, the VWAP Trading Day immediately before the date the applicable Event of Default occurred (or the date on which the Default underlying such Event of Default initially occurred, if different than the date on which the Event of Default occurred) and (ii) the accrued and unpaid interest on this Note.
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“Event of Default Equity Payment” has the meaning set forth in Section 5(E).
“Event of Default Equity Payment Date” means any date on which the Holder delivers an Event of Default Equity Payment Notice pursuant to Section 5(E) hereunder.
“Event of Default Equity Payment Delivery Date” has the meaning set forth in Section 5(E).
“Event of Default Equity Payment Notice” has the meaning set forth in Section 5(E).
“Event of Default Equity Payment Shares” has the meaning set forth in Section 5(E).
“Event of Default Notice” has the meaning set forth in Section 10(C).
“Ex-Dividend Date” means, with respect to an issuance, dividend or distribution on the Issuer Equity Interests, the first date on which the Issuer Equity Interests trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance, dividend or distribution (including pursuant to due bills or similar arrangements required by the relevant stock exchange). For the avoidance of doubt, any alternative trading convention on the applicable exchange or market in respect of the Issuer Equity Interests under a separate ticker symbol or CUSIP number will not be considered “regular way” for this purpose.
“Excess Units” has the meaning set forth in Section 7(I).
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Existing Secured Notes” means those certain secured promissory notes issued by the Company to certain holders pursuant to (a) the Securities Purchase Agreement, dated as of August 19, 2025, and accepted by the Issuer, as to the Purchasers (as defined therein) on August 19, 2025, September 2, 2025, September 15, 2025, September 29, 2025, and (b) the Securities Purchase Agreement, dated as of April 20, 2026, and accepted by the Issuer, as to the Purchasers (as defined therein) on April 20, 2026 (the “Purchase Agreement”), in each case as in effect on the Issue Date (but not as amended, restated, supplemented or otherwise modified after the Issue Date except as permitted by clause (H) of the definition of Permitted Indebtedness).
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“Expiration Date” has the meaning set forth in Section 7(F)(i)(5).
“Expiration Time” has the meaning set forth in Section 7(F)(i)(5).
“Freely Tradable” means, with respect to any Issuer Equity Interests issued or issuable pursuant to this Note, that (A) such shares would be eligible to be offered, sold or otherwise transferred by the Holder pursuant to Rule 144, without any requirements as to volume, manner of sale, availability of current public information (whether or not then satisfied) or notice under the Securities Act and without any requirement for registration under any state securities or “blue sky” laws; (B) such shares are (or, when issued, will be) (i) represented by book-entries at DTC and identified therein by an “unrestricted” CUSIP number; (ii) not represented by any certificate that bears a legend referring to transfer restrictions under the Securities Act or other securities laws; and (iii) listed and admitted for trading, without suspension or material limitation on trading, on such Eligible Exchange; and (C) no delisting or suspension by such Eligible Exchange is pending or has been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (x) a writing by such Eligible Exchange or (y) the Company falling below the minimum listing maintenance requirements of such Eligible Exchange.
“Fundamental Change” means any of the following events:
(A) a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than the Company or its Wholly Owned Subsidiaries, or the employee benefit plans of the Company or its Wholly Owned Subsidiaries, files any report with the Commission indicating that such person or group has become the direct or indirect “beneficial owner” (as defined below) of shares of the Company’s common equity representing more than fifty percent (50%) of the voting power of all of the Company’s then outstanding common equity;
(B) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person (other than solely to one or more of the Company’s Wholly Owned Subsidiaries); or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Issuer Equity Interests are exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property (other than a subdivision or combination, or solely a change in par value, of the Issuer Equity Interests); provided, however, that any merger, consolidation, share exchange or combination of the Company pursuant to which the Persons that directly or indirectly “beneficially owned” (as defined below) all classes of the Company’s common equity immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50%) of all classes of common equity of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction will be deemed not to be a Fundamental Change pursuant to this clause (B);
(C) the Company’s equityholders approve any plan or proposal for the liquidation or dissolution of the Company; or
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(D) following the SPAC Transaction Effective Date, the Issuer Equity Interests cease to be listed on any Eligible Exchange.
For purposes of this definition, (x) any transaction or event described in both clause (A) and in clause (B) above (without regard to the proviso in clause (B)) will be deemed to occur solely pursuant to clause (B) above (subject to such proviso); (y) whether a Person is a “beneficial owner” and whether shares are “beneficially owned” will be determined in accordance with Rule 13d-3 under the Exchange Act, and (z) the SPAC Transaction shall not qualify as a Fundamental Change.
“Fundamental Change Notice” has the meaning set forth in Section 6(C).
“Fundamental Change Repurchase Date” means the date as of which this Note must be repurchased for cash in connection with a Fundamental Change, as provided in Section 6(B).
“Fundamental Change Repurchase Price” means, with respect to this Note (or any portion of this Note to be repurchased) upon a Repurchase Upon Fundamental Change, a cash amount equal to the sum of (i) one hundred twenty five percent (125%) of the then outstanding Principal Amount of this Note (or such lesser principal amount accelerated pursuant to such notice), plus (ii) accrued and unpaid interest on this Note to be so repurchased.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided the definitions set forth in this Note and any financial calculations required thereby shall be computed to exclude any change to lease accounting rules from those in effect pursuant to Financial Accounting Standards Board Accounting Standards Codification 840 (Leases) and other related lease accounting guidance as in effect on the date hereof.
“Governmental Authority” means any nation or government, any foreign, Federal, state, national, territory, provincial, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Holder” means the person in whose name this Note is registered on the books of the Company, which initially is the Initial Holder.
“Holder Amortization Funding Notice” has the meaning set forth in Section 5(C)(ii).
“Holder Conversion Notice” has the meaning set forth in Section 7(C)(i).
“Holder Redemption Date” means the date specified as the Holder Redemption Date by the Holder in the applicable Holder Redemption Notice.
“Holder Redemption Notice” has the meaning set forth in Section 4(B).
“Holder Redemption Payment” has the meaning set forth in Section 4(B).
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The term “including” means “including without limitation,” unless the context provides otherwise.
“Indebtedness” means, indebtedness of any kind, including, without duplication (A) all indebtedness for borrowed money or the deferred purchase price of property or services, including reimbursement and other obligations with respect to surety bonds and letters of credit, (B) all obligations evidenced by notes, bonds, debentures or similar instruments, (C) all Capital Lease Obligations, (D) all Contingent Obligations, and (E) Disqualified Stock.
“Independent Investigator” has the meaning set forth in Section 8(S).
“Information Statement” means any written document delivered to the Holder to satisfy the Company’s obligations pursuant to Section 8(X).
“Initial Closing Date” has the meaning set forth in the Securities Purchase Agreement.
“Initial Holder” has the meaning set forth in the cover page of this Note.
“Intellectual Property” means all of the Company’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; the Company’s applications therefor and reissues, extensions, or renewals thereof; and the Company’s goodwill associated with any of the foregoing, together with the Company’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.
“Intercreditor Agreement” means that certain intercreditor and subordination agreement, dated as of or prior to the Issue Date, among the Collateral Agent (on behalf of the Holder and each Other Holder), Christopher Carlin, as agent for the holders of the Existing Secured Notes and the Company, in form and substance reasonably satisfactory to the Collateral Agent, pursuant to which the Liens securing the Existing Secured Notes are subordinated and made junior to the Liens securing the Notes.
“Interest Payment Date” means (A) the first day of each calendar month, beginning on [●], 2026; and (B) if not otherwise included in clause (A), the Maturity Date.
“Interest Payment Shares” has the meaning set forth in Section 5(B).
“Investment” means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person or the purchase of any assets of another Person for greater than the fair market value of such assets to solely the extent of the amount in excess of the fair market value.
“Issue Date” means [ ● ], 2026.
“Issuer Equity Interests” means the shares of common stock, the ordinary shares, or the similar common equity securities of the SPAC, subject to Section 7(H).
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“Last Reported Sale Price” of the Issuer Equity Interests for any Trading Day means the closing sale price per Issuer Equity Interest (or, if no closing sale price is reported, the average of the last bid price and the last ask price per Issuer Equity Interest or, if more than one in either case, the average of the average last bid prices and the average last ask prices per Issuer Equity Interest) on such Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Issuer Equity Interests are then listed. If the Issuer Equity Interests are not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last quoted bid price per share of Issuer Equity Interests on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. If the Issuer Equity Interests are not so quoted on such Trading Day, then the Last Reported Sale Price will be the average of the mid-point of the last bid price and the last ask price per Issuer Equity Interest on such Trading Day from a nationally recognized independent investment banking firm selected by the Company.
“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest; provided, that for the avoidance of doubt, licenses, strain escrows and similar provisions in collaboration agreements, research and development agreements that do not create or purport to create a security interest, encumbrance, levy, lien or charge of any kind shall not be deemed to be Liens for purposes of this Note.
“Market Disruption Event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled close of trading on such date on the principal, in terms of volume, Eligible Exchange on which the Issuer Equity Interests are listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Issuer Equity Interests or in any options contracts or futures contracts relating to the Issuer Equity Interests.
“Market Equity Payment Price” means, with respect to any Event of Default Equity Payment Date, an amount equal to eighty two percent (82%) of the lesser of (a) the Daily VWAP on the VWAP Trading Day immediately prior to such Event of Default Equity Payment Date, as applicable, and (b) the lowest Daily VWAP during the ten (10) VWAP Trading Day period ending on and including the VWAP Trading Day immediately prior to the delivery of the relevant Event of Default Equity Payment Notice.
“Maturity Date” means [●], 2031.
“Maximum Percentage” has the meaning set forth in Section 7(I).
“Minimum Cash Collateral Amount” means, at the time any determination is to be made, the aggregate amount of Cash and Cash Equivalents required to be held in a Controlled Cash Account in accordance with Section 8(Z) less the aggregate amount of Cash and Cash Equivalents that the Company may request to be released from the Controlled Cash Account in accordance with Section 8(Z)(iii).
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“Minimum Liquidity Control Account” has the meaning set forth in Section 8(K)(i).
“Modified Option/Convertible Security Terms” has the meaning set forth in Section 7(F)(ii)(1)(c).
“New Issuance Price” has the meaning set forth in Section 7(F)(ii)(1).
“Open of Business” means 9:00 a.m., New York City time.
“Options” means any rights, warrants or options to subscribe for or purchase Issuer Equity Interests or Convertible Securities.
The term “or” is not exclusive, unless the context expressly provides otherwise.
“Other Holder” means any person in whose name any Other Note is registered on the books of the Company.
“Other Notes” means any Notes that are of the same class of this Note and that are represented by one or more certificates other than the certificate representing this Note.
“Patent License” means any written agreement granting any right with respect to any invention covered by a Patent that is in existence or a Patent application that is pending, in which agreement the Company now holds or hereafter acquires any interest.
“Patents” means all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country.
“Permitted Indebtedness” means (A) Indebtedness evidenced by this Note and all other Senior Secured Convertible Notes issued pursuant to the Securities Purchase Agreement; (B) Indebtedness actually disclosed pursuant to the Securities Purchase Agreement as of the date of the Securities Purchase Agreement; (C) Indebtedness to trade creditors incurred in the ordinary course of business consistent with past practices; (D) Subordinated Indebtedness of the Company; (E) reimbursement obligations in connection with letters of credit or similar instruments that are secured by Cash or Cash Equivalents and issued on behalf of the Company or a Subsidiary thereof in an aggregate amount not to exceed fifty thousand dollars ($50,000) at any time outstanding, (F) Indebtedness outstanding at any time secured by a Lien described in clause (L) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the cost of the Equipment or real property interests and related expenses financed with such Indebtedness or in the form of purchase money Indebtedness (whether in the form of a loan or a lease) used solely to acquire Equipment or real property interests used in the ordinary course of business and secured only by such equipment and sale and insurance proceeds in respect thereof; provided that the total amount of Permitted Indebtedness described in this clause (F) may not exceed fifty thousand dollars ($50,000) in the aggregate, (G) Permitted Project Financing Indebtedness, (H) the Existing Secured Notes, together with accrued and unpaid interest thereon and any fees and expenses payable thereunder; provided that (x) such Existing Secured Notes are not amended, restated, supplemented or otherwise modified in any manner that is adverse to the Company (other than amendments that are ministerial in nature) without the prior written consent of the Required Holders, (y) no additional Indebtedness is incurred under or in respect of such Existing Secured Notes following the Issue Date, and (z) the holders of such Existing Secured Notes shall have entered into an Intercreditor Agreement in form and substance reasonably satisfactory to the Collateral Agent; (I) Contingent Obligations that are guarantees of the Indebtedness described in clauses (A) through (K); (J) any Permitted Pre-DeSPAC Financing (as defined in the Securities Purchase Agreement); and (K) Indebtedness incurred by a Designated Acquisition Financing Subsidiary (as defined in the Securities Purchase Agreement) that is (x) secured solely by the assets of such Designated Acquisition Financing Subsidiary and is not secured by any assets of the Company or any other Subsidiary (other than such Designated Acquisition Financing Subsidiary), (y) non-recourse to the Company and each other Subsidiary (other than such Designated Acquisition Financing Subsidiary) and (z) not guaranteed by the Company or any other Subsidiary.
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“Permitted Intellectual Property Licenses” means (A) Intellectual Property licenses actually disclosed pursuant to the Securities Purchase Agreement as of the date of the Securities Purchase Agreement, and (B) non-perpetual Intellectual Property licenses granted in the ordinary course of business on arm’s length terms consisting of the licensing of technology, the development of technology or the providing of technical support which may include licenses with unlimited renewal options solely to the extent such options require mutual consent for renewal or are subject to financial or other conditions as to the ability of licensee to perform under the license; provided such license was not entered into during an Event of Default or continuance of a Default.
“Permitted Investment” means: (A) Investments actually disclosed pursuant to the Securities Purchase Agreement, as in effect as of the Issue Date; (B) (i) marketable direct obligations issued or unconditionally guaranteed by the United States Government or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) certificates of deposit issued by any bank headquartered in the United States with assets of at least five billion dollars ($5,000,000,000) maturing no more than one year from the date of investment therein, and (iv) money market accounts; (C) Investments accepted in connection with Permitted Transfers; (D) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of the Company’s business; (E) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers in the ordinary course of business and consistent with past practice, provided that this clause (E) shall not apply to Investments of the Company in any Subsidiary thereof; (F) Investments consisting of (i) loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of Capital Stock of the Company pursuant to employee stock purchase plans or other similar agreements approved by the Company’s Directors and (ii) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, provided that the aggregate of all such loans outstanding may not exceed fifty thousand dollars ($50,000) at any time; (G) Investments in Wholly Owned Subsidiaries; (H) Permitted Intellectual Property Licenses; and (I) additional Investments that do not exceed fifty thousand dollars ($50,000) in the aggregate in any twelve (12) month period.
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“Permitted Liens” means any and all of the following: (A) Liens deemed to be disclosed pursuant to the Securities Purchase Agreement, as in effect as of the Issue Date; (B) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; provided, that the Company maintains adequate reserves therefor in accordance with GAAP; (C) Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of business; provided, that (i) the payment thereof is not yet required or the amount is being disputed in good faith by appropriate proceedings and appropriate reserves have been made as required by GAAP, (ii) such Liens do not attach to any material Intellectual Property or the Capital Stock of any Subsidiary, and (iii) such Liens shall be discharged within sixty (60) days of the date on which payment thereof becomes due (unless being contested in good faith by appropriate proceedings); (D) Liens arising from judgments, decrees or attachments in circumstances which do not constitute a Default or an Event of Default hereunder; (E) the following deposits, to the extent made in the ordinary course of business: deposits under workers’ compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (F) leasehold interests in leases or subleases and licenses granted in the ordinary course of the Company’s business and not interfering in any material respect with the business of the licensor; (G) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due; (H) Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property or assets); (I) statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; (J) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property; (K) Liens on Cash or Cash Equivalents securing obligations permitted under clauses (C) and (E) of the definition of Permitted Indebtedness; (L) Liens on Equipment or software or other intellectual property constituting purchase money Liens and Liens in connection with Capital Leases securing Indebtedness permitted in clause (F) of the definition of Permitted Indebtedness, (M) Liens in favor of Holder or the Collateral Agent; (N) first priority Liens granted by any Project Financing Subsidiary on the assets of such Project Financing Subsidiary that were purchased using the proceeds of Permitted Project Financing Indebtedness permitted under clause (G) of the definition of Permitted Indebtedness; (O) Liens on the Collateral securing the Existing Secured Notes, provided that such Liens are at all times junior and subordinate in priority to the Liens in favor of the Holder and the Collateral Agent securing the Notes, and subject to the terms of the Intercreditor Agreement; and (P) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (B) through (K) above (other than any Indebtedness repaid with the proceeds of this Note); provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any payment thereon) does not increase.
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“Permitted Project Financing Indebtedness” means Indebtedness incurred by a Project Financing Subsidiary that satisfies each of the following conditions: (A) such Indebtedness shall be incurred solely in the form of Spaceport Bonds to finance qualified spaceport facilities of the applicable Project Financing Subsidiary; (B) the aggregate principal amount of all such Indebtedness outstanding at any time across all Project Financing Subsidiaries shall not exceed one hundred million dollars ($100,000,000); (C) such Indebtedness is secured solely by the assets of the applicable Project Financing Subsidiary and is not secured by any assets of the Company or any other Subsidiary (other than the applicable Project Financing Subsidiary); (D) such Indebtedness shall be non-recourse to the Company and each other Subsidiary (other than the applicable Project Financing Subsidiary); (E) such Indebtedness shall not be guaranteed by the Company or any other Subsidiary; (F) the Required Holders shall have consented in writing to the incurrence of such Indebtedness (such consent not to be unreasonably withheld, conditioned, or delayed upon the satisfaction of conditions (A) through (E) and (G) in this paragraph); and (G) at the time of the incurrence of such Indebtedness, no Event of Default shall have occurred that has not been waived and no Default shall have occurred and be continuing which has not been waived.
“Permitted Transfers” means (A) dispositions of inventory sold, and Permitted Intellectual Property Licenses entered into, in each case, in the ordinary course of business, (B) dispositions of worn-out, obsolete or surplus property at fair market value in the ordinary course of business; (C) dispositions of accounts or payment intangibles (each as defined in the UCC) resulting from the compromise or settlement thereof in the ordinary course of business for less than the full amount thereof; (D) transfers consisting of Permitted Investments in Wholly Owned Subsidiaries under clause (G) of Permitted Investments; and (E) other transfers of assets to any Person other than to a joint venture and which have a fair market value of not more than one hundred thousand dollars ($100,000) in the aggregate in any twelve (12) month period.
“Person” or “person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
“PIK Amount” means, on any Interest Payment Date on which a payment of Stated Interest is made in kind pursuant to Section 4(C), the amount by which the Principal Amount increased on such Interest Payment Date.
“PIK Interest Notice” has the meaning set forth in Section 4(C).
“Primary Security” has the meaning set forth in Section 7(F)(ii)(1)(d).
“Principal Amount” has the meaning set forth in the cover page of this Note; provided, however, that the Principal Amount of this Note will be subject to (i) reduction (A) pursuant to Section 5, Section 6, and Section 7, (B) by an amount equal to (i) the sum of all Holder Redemption Payments (including any Deferred Holder Redemption Payments) or Amortization Payments (including any Accelerated Amortization Payments or Deferred Amortization Payments) made prior to the date of determination of the Principal Amount of the Note then outstanding, divided by (ii) one and five hundredths (1.05), and (C) by an amount equal to (x) the sum of all payments of the Company Redemption Price pursuant to Section 4(F) made prior to date of determination of the Principal Amount of the Note then outstanding, divided by (y) one and twenty five hundredths (1.25), in each case pursuant to this clause (i) solely to the extent such payment is applied to reduce the Principal Amount (and not to the extent applied to accrued and unpaid interest) and (ii) accretion to the extent any payment of Stated Interest is paid in kind pursuant to Section 4(C).
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“Project Financing Subsidiary” means any Subsidiary of the Company that is formed solely for the purpose of incurring Permitted Project Financing Indebtedness and owning, constructing, developing, operating, and/or financing qualified spaceport facilities; provided that (i) such Subsidiary is a Wholly Owned Subsidiary of the Company and (ii) such Subsidiary is organized as a special purpose entity with limited recourse financing protections.
“Reference Property” has the meaning set forth in Section 7(H)(i)(4).
“Reference Property Unit” has the meaning set forth in Section 7(H)(i)(4).
“Reported Outstanding Interest Number” has the meaning set forth in Section 7(I).
“Repurchase Upon Fundamental Change” means the repurchase of any Note by the Company pursuant to Section 6.
“Required Holders” has the meaning set forth in the Securities Purchase Agreement.
“Required Reserve Amount” has the meaning set forth in Section 8(R).
“Requirements of Law” means, with respect to any Person, collectively, the common law and any and all federal, state, provincial, territorial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities), and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of any Governmental Authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Reset Conversion Rate” means a number of Issuer Equity Interests per $1,000 Principal Amount of Notes equal to one thousand dollars ($1,000) divided by the Last Reported Sale Price (which shall not be less than $5.00) of the Issuer Equity Interests on the Reset Date (or, if such date is not a Trading Day, the Last Reported Sale Price of the Issuer Equity Interests on the immediately preceding Trading Day), provided, however, that the Reset Conversion Rate is subject to adjustment pursuant to Section 7.
“Reset Date” means the six (6) month anniversary of the Subsequent Closing Date (as defined in the Securities Purchase Agreement).
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“Rule 144” means Rule 144 promulgated under the Securities Act.
“Scheduled Trading Day” means any day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange on which the Issuer Equity Interests are then listed or, if the Issuer Equity Interests are not then listed on a U.S. national or regional securities exchange, on the principal, in terms of volume, Eligible Exchange on which the Issuer Equity Interests are listed for trading or, if the Issuer Equity Interests are not so listed or traded, then a Business Day.
“Secondary Security” has the meaning set forth in Section 7(F)(ii)(1)(d).
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Securities Purchase Agreement” means that certain Securities Purchase Agreement, dated as of [ ● ], 2026 between the Company, the SPAC and HBC Investment Ltd. providing for the issuance of this Note.
“Security Agreements” means those certain security agreements, dated [ ● ], 2026 between the Company and the Collateral Agent.
“Security Document” has the meaning set forth in the Security Agreements.
“Significant Subsidiary” means, with respect to any Person, any Subsidiary of such Person that constitutes a “significant subsidiary” (as defined in Rule 1-02(w) of Regulation S-X under the Exchange Act) of such Person.
“SPAC” means McKinley Acquisition Corp., a Cayman Islands exempted company.
“SPAC Transaction” means the Business Combination between Space-Eyes and the SPAC.
“SPAC Transaction Agreement” means that certain Business Combination Agreement by and between Space-Eyes, the SPAC, and McKinley Acquisition Merger Sub Inc., in the form provided to the Holders on the Issue Date.
“SPAC Transaction Effective Date” means the date that the SPAC Transaction consummates.
“Space-Eyes” means Space-Eyes, Inc., a Delaware corporation.
“Spaceport Bonds” has the meaning set forth in Section 13602 of the Internal Revenue Code of 1986, as amended.
“Spin-Off” has the meaning set forth in Section 7(F)(i)(3)(b).
“Spin-Off Valuation Period” has the meaning set forth in Section 7(F)(i)(3)(b).
“Stated Interest” has the meaning set forth in Section 4(C).
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“Stated Interest Rate” means, as of any date, a rate per annum equal to ten percent (10%).
“Stated Interest Stock Payment Notice” has the meaning set forth in Section 5(B).
“Subordinated Indebtedness” means Indebtedness subordinated to the Notes pursuant to a written agreement between the Required Holders and the applicable lender in amounts and on terms and conditions satisfactory to the Required Holders in their sole discretion.
“Subsequent Closing Share Balance” has the meaning set forth in the Securities Purchase Agreement.
“Subsequent Closing Shares” has the meaning set forth in the Securities Purchase Agreement.
“Subsidiary” means, with respect to any Person, (A) any corporation, association or other business entity (other than a partnership or limited liability company) of which more than fifty percent (50%) of the total voting power of the Capital Stock entitled (without regard to the occurrence of any contingency, but after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (B) any partnership or limited liability company where (i) more than fifty percent (50%) of the capital accounts, distribution rights, equity and voting interests, or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general, special or limited partnership or limited liability company interests or otherwise; and (ii) such Person or any one or more of the other Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
“Successor Corporation” has the meaning set forth in Section 9(A).
“Successor Person” has the meaning set forth in Section 7(H)(i).
“Tender/Exchange Offer Valuation Period” has the meaning set forth in Section 7(F)(i)(5).
“Total Market Capitalization” means, with respect to any date of determination, the product of (i) the Reported Outstanding Interest Number on such date, less (x) any Issuer Equity Interests then-held by any Affiliates of the Company and (y) any restricted Issuer Equity Interests then-issued and outstanding and (ii) the Daily VWAP on such date.
“Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by the Company or in which the Company now holds or hereafter acquires any interest.
“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof.
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“Trading Day” means any day on which (A) trading in the Issuer Equity Interests generally occurs on the principal U.S. national or regional securities exchange on which the Issuer Equity Interests are then listed or, if the Issuer Equity Interests are not then listed on a U.S. national or regional securities exchange, on the principal, in terms of volume, Eligible Exchange on which the Issuer Equity Interests are listed for trading; and (B) there is no Market Disruption Event, provided that the Holder, by written notice to the Company, may waive any such Market Disruption Event. If the Issuer Equity Interests are not so listed or traded, then, with respect to the Issuer Equity Interests, “Trading Day” means a Business Day.
“Transaction Documents” has the meaning set forth in the Securities Purchase Agreement.
“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of Delaware.
“Undelivered Equity Interests” has the meaning set forth in Section 7(D)(iv).
“Unit” has the meaning set forth in Section 7(F)(ii)(1)(d).
“Valuation Event” has the meaning set forth in Section 7(F)(ii)(1)(d).
“Variable Price” has the meaning set forth in Section 7(F)(ii)(2).
“Variable Price Securities” has the meaning set forth in Section 7(F)(ii)(2).
“Variable Rate Transaction” means a transaction in which the Company or any Subsidiary (A) issues or sells any Convertible Securities either (i) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Equity at any time after the initial issuance of such Convertible Securities, or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Equity, other than pursuant to customary adjustments for stock splits, stock dividends, stock combinations, recapitalizations and similar events or (B) enters into any agreement (including, without limitation, an equity line of credit) whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights); provided that, for avoidance of doubt, an “at-the-market” offering within the meaning of Rule 415(a)(4) of the Securities Act shall not be a “Variable Rate Transaction”, provided that issuances thereunder otherwise comply with the Transaction Documents.
“VWAP Market Disruption Event” means, with respect to any date, (A) the failure by the principal U.S. national or regional securities exchange on which the Issuer Equity Interests are then listed, or, if the Issuer Equity Interests are not then listed on a U.S. national or regional securities exchange, the principal, in terms of volume, Eligible Exchange on which the Issuer Equity Interests are then traded, to open for trading during its regular trading session on such date; or (B) the occurrence or existence, for more than one half hour period in the aggregate, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Issuer Equity Interests or in any options contracts or futures contracts relating to the Issuer Equity Interests, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such date.
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“VWAP Trading Day” means a day on which (A) there is no VWAP Market Disruption Event; provided that the Holder, by written notice to the Company, may waive any such VWAP Market Disruption Event; and (B) trading in the Issuer Equity Interests generally occurs on the principal U.S. national or regional securities exchange on which the Issuer Equity Interests are then listed or, if the Issuer Equity Interests are not then listed on a U.S. national or regional securities exchange, on the principal, in terms of volume, Eligible Exchange on which the Issuer Equity Interests are then traded. If the Issuer Equity Interests are not so listed or traded, then “VWAP Trading Day” means a Business Day.
“Wholly Owned Subsidiary” of a Person means any Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) are owned by such Person or one or more Wholly Owned Subsidiaries of such Person.
Section 2. Persons Deemed Owners.
The Holder of this Note will be treated as the owner of this Note for all purposes.
Section 3. Registered Form.
This Note, and any Note issued in exchange therefor or in substitution thereof, will be in registered form, without coupons.
Section 4. Amortization Payments; Holder Redemption Payments; Interest; Maturity Date Payment; Prepayment.
(A) Amortization Payment. If the Holder wishes to elect to require the Company to make an Amortization Payment with respect to this Note, the Holder shall deliver to the Company a written notice of any such election (an “Amortization Notice”) at least thirty (30) days prior to the applicable Amortization Date in order to make an effective election. Subject to the provisions of Section 5(C), the Company shall pay the Holder the Amortization Payment by wire transfer of immediately available funds on the applicable Amortization Date. Notwithstanding the foregoing, the Holder may, in its sole discretion, subsequently defer any Amortization Payment (including any prior Deferred Amortization Payment) (or any portion thereof) one or more times prior to the applicable Amortization Date to any subsequent Amortization Date (in which case such deferred Amortization Payment shall become a “Deferred Amortization Payment”), in which case, subject to the provisions of Section 5(C), on the applicable Amortization Date, the Company will pay the Holder an amount in cash equal to such Amortization Payment (including any Deferred Amortization Payment) to be paid on such date. Any Amortization Payment (including any Deferred Amortization Payments) paid pursuant to this Section 4(A) shall reduce the Principal Amount by such paid amount divided by one hundred and five percent (105%). If this Note (or any portion of this Note) is to be paid pursuant to this Section 4(A), then, from and after the date the related Amortization Payment is paid in full, this Note (or such portion) will cease to be outstanding and interest will cease to accrue on this Note (or such portion).
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(B) Holder Redemption Payments. If at any time the Holder wishes to elect to require the Company to redeem all or a portion of this Note for a Holder Redemption Payment (including any Deferred Holder Redemption Payments), the Holder shall deliver to the Company a written notice of any such election (a “Holder Redemption Notice”), including the applicable amount of such redemption (together with any Deferred Holder Redemption Payment, the “Holder Redemption Payment”), at least ten (10) Business Days prior to the applicable Holder Redemption Date in order to make an effective election; provided that the applicable Holder Redemption Date shall be no earlier than the second anniversary of the Subsequent Closing Date (as defined in the Securities Purchase Agreement). The Company shall pay the Holder the Holder Redemption Payment by wire transfer of immediately available funds on the applicable Holder Redemption Date; provided, that the Holder shall have the right to convert any Holder Redemption Payment or Deferred Holder Redemption Payment (as defined below) (or any applicable portion thereof) into Issuer Equity Interests pursuant to Section 7 hereof at any time prior to the receipt of the applicable Holder Redemption Payment or Deferred Holder Redemption Payment from the Company. Notwithstanding the foregoing, the Holder may, in its sole discretion, despite such election, subsequently defer any Holder Redemption Payment (including any prior Deferred Holder Redemption Payment) (or any portion thereof) one or more times prior to the applicable Holder Redemption Date to any subsequent Holder Redemption Date (in which case such deferred Holder Redemption Payment shall become a “Deferred Holder Redemption Payment”), in which case, on the applicable Holder Redemption Date, the Company will pay the Holder an amount in cash equal to such Holder Redemption Payment (including any Deferred Holder Redemption Payments) to be paid on such date. Any Holder Redemption Payment (including any Deferred Holder Redemption Payments) paid pursuant to this Section 4(B) shall reduce the Principal Amount by such paid amount divided by one hundred and five percent (105%). If this Note (or any portion of this Note) is to be redeemed pursuant to this Section 4(B), then, from and after the date the related Holder Redemption Payment is paid in full, this Note (or such portion) will cease to be outstanding and interest will cease to accrue on this Note (or such portion).
(C) Interest. Except as provided in Section 10(D), this Note will accrue interest (the “Stated Interest”) at a rate per annum equal to the Stated Interest Rate. Stated Interest on this Note will (i) accrue on the Base Amount of this Note; (ii) accrue from, and including, the most recent date to which Stated Interest has been paid or duly provided for (or, if no Stated Interest has theretofore been paid or duly provided for, the Issue Date) to, but excluding, the date of payment of such Stated Interest; (iii) be paid to Holder in cash on each Interest Payment Date in accordance with Section 5(A) or in Issuer Equity Interests in accordance with Section 5(B); (iv) be paid to Holder in cash concurrently on any date on which any portion of the outstanding Principal Amount of this Note is reduced or otherwise retired (including, for the avoidance of doubt, a Fundamental Change Repurchase Date, Conversion Settlement Date, an Amortization Date (with respect to the amount of interest then accrued on the portion of the Principal Amount being paid on such date), an Amortization Stock Payment Date (with respect to the amount of interest then accrued on the portion of the Principal Amount being repaid on such date), a Holder Redemption Date (with respect to the amount of interest then accrued on the portion of the Principal Amount being redeemed on such date), a Company Redemption Date or any date that an Event of Default Acceleration Amount or Company Redemption Price is paid by the Company to the Holder) and (v) be computed on the basis of a 360-day year comprised of twelve 30-day months. Notwithstanding the foregoing, the Company may, by giving irrevocable written notice to the Holder at least twenty (20) Trading Days (but no more than twenty five (25) Trading Days) prior to an Interest Payment Date (a “PIK Interest Notice”), elect to pay the Stated Interest for such Interest Payment Date in kind, in which case on such Interest Payment Date the amount of such Stated Interest (calculated at an interest rate of twelve percent (12%) rather than the Stated Interest Rate) shall be added to the Principal Amount then outstanding, and after such Interest Payment Date, Stated Interest will accrue on the Principal Amount as so increased. If the Company fails to timely deliver a written notice to the Holder with respect to any Interest Payment Date, the Company shall be deemed to have waived its right to elect to pay such Stated Interest in kind. For the avoidance of doubt, the Company may not elect to pay Default Interest (defined below) in kind pursuant to this Section 4(C).
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(D) Maturity Date Payment. On the Maturity Date, the Company will pay the Holder an amount in cash equal to the then outstanding Principal Amount of this Note plus any accrued and unpaid interest on this Note.
(E) Prepayment. The Company may not prepay the Note without the written consent of the Holder other than pursuant to Section 4(F).
(F) Company Redemption Election.
(i) Upon and following the SPAC Transaction Effective Date, the Company may redeem a portion (not less than the lesser of five million dollars ($5,000,000) and the then outstanding Principal Amount of this Note) or all of the then outstanding Principal Amount of this Note (a “Company Redemption”) on a date to be determined by the Company (any such date a “Company Redemption Date”), for a cash redemption price equal to the Company Redemption Price; provided, that (x) the Company must provide notice of a Company Redemption, which notice shall state the Company Redemption Date and the outstanding Principal Amount of this Note to be redeemed (which for the avoidance of doubt, shall not be less than the lesser of five million dollars ($5,000,000) and the then outstanding Principal Amount of this Note) (“Company Redemption Notice”), at least thirty (30) Trading Days prior to such Company Redemption Date and (y) the Company must have, on or prior to 8:30 a.m., New York City time, on the Trading Day on which such Company Redemption Notice is delivered, publicly disclosed any material, non-public information regarding the Company (including the fact that the Company is redeeming the Note) on a Current Report on Form 8-K or otherwise. The Holder may convert any portion of this Note being redeemed pursuant to a Company Redemption prior to the payment of the Company Redemption Price. The portion of the Company Redemption Price paid pursuant to this Section 4(F)(i) that is applied to reduce the Principal Amount (and not applied to accrued and unpaid interest) shall reduce the Principal Amount by such paid amount divided by one hundred and twenty five percent (125%). For the avoidance of doubt, the Company may effect more than one Company Redemptions in accordance with this Section 4(F).
(ii) If this Note is to be redeemed in full pursuant to this Section 4(F) then, from and after the date the related Company Redemption Price is paid in full, this Note will cease to be outstanding.
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(iii) Notwithstanding anything herein to the contrary, the Company will not have the right to, and will not, make any Company Redemption pursuant to this Section 4(F) if (x) the Company is in possession of material non-public information or (y) the Equity Conditions are not satisfied on each Trading Day during the period commencing on the date the Company Redemption Notice is delivered to the Holder and ending on, and including the Company Redemption Date (the “Company Redemption Compliance Period”). The Company shall certify in writing (a “Company Redemption Certification”) to the Holder (A) on the date of the Company Redemption Notice, within such notice, that the Equity Conditions were satisfied as of the date of the Company Redemption Notice and (B) on the Company Redemption Date, that the Equity Conditions have continued to have been satisfied on each Trading Day during the remainder of the Company Redemption Compliance Period, unless such failure of the Equity Conditions to be so satisfied is waived in writing by the Holder, which waiver may be granted or withheld by the Holder in its sole discretion.
Section 5. Method of Payment; When Payment Date is Not a Business Day.
(A) Method of Payment. The Company will pay all cash amounts due under this Note by wire transfer of immediately available funds to the account of the Holder as set forth in a written notice of an account of such Holder delivered by the Holder to the Company at least one (1) Business Day before the date such amount is due.
(B) Company’s Election to Pay Stated Interest in Cash or Issuer Equity Interests. Upon and following the SPAC Transaction Effective Date, at least twenty (20) Trading Days (but no more than twenty five (25) Trading Days) prior to an Interest Payment Date, the Company, if it desires to elect to make a payment of Stated Interest with respect to such Interest Payment Date entirely or partially, in Issuer Equity Interests, shall deliver to the Holder a written notice of such election stating which portion thereof the Company has elected to pay in Issuer Equity Interests and certifying that the Equity Conditions are satisfied as of such date (a “Stated Interest Stock Payment Notice”) (and such election shall be irrevocable as to such Interest Payment Date). If the Company fails to timely deliver such Stated Interest Stock Payment Notice to the Holder with respect to any Interest Payment Date, the Company shall be deemed to have waived its right to elect to pay such Stated Interest in Issuer Equity Interests. With respect to any Interest Payment Date for which the Company has elected to make a payment of Stated Interest (or any applicable portion thereof) in Issuer Equity Interests in accordance with this Section 5(B), the Company shall issue to the Holder on such Interest Payment Date a number of validly issued, fully paid and Freely Tradable Issuer Equity Interests (the “Interest Payment Shares”) equal to the quotient (rounded up to the closest whole number) obtained by dividing all or any applicable portion of the payment of Stated Interest by ninety percent (90%) of the lower of (A) the Last Reported Sale Price of the Issuer Equity Interests on the Trading Day immediately prior to the Interest Payment Date and (B) the average of the lowest two Daily VWAPs in the ten (10) Trading Day period ending on and including the Trading Day immediately prior to the Interest Payment Date. Notwithstanding anything herein to the contrary, the Company will not have the right to, and will not, make any payment of Stated Interest (or any applicable portion thereof) in Issuer Equity Interests if the Equity Conditions are not satisfied for each VWAP Trading Day occurring between the date of delivery of the Stated Interest Stock Payment Notice and the applicable Interest Payment Date (and the Company shall certify in writing to the Holder on the applicable Interest Payment Date that the Equity Conditions have continued to have been satisfied during such period), and such payment of Stated Interest (or any applicable portion thereof) shall instead be paid in cash or in kind pursuant to Section 4(C), unless such failure of the Equity Conditions to be so satisfied is waived in writing by the Holder, which waiver may be granted or withheld by the Holder in its sole discretion. Notwithstanding the foregoing, the Holder may, with written notice to the Company, elect to deduct a number of Subsequent Closing Shares not exceeding the applicable number of Interest Payment Shares from the Subsequent Closing Share Balance, effective as of such Interest Payment Date, in which case the Company shall deliver any remaining Interest Payment Shares to the Holder on the related Interest Payment Date.
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(C) Company’s Election to Pay Amortization Payments in Cash or Issuer Equity Interests.
(i) Subject to Section 5(C)(ii), upon and following the SPAC Transaction Effective Date, at least twenty (20) Trading Days (but no more than twenty five (25) Trading Days) prior to an Amortization Date, the Company, if it desires to elect to make an Amortization Payment with respect to such Amortization Date entirely or partially in Issuer Equity Interests, shall deliver to the Holder a written notice of such election stating which portion thereof the Company has elected to pay in Issuer Equity Interests and certifying that the Equity Conditions are satisfied as of such date (an “Amortization Stock Payment Notice”) (and such election shall be irrevocable as to such Amortization Date, including if such payment is deferred by the Holder pursuant to this Section 5(C)). Unless required to deliver such Amortization Stock Payment Notice pursuant to Section 5(C)(ii) (notwithstanding the expiration of the foregoing delivery window), if the Company fails to timely deliver such Amortization Stock Payment Notice with respect to any Amortization Date, the Company shall be deemed to have waived its right to elect to pay such Amortization Payment in Issuer Equity Interests.
(ii) If, on any date during the Amortization Notice Period, the Amortization Conversion Price calculated assuming such date were an Amortization Stock Payment Date would have been equal to or greater than the Amortization Conversion Price Floor, the Holder shall have the right, exercisable in its sole discretion by delivery of written notice to the Company on any day prior to the related Amortization Date (such notice, a “Holder Amortization Funding Notice”), to (a) if the Company has not delivered an Amortization Stock Payment Notice with respect to the related Amortization Date, require the Company to deliver an Amortization Stock Payment Notice for such Amortization Payment at least one Business Day following the delivery of the Holder Amortization Funding Notice, in which case the Company shall issue Issuer Equity Interests to the Holder in accordance with Section 5(C)(iv) and (b) if the Company has timely delivered an Amortization Stock Payment Notice with respect to the related Amortization Date, require the Company to instead pay such Amortization Payment in cash within one (1) Business Day following delivery of the Holder Amortization Funding Notice. Any cash payments due pursuant to Section 5(C)(ii)(b) shall be made first from funds available in the Controlled Cash Account, with the exception of an amount equal to the Legal Reimbursement (as defined in the Securities Purchase Agreement) which shall not be paid from the Controlled Cash Account.
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(iii) Upon the earlier to occur of (a) the receipt by the Holder of any Amortization Stock Payment Notice and (b) the receipt by the Company of any Holder Amortization Funding Notice, the Holder shall have the right, exercisable in its sole discretion by delivery of written notice to the Company (an “Amortization Acceleration Notice”), to accelerate all or any portion of the remaining Amortization Payments (including any Deferred Amortization Payments) due under this Note as specified by the Holder in such notice (such Amortization Payments, the “Accelerated Amortization Payments”), in which case the Company shall issue Issuer Equity Interests to the Holder in accordance with Section 5(C)(iv).
(iv) With respect to any Amortization Date for which the Company is required to make an Amortization Payment (or any applicable portion thereof) in Issuer Equity Interests pursuant to this Section 5(C), (a) the Holder shall have the right to (x) convert all or any portion of such Amortization Payment (including any Accelerated Amortization Payments or Deferred Amortization Payments) into Issuer Equity Interests pursuant to Section 7 hereof at any time following the earlier to occur of (1) the receipt by the Holder of the Amortization Stock Payment Notice and (2) the receipt by the Company of the Holder Amortization Funding Notice, in each case up until the Scheduled Trading Day immediately before the related Amortization Date, (y) allocate all or any portion of any applicable Amortization Payment (including any Accelerated Amortization Payments or Deferred Amortization Payments) to any Scheduled Trading Day (any such date, an “Amortization Stock Payment Date”) during the period beginning on, and including, the applicable Amortization Date and ending on, and including, the Scheduled Trading Day immediately before the subsequent Amortization Date (the “Amortization Stock Payment Period”), or (z) defer all or any portion of such Amortization Payment (including any Accelerated Amortization Payment or Deferred Amortization Payment) to any future Amortization Date selected by the Holder (in which case such amount shall be a Deferred Amortization Payment); and (b) subject to Section 5(C)(ii)(b), the Company shall issue to the Holder a number of validly issued, fully paid and Freely Tradable Issuer Equity Interests equal to the quotient (rounded up to the closest whole number) obtained by dividing all or any applicable portion of such Amortization Payment (including any Accelerated Amortization Payment or Deferred Amortization Payment) by the Amortization Conversion Price. Any portion of an Amortization Payment (or any Accelerated Amortization Payment) or Deferred Amortization Payment not paid in Issuer Equity Interests because the Holder did not allocate all or any portion of such Amortization Payment (including any Accelerated Amortization Payment) or Deferred Amortization Payment to a Scheduled Trading Day during the applicable Amortization Stock Payment Period or did not otherwise require the Company to pay such Amortization Payment in cash pursuant to Section 5(C)(ii)(b) will be automatically deferred to the next Amortization Date. The Holder must provide notice to the Company of its election of any Amortization Stock Payment Date and the applicable portion of the Amortization Payment or Deferred Amortization Payment it is electing to receive on each such Amortization Stock Payment Date no later than 4:30 p.m. New York City time on such Amortization Stock Payment Date. Notwithstanding anything herein to the contrary, the Company will not have the right to, and will not, make any Amortization Payment (including any Accelerated Amortization Payment) or Deferred Amortization Payment (or any applicable portion thereof) in Issuer Equity Interests if the Equity Conditions are not satisfied for each VWAP Trading Day occurring between (1) the date of the earlier to occur of the delivery by the Company of the Amortization Stock Payment Notice and the delivery by the Holder of the Holder Amortization Funding Notice and (2) the applicable Amortization Stock Payment Delivery Date (as defined below) (and the Company shall certify in writing to the Holder on the applicable Amortization Stock Payment Delivery Date that the Equity Conditions have continued to have been satisfied during such period), and such Amortization Payment (including any Accelerated Amortization Payment) or Deferred Amortization Payment (or any applicable portion thereof) shall instead be paid in cash, within one Business Day following such VWAP Trading Day for which the Company was unable to satisfy the Equity Conditions, in accordance with Section 5(A), unless such failure of the Equity Conditions to be so satisfied is waived in writing by the Holder, which waiver may be granted or withheld by the Holder in its sole discretion. The Company shall not pay any portion of any Amortization Payment (or Accelerated Amortization Payment) or Deferred Amortization Payment in Issuer Equity Interests on any day that the Holder has not allocated as an Amortization Stock Payment Date. Any such Issuer Equity Interests (the “Amortization Payment Shares”) will be delivered by the Company to the Holder on or before the first (1st) Business Day following the applicable Amortization Stock Payment Date (such delivery date, an “Amortization Stock Payment Delivery Date”).
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(v) Notwithstanding the foregoing, in lieu of requiring the Company to deliver Issuer Equity Interests on any Amortization Stock Payment Delivery Date, the Holder may, with written notice to the Company, elect to deduct a number of Subsequent Closing Shares not exceeding the applicable number of Amortization Payment Shares from the Subsequent Closing Share Balance, effective as of such Amortization Stock Payment Date, in which case the Company shall deliver any remaining Amortization Payment Shares to the Holder on the related Amortization Stock Payment Delivery Date.
(D) Delay of Payment when Payment Date is Not a Business Day. If the due date for a payment on this Note as provided in this Note is not a Business Day, then, notwithstanding anything to the contrary in this Note, such payment may be made on the immediately following Business Day and no interest will accrue on such payment as a result of the related delay.
(E) Event of Default Issuer Equity Interest Payments. If an Event of Default occurs and the Company fails to pay the Event of Default Acceleration Amount when due in accordance with this Note, then the Holder may elect to receive such unpaid portion of the Event of Default Acceleration Amount, entirely or partially, in Issuer Equity Interests (an “Event of Default Equity Payment”), and shall deliver to the Company a written notice of such election stating which portion thereof the Holder has elected to receive in Issuer Equity Interests (an “Event of Default Equity Payment Notice”). On or before the first (1st) Business Day following the date of delivery of any Event of Default Equity Payment Notice hereunder (the “Event of Default Equity Payment Delivery Date”), the Company shall issue and deliver to the Holder, a number of validly issued, fully paid and Freely Tradable Issuer Equity Interests (the “Event of Default Equity Payment Shares”) equal to the quotient (rounded up to the closest whole number) obtained by dividing the Event of Default Acceleration Amount (or applicable portion thereof) by the Market Equity Payment Price as of the date of delivery of the Event of Default Equity Payment Notice; provided, that, if the Company fails to timely issue and deliver to the Holder such Issuer Equity Interests, then the Holder may revoke its election to receive Issuer Equity Interests and elect to receive such Event of Default Acceleration Amount (or any portion thereof) in cash at any time prior to delivery of such Issuer Equity Interests. Any portion of the Event of Default Acceleration Amount not paid in Issuer Equity Interests because the Holder did not elect, or effectively revoked its election, to receive Issuer Equity Interests for such Event of Default Acceleration Amount (or applicable portion thereof) will be paid in cash; provided, that the Holder may deliver multiple Event of Default Equity Payment Notices in accordance with this Section 5(E) to the extent that any portion of the Event of Default Acceleration Amount remains unpaid when due in accordance with this Note. Notwithstanding the foregoing, in lieu of requiring the Company to deliver Issuer Equity Interests on any Event of Default Equity Payment Delivery Date, the Holder may, with written notice to the Company, elect to deduct a number of Subsequent Closing Shares not exceeding the applicable number of Event of Default Equity Payment Shares from the Subsequent Closing Share Balance, effective as of such Event of Default Equity Payment Delivery Date, in which case the Company shall deliver any remaining Event of Default Equity Payment Shares to the Holder on the related Event of Default Equity Payment Delivery Date.
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(F) Stock Exchange Limitations. Notwithstanding anything to the contrary in this Note, in no event will the number of Issuer Equity Interests issuable upon conversion or otherwise pursuant to this Note and any Other Notes, including (for the avoidance of doubt) any portion constituting an Amortization Payment or payment of Stated Interest, exceed in the aggregate a number of Issuer Equity Interests equal to one Issuer Equity Interest less than twenty percent (20%) of the outstanding Issuer Equity Interests of the SPAC immediately following the consummation of the SPAC Transaction. If any one or more Issuer Equity Interests are not delivered as a result of the operation of the preceding sentence (such Issuer Equity Interests, the “Withheld Shares”), then (1) on the date such Issuer Equity Interests are issuable hereunder (after giving effect to any limitations imposed under Section 7(I), the Company will pay to the Holder, in addition to the Conversion Consideration otherwise due upon such conversion or shares otherwise due to the Holder hereunder, cash in an amount equal to the product of (x) the number of such Withheld Shares; and (y) the Daily VWAP per each such Issuer Equity Interest on the applicable Equity Interest Payment Determination Date; and (2) to the extent the Holder purchases (in an open market transaction or otherwise) Issuer Equity Interests to deliver in settlement of a sale by the Holder of such Withheld Shares, the Company will reimburse the Holder for (x) any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection with such purchases and (y) the excess, if any, of (A) the aggregate purchase price of such purchases over (B) the product of (I) the number of such Withheld Shares purchased by the Holder; and (II) the Daily VWAP per such Issuer Equity Interest on the applicable Equity Interest Payment Determination Date.
Section 6. Required Repurchase of Note upon a Fundamental Change.
(A) Repurchase Upon Fundamental Change. Subject to the other terms of this Section 6, if a Fundamental Change occurs, then the Holder will have the right to require the Company to repurchase this Note (or any portion of this Note in an Authorized Denomination) on the Fundamental Change Repurchase Date for such Fundamental Change for a cash purchase price equal to the Fundamental Change Repurchase Price.
(B) Fundamental Change Repurchase Date. The Fundamental Change Repurchase Date for any Fundamental Change will be a Business Day of the Holder’s choosing that is no more than twenty (20) Business Days after the later of (x) the date the Company delivers to the Holder the related Fundamental Change Notice pursuant to Section 6(C); and (y) the effective date of such Fundamental Change.
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(C) Fundamental Change Notice. No later than the tenth (10th) Business Day before the occurrence of any Fundamental Change, the Company will send to the Holder a written notice (the “Fundamental Change Notice”) thereof (provided, however, in no event shall such notice be required prior to the actual public announcement of such Fundamental Change), stating the expected date such Fundamental Change will occur. No later than the fifth (5th) Business Day after the date of delivery of the Fundamental Change Notice, the Holder shall notify the Company in writing whether it will require the Company to repurchase this Note and specify the Fundamental Change Repurchase Date.
(D) Effect of Repurchase. If this Note (or any portion of this Note) is to be repurchased upon a Repurchase Upon Fundamental Change, then, from and after the date the related Fundamental Change Repurchase Price is paid in full, this Note (or such portion) will cease to be outstanding and interest will cease to accrue on this Note (or such portion).
Section 7. Conversion.
(A) Right to Convert.
(i) Generally. Subject to the provisions of this Section 7, upon and following the SPAC Transaction Effective Date, the Holder may, at its option, convert this Note, including any portion constituting an Amortization Payment or a Holder Redemption Payment, into Conversion Consideration.
(ii) Conversions in Part. Subject to the terms of this Section 7, upon and following the SPAC Transaction Effective Date, this Note may be converted in part, but only in an Authorized Denomination. Provisions of this Section 7 applying to the conversion of this Note in whole will equally apply to conversions of any permitted portion of this Note.
(B) When this Note May Be Converted.
(i) Generally. Upon and following the SPAC Transaction Effective Date, the Holder may convert this Note immediately at any time until the Close of Business on the first (1st) Scheduled Trading Day (or, if later, the standard settlement period for the primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests)) on which the Issuer Equity Interests are traded immediately before the Maturity Date. For the avoidance of doubt, the Holder’s right to convert this Note shall not be impacted by a prior notice or election to defer any Amortization Payment delivered pursuant to Section 4(A) hereof or Holder Redemption Payment delivered by the Holder pursuant to Section 4(B) hereof.
(ii) Limitations and Closed Periods. Notwithstanding anything to the contrary in this Section 7, if this Note (or any portion of this Note) is to be repurchased upon a Repurchase Upon Fundamental Change, then in no event may this Note (or such portion) be converted after the Close of Business on the Scheduled Trading Day immediately before the related Fundamental Change Repurchase Date; provided, that the limitations contained in this Section 7(B)(ii) shall no longer apply to this Note (or such applicable portion) if the applicable Fundamental Change Repurchase Price is not delivered on the Fundamental Change Repurchase Date in accordance with Section 6.
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(C) Conversion Procedures.
(i) Generally. To convert this Note, the Holder must complete, sign and deliver to the Company the conversion notice attached to this Note on Exhibit A or portable document format (.pdf) version of such conversion notice (at which time such conversion will become irrevocable) (a “Holder Conversion Notice”). For the avoidance of doubt, the Holder Conversion Notice may be delivered by e-mail in accordance with Section 13. If the Company fails to deliver, by the related Conversion Settlement Date, any Issuer Equity Interests forming part of the Conversion Consideration of the conversion of this Note, the Holder, by notice to the Company, may rescind all or any portion of the corresponding Holder Conversion Notice at any time until such Undelivered Equity Interests are delivered.
(ii) Holder of Record of Conversion Consideration. The person in whose name any Issuer Equity Interests are issuable pursuant to this Note will be deemed to become the holder of record of such Issuer Equity Interests as of the Close of Business on the Conversion Date for such conversion, conferring, as of such time, upon such person, without limitation, all voting and other rights appurtenant to such shares; provided, that the Holder shall be deemed to have waived any voting rights of any such Issuer Equity Interests issued to the Holder that may arise during the period commencing on such Conversion Date, through, and including, such applicable Conversion Settlement Date, as necessary, such that the aggregate voting rights of any Issuer Equity Interests (including such Issuer Equity Interests issued to the Holder) beneficially owned by the Holder and/or any Attribution Parties, collectively, on any such record date shall not exceed the Maximum Percentage as a result of any such conversion of this Note.
(iii) Taxes and Duties. If the Holder converts a Note, the Company will pay any documentary, stamp or similar issue or transfer tax or duty due on the issuance of any Issuer Equity Interests upon such conversion.
(D) Settlement upon Conversion.
(i) Generally. The consideration (the “Conversion Consideration”) due in respect of each one thousand dollars ($1,000) Principal Amount of this Note, including any portion constituting an Amortization Payment or Holder Redemption Payment required to be paid by the Company on the next Amortization Date or Holder Redemption Date (as applicable), or any outstanding Accelerated Amortization Payment, Deferred Amortization Payment or Deferred Holder Redemption Payment, to be converted will consist of the following:
(1) subject to Section 7(D)(ii), a number of Issuer Equity Interests equal to the Conversion Rate in effect on the Conversion Date for such conversion; and
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(2) cash in an amount equal to the aggregate accrued and unpaid interest on this Note to, but excluding, the Conversion Settlement Date for such conversion, provided that, if, prior to the related Conversion Settlement Date, the Company provides the Holder with a timely PIK Interest Notice pursuant to Section 4(C) or Stated Interest Stock Payment Notice pursuant to Section 5(B) with respect to the Interest Payment Date immediately following the related Conversion Settlement Date, such accrued and unpaid interest on this Note shall be paid in kind or in Issuer Equity Interests (as applicable) in accordance with the applicable notice.
(ii) Fractional Shares. The total number of Issuer Equity Interests due in respect of any conversion of this Note pursuant to this Section 7, including any portion constituting an Amortization Payment or Holder Redemption Payment required to be paid by the Company on the next Amortization Date or Holder Redemption Date (as applicable) or any outstanding Accelerated Amortization Payment, Deferred Amortization Payment or Deferred Holder Redemption Payment, will be determined on the basis of the total Principal Amount of this Note to be converted with the same Conversion Date; provided, however, that if such number of Issuer Equity Interests is not a whole number, then such number will be rounded up to the nearest whole number.
(iii) Delivery of the Conversion Consideration. The Company will pay or deliver, as applicable, the Conversion Consideration due upon the conversion of this Note, including any portion constituting an Amortization Payment or Holder Redemption Payment required to be paid by the Company on the next Amortization Date or Holder Redemption Date (as applicable) or any outstanding Accelerated Amortization Payment, Deferred Amortization Payment or Deferred Holder Redemption Payment, to the Holder on or before the first (1st) Business Day (or, if earlier, the standard settlement period for the primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests) on which the Issuer Equity Interests are traded) immediately after the Conversion Date for such conversion (the “Conversion Settlement Date”). Notwithstanding the foregoing, the Holder may, with written notice to the Company, elect to deduct a number of Subsequent Closing Shares not exceeding the applicable number of Issuer Equity Interests comprising the Conversion Consideration from the Subsequent Closing Share Balance, effective as of such Conversion Date, in which case the Company shall deliver any remaining Issuer Equity Interests comprising such Conversion Consideration to the Holder on the related Conversion Settlement Date.
(iv) Company Failure to Timely Deliver Equity Payments. If (x) the Company shall fail for any reason or for no reason on or prior to the applicable Conversion Settlement Date to deliver Issuer Equity Interests in accordance with Section 5(B), Section 5(C), Section 5(E) or Section 7(C) (such Issuer Equity Interests to which Holder is entitled referred to as the “Undelivered Equity Interests”); and (y) the Holder (whether directly or indirectly, including by any broker acting on the Holder’s behalf or acting with respect to such Undelivered Equity Interests) purchases any Issuer Equity Interests (whether in the open market or otherwise) to cover any such Undelivered Equity Interests (whether to satisfy any settlement obligations with respect thereto of the Holder or otherwise), then, without limiting the Holder’s right to pursue any other remedy available to it (whether hereunder, under applicable law or otherwise), the Holder will have the right, exercisable by notice to the Company, to cause the Company to either:
(1) pay, on or before the first (1st) Business Day after the date such notice is delivered (or, if earlier, the standard settlement period for the primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests) on which the Issuer Equity Interests are traded), cash to the Holder in an amount equal to the aggregate purchase price (including any brokerage commissions and other out-of-pocket costs, including, for the avoidance of doubt, the reasonable and documented fees and expenses of counsel in connection with such purchase) incurred to purchase such Issuer Equity Interests (such aggregate purchase price, the “Covering Price”); or
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(2) promptly deliver to the Holder such Undelivered Equity Interests in accordance with this Note, together with cash in an amount equal to the excess, if any, of the Covering Price over the product of (x) the number of such Undelivered Equity Interests; and (y) the Daily VWAP per Issuer Equity Interest on the Trading Day immediately prior to the relevant Conversion Settlement Date.
To exercise such right, the Holder must deliver notice of such exercise to the Company, specifying whether the Holder has elected clause (1) or (2) above to apply. If the Holder has elected clause (1) to apply, then the Company’s obligation to deliver the Undelivered Equity Interests in accordance with this Note will be deemed to have been satisfied and discharged to the extent the Company has paid the Covering Price in accordance with clause (1). Nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Issuer Equity Interests as required pursuant to the terms hereof. If the Company fails for any reason to deliver Issuer Equity Interests to the Holder by the applicable Conversion Settlement Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each one thousand dollars ($1,000) of Undelivered Equity Interests (based on the greater of the Daily VWAP on the applicable Conversion Settlement Date or the Conversion Price), ten dollars ($10) per Trading Day (increasing to twenty dollars ($20) per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after the Conversion Settlement Date until the cash amount set forth in Section 7(D)(iv)(1) is paid to the Holder or the Issuer Equity Interests are delivered to the Holder pursuant to Section 7(D)(iv)(2).
(v) Effect of Conversion. If this Note is converted in full, then, from and after the date the Conversion Consideration therefor is issued or delivered in settlement of such conversion, this Note will cease to be outstanding and all interest will cease to accrue on this Note.
(E) Status of Issuer Equity Interests Issued upon Conversion.
(i) Status of Conversion Consideration; Listing. Each Issuer Equity Interest delivered pursuant to this Note will be a newly issued or treasury share and will be duly and validly issued, fully paid, non-assessable, free from preemptive rights and free of any Lien or adverse claim (except to the extent of any Lien or adverse claim created by the action or inaction of the Holder or the Person to whom such share will be delivered). If the Issuer Equity Interests are then listed on any securities exchange, or quoted on any inter-dealer quotation system, then the Company will cause each Issuer Equity Interest issued pursuant to this Note, when delivered, to be admitted for listing on such exchange or quotation on such system. Issuer Equity Interests issued pursuant to this Note will be issued in the form of book-entries at the facilities of DTC.
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(ii) Transferability of Conversion Consideration. Any Issuer Equity Interests issued pursuant to this Note will be identified therein by an “unrestricted” CUSIP number.
(F) Adjustments to the Conversion Rate.
(i) Events Requiring an Adjustment to the Conversion Rate. The Conversion Rate will be adjusted from time to time as follows:
(1) Stock Dividends, Splits and Combinations. If the Company issues solely Issuer Equity Interests as a dividend or distribution on all or substantially all Issuer Equity Interests, or if the Company effects a stock split or a stock combination of the Issuer Equity Interests (in each case excluding an issuance solely pursuant to an Equity Change Event, as to which Section 7(H) will apply), then the Conversion Rate will be adjusted based on the following formula:
where:
| CR0 | = | the Conversion Rate in effect immediately before the Open of Business on the Ex-Dividend Date for such dividend or distribution, or immediately before the Open of Business on the effective date of such stock split or stock combination, as applicable; | |
| CR1 | = | the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date or the Open of Business on such effective date, as applicable; | |
| OS0 | = | the number of Issuer Equity Interests outstanding immediately before the Open of Business on such Ex-Dividend Date or effective date, as applicable, without giving effect to such dividend, distribution, stock split or stock combination; and | |
| OS1 | = | the number of Issuer Equity Interests outstanding immediately after giving effect to such dividend, distribution, stock split or stock combination. |
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If any dividend, distribution, stock split or stock combination of the type described in this Section 7(F)(i)(1) is declared or announced, but not so paid or made, then the Conversion Rate will be readjusted, effective as of the date the Directors determine not to pay such dividend or distribution or to effect such stock split or stock combination, to the Conversion Rate that would then be in effect had such dividend, distribution, stock split or stock combination not been declared or announced.
(2) Rights, Options and Warrants. If the Company distributes, to all or substantially all holders of Issuer Equity Interests, rights, Options or warrants (other than rights issued or otherwise distributed pursuant to a stockholder rights plan, as to which the provisions set forth in Sections 7(F)(i)(3)(a) and 7(F)(viii) will apply) entitling such holders, for a period of not more than sixty (60) calendar days after the record date of such distribution, to subscribe for or purchase Issuer Equity Interests at a price per Issuer Equity Interest that is less than the average Last Reported Sale Price per Issuer Equity Interest during the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced, then the Conversion Rate will be increased (and for the avoidance of doubt shall never be decreased) based on the following formula:
where:
| CR0 | = | the Conversion Rate in effect immediately before the Open of Business on the Ex-Dividend Date for such distribution; | |
| CR1 | = | the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date; | |
| OS | = | the number of Issuer Equity Interests outstanding immediately before the Open of Business on such Ex-Dividend Date; | |
| X | = | the total number of Issuer Equity Interests issuable pursuant to such rights, Options or warrants; and | |
| Y | = | a number of Issuer Equity Interests obtained by dividing (x) the aggregate price payable to exercise such rights, Options or warrants by (y) the average Last Reported Sale Price per Issuer Equity Interest during the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced. |
For purposes of this Section 7(F)(i)(2), in determining whether any rights, Options or warrants entitle holders of Issuer Equity Interests to subscribe for or purchase Issuer Equity Interests at a price per share that is less than the average Last Reported Sale Price per Issuer Equity Interest during the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date the distribution of such rights, Options or warrants is announced, and in determining the aggregate price payable to exercise such rights, Options or warrants, there will be taken into account any consideration the Company receives for such rights, Options or warrants and any amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by the Directors in good faith.
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(3) Spin-Offs and Other Distributed Property.
(a) Distributions Other than Spin-Offs. If the Company distributes shares of its Capital Stock, evidences of its indebtedness or other assets or property of the Company, or rights, Options or warrants to acquire Capital Stock of the Company or other securities, to all or substantially all holders of Issuer Equity Interests, excluding:
(v) dividends, distributions, rights, Options or warrants for which an adjustment to the Conversion Rate is required pursuant to Section 7(F)(i)(1) or Section 7(F)(i)(2);
(w) dividends or distributions paid exclusively in cash for which an adjustment to the Conversion Rate is required pursuant to Section 7(F)(i)(4);
(x) rights issued or otherwise distributed pursuant to a stockholder rights plan, except to the extent provided in Section 7(F)(viii);
(y) Spin-Offs for which an adjustment to the Conversion Rate is required pursuant to Section 7(F)(i)(3)(b); and
(z) a distribution solely pursuant to an Equity Change Event, as to which Section 7(H) will apply,
then the Conversion Rate will be increased based on the following formula:
where:
| CR0 | = | the Conversion Rate in effect immediately before the Open of Business on the Ex-Dividend Date for such distribution; |
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| CR1 | = | the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date; | |
| SP | = | the average Last Reported Sale Price per Issuer Equity Interest during the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before such Ex-Dividend Date; and | |
| FMV | = | the fair market value (as determined by the Directors in good faith), as of such Ex-Dividend Date, of the shares of Capital Stock, evidences of indebtedness, assets, property, rights, Options or warrants distributed per Issuer Equity Interest pursuant to such distribution; |
provided, however, that if FMV is equal to or greater than SP, then, in lieu of the foregoing adjustment to the Conversion Rate, the Holder will receive, for each $1,000 Principal Amount of this Note held by this Holder on the record date for such distribution, at the same time and on the same terms as holders of Issuer Equity Interests, the amount and kind of shares of Capital Stock, evidences of indebtedness, assets, property, rights, Options or warrants that such Holder would have received if such Holder had owned, on such record date, a number of Issuer Equity Interests equal to the Conversion Rate in effect on such record date.
(b) Spin-Offs. If the Company distributes or dividends shares of Capital Stock of any class or series, or similar equity interest, of or relating to an Affiliate, a Subsidiary or other business unit of the Company to all or substantially all holders of Issuer Equity Interests (other than solely pursuant to an Equity Change Event, as to which Section 7(H) will apply) and such Capital Stock or equity interest is listed or quoted (or will be listed or quoted upon the consummation of the transaction) on a U.S. national securities exchange (a “Spin-Off”), then the Conversion Rate will be increased based on the following formula:
where:
| CR0 | = | the Conversion Rate in effect immediately before the Open of Business on the Ex-Dividend Date for such Spin-Off; | |
| CR1 | = | the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date; | |
| FMV | = | the product of (x) the average of the Last Reported Sale Prices per share or unit of the Capital Stock or equity interests distributed in such Spin-Off over the ten (10) consecutive Trading Day period (the “Spin-Off Valuation Period”) beginning on, and including, such Ex-Dividend Date (such average to be determined as if references to Issuer Equity Interests in the definitions of Last Reported Sale Price, Trading Day and Market Disruption Event were instead references to such Capital Stock or equity interests); and (y) the number of shares or units of such Capital Stock or equity interests distributed per Issuer Equity Interest in such Spin-Off; and |
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| SP | = | the average of the Last Reported Sale Prices per Issuer Equity Interest for each Trading Day in the Spin-Off Valuation Period. |
The adjustment to the Conversion Rate pursuant to this Section 7(F)(i)(3)(b) will be calculated as of the Close of Business on the last Trading Day of the Spin-Off Valuation Period but will be given effect immediately after the Open of Business on the Ex-Dividend Date for the Spin-Off, with retroactive effect. If a Note is converted and the Conversion Date occurs during the Spin-Off Valuation Period, then, notwithstanding anything to the contrary in this Note, the Company will, if necessary, delay the settlement of such conversion until the first (1st) Business Day after the last day of the Spin-Off Valuation Period (or, if earlier, the standard settlement period for the primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests) on which the Issuer Equity Interests are traded).
(4) Cash Dividends or Distributions. If any cash dividend or distribution is made to all or substantially all holders of Issuer Equity Interests, then the Conversion Rate will be increased based on the following formula:
where:
| CR0 | = | the Conversion Rate in effect immediately before the Open of Business on the Ex-Dividend Date for such dividend or distribution; | |
| CR1 | = | the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date; | |
| SP | = | the Last Reported Sale Price per Issuer Equity Interest on the Trading Day immediately before such Ex-Dividend Date; and |
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| D | = | the cash amount distributed per Issuer Equity Interest in such dividend or distribution; |
provided, however, that if D is equal to or greater than SP, then, in lieu of the foregoing adjustment to the Conversion Rate, the Holder will receive, for each $1,000 Principal Amount of this Note held by the Holder on the record date for such dividend or distribution, at the same time and on the same terms as holders of Issuer Equity Interests, the amount of cash that such Holder would have received if such Holder had owned, on such record date, a number of Issuer Equity Interests equal to the Conversion Rate in effect on such record date.
(5) Tender Offers or Exchange Offers. If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for Issuer Equity Interests (other than solely pursuant to an odd-lot tender offer pursuant to Rule 13e-4(h)(5) under the Exchange Act), and the value (determined as of the Expiration Time by the Directors in good faith) of the cash and other consideration paid per Issuer Equity Interest in such tender or exchange offer exceeds the Last Reported Sale Price per Issuer Equity Interest on the Trading Day immediately after the last date (the “Expiration Date”) on which tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended), then the Conversion Rate will be increased based on the following formula:
where:
| CR0 | = | the Conversion Rate in effect immediately before the time (the “Expiration Time”) such tender or exchange offer expires; | |
| CR1 | = | the Conversion Rate in effect immediately after the Expiration Time; | |
| AC | = | the aggregate value (determined as of the Expiration Time by the Directors in good faith) of all cash and other consideration paid for Issuer Equity Interests purchased or exchanged in such tender or exchange offer; | |
| OS0 | = | the number of Issuer Equity Interests outstanding immediately before the Expiration Time (including all Issuer Equity Interests accepted for purchase or exchange in such tender or exchange offer); | |
| OS1 | = | the number of Issuer Equity Interests outstanding immediately after the Expiration Time (excluding all Issuer Equity Interests accepted for purchase or exchange in such tender or exchange offer); and |
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| SP | = | the average of the Last Reported Sale Prices per Issuer Equity Interests over the ten (10) consecutive Trading Day period (the “Tender/Exchange Offer Valuation Period”) beginning on, and including, the Trading Day immediately after the Expiration Date; |
provided, however, that the Conversion Rate will in no event be adjusted down pursuant to this Section 7(F)(i)(5), except to the extent provided in the immediately following paragraph. The adjustment to the Conversion Rate pursuant to this Section 7(F)(i)(5) will be calculated as of the Close of Business on the last Trading Day of the Tender/Exchange Offer Valuation Period but will be given effect immediately after the Expiration Time, with retroactive effect. If a Note is converted and the Conversion Date occurs on the Expiration Date or during the Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the contrary in this Note, the Company will, if necessary, delay the settlement of such conversion until the first (1st) Business Day after the last day of the Tender/Exchange Offer Valuation Period (or, if earlier, the standard settlement period for the primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests) on which the Issuer Equity Interests are traded).
(ii) Adjustments to the Conversion Rate in Connection with Certain Equity Issuances.
(1) Adjustment Upon Issuance of Shares of Issuer Equity Interests. If at any time after the date of the Securities Purchase Agreement the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 7(F)(ii) is deemed to have granted, issued or sold, any Issuer Equity Interests (including the issuance or sale of Issuer Equity Interests owned or held by or for the account of the Company) excluding Exempt Issuances (as defined below) for a consideration per Issuer Equity Interest (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such granting, issuance or sale or deemed granting issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Conversion Rate will be increased to an amount equal to (x) $1,000 divided by (y) such New Issuance Price; provided, that if such amount is less than the Conversion Rate prior to such adjustment, the Conversion Rate shall not be changed. “Exempt Issuance” means (A) the issuance of McKinley Options (as defined in the Securities Purchase Agreement) or McKinley Convertible Securities (as defined in the Securities Purchase Agreement) issued under any Approved Stock Plan (as defined in the Securities Purchase Agreement), so long as (i) the aggregate number of shares issued and issuable pursuant thereto does not exceed five percent (5%) of the shares of Issuer Equity Interests issued and outstanding immediately prior to the date hereof and (ii) the exercise price of any such McKinley Options is not lowered and the conversion price of any such McKinley Convertible Securities is not lowered, none of such McKinley Options or McKinley Convertible Securities are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options or convertible securities are otherwise materially changed in any manner that adversely affects the Holder (including any extension of the term thereof), (B) the issuances of Underlying Shares (as defined in the Securities Purchase Agreement), (C) the issuance of Issuer Equity Interests in satisfaction of any Amortization Payment in accordance with Section 5(C) for which the Company has elected to reduce the applicable Amortization Conversion Price Floor in accordance with the definition thereof, (D) the issuance of Issuer Equity Interests issuable upon the conversion, exercise or exchange of Convertible Securities outstanding as of the Issue Date; provided that the terms of such Convertible Securities have not been amended or modified (w) to reduce the exercise price, conversion price, or exchange price, (x) to increase the number of Issuer Equity Interests issuable upon exercise, conversion or exchange thereof, (y) to extend the term or expiration date thereof or (z) otherwise in any manner that adversely affects the Holder, or (E) the issuance of Issuer Equity Interests as consideration for the acquisition or license of any business or asset by Space-Eyes or the SPAC (as applicable) or any of its Subsidiaries, provided that (i) such transaction is approved by a majority of the disinterested directors of Space-Eyes or the SPAC (as applicable), and (ii) such transaction is not effected by Space-Eyes or the SPAC (as applicable) primarily for the purpose of raising capital, or (F) the issuance of Spaceport Bonds issued by the Company to finance qualified spaceport facilities of the applicable Project Financing Subsidiary. For the avoidance of doubt, the “New Issuance Price” with respect to shares of Common Stock issued by the Company before the consummation of the Merger shall be adjusted to give effect to any conversion of such shares of Common Stock into shares of Common Stock of McKinley in connection with the Merger. Notwithstanding the foregoing, no adjustments shall be made pursuant to this Section 7(F)(ii) in connection with a Permitted Pre-DeSPAC Financing only to the extent the Permitted Pre-DeSPAC Financing results in a New Issuance Price greater than seventy five percent (75%) of the Applicable Price.
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(1) For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Rate and the New Issuance Price under this Section 7(F)(ii)) the following shall be applicable:
(a) Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options and the lowest price per Issuer Equity Interest for which one Issuer Equity Interest is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such Issuer Equity Interest shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 7(F)(ii)(1)(a), the “lowest price per Issuer Equity Interest for which one Issuer Equity Interest is at any time issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Issuer Equity Interest upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one Issuer Equity Interest is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Rate shall be made upon the actual issuance of such Issuer Equity Interests or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such Issuer Equity Interests upon conversion, exercise or exchange of such Convertible Securities.
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(b) Issuance of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible Securities and the lowest price per Issuer Equity Interest for which one Issuer Equity Interest is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such Issuer Equity Interest shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For purposes of this Section 7(F)(ii)(1)(b), the “lowest price per Issuer Equity Interest for which one Issuer Equity Interest is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any Issuer Equity Interest upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one Issuer Equity Interest is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Rate shall be made upon the actual issuance of such Issuer Equity Interests upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which an adjustment of the Conversion Rate has been or is to be made pursuant to other provisions of this Section 7(F)(ii), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
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(c) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for Issuer Equity Interests increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with a stock split or combination of the type set forth in Section 7(F)(i)(1)) (any such increases or decreases referred to herein as the “Modified Option/Convertible Security Terms”), the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such Modified Option/Convertible Security Terms at the time such Options or Convertible Securities were initially granted, issued or sold. For purposes of this Section 7(F)(ii)(1)(c), if the terms of any Option or Convertible Security that was outstanding as of the date of the Securities Purchase Agreement are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Issuer Equity Interests deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(F)(ii)(1)(c) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.
(d) Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per Issuer Equity Interest with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per Issuer Equity Interest for which one Issuer Equity Interest is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 7(F)(ii)(1)(a) or Section 7(F)(ii)(1)(b) above and (z) the lowest Daily VWAP of the Issuer Equity Interests on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Note is converted, on any given Conversion Date during any such Adjustment Period, solely with respect to such portion of this Note converted on such applicable Conversion Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Conversion Date). If any Issuer Equity Interests, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any Issuer Equity Interests, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the Daily VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any Issuer Equity Interest, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity (other than, for the avoidance of doubt, the SPAC Transaction), the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Issuer Equity Interests, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
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(2) Holder’s Right of Alternative Conversion Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation of the other provisions of this Section 7(F)(ii), if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Equity, Options or Convertible Securities (any such securities, “Variable Price Securities”) that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Equity at a price which varies or may vary with the market price of the shares of Common Equity, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof to the Holder on the date of such agreement and the issuance of such Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder may, for any conversion of this Note pursuant to Section 7(A), elect in its sole discretion to substitute $1,000 divided by the applicable Variable Price for the Conversion Rate applicable to such conversion of this Note by designating such election in the applicable Holder Conversion Notice delivered in connection with such conversion of this Note. The Holder’s election to rely on a Variable Price for a particular conversion of this Note shall not obligate the Holder to rely on a Variable Price for any future conversion of this Note.
(3) Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7(F)(ii) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Directors shall in good faith determine and implement an appropriate adjustment to the Conversion Rate so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 7(F)(ii)(3) will decrease the Conversion Rate; provided, further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(iii) Holder’s Right of Alternative Conversion Price Pursuant to Section 7(F)(i) or Section 7(F)(ii). In the event of any conflict between the terms of Section 7(F)(i) or Section 7(F)(ii) with regard to any adjustment to the Conversion Price hereunder, the Holder may, in its sole discretion, determine whether Section 7(F)(i) or Section 7(F)(ii) controls.
(iv) No Adjustments in Certain Cases.
(1) Where the Holder Participates in the Transaction or Event Without Conversion. Notwithstanding anything to the contrary in Section 7(F)(i), the Company will not be obligated to adjust the Conversion Rate on account of a transaction or other event otherwise requiring an adjustment pursuant to Section 7(F)(i) (other than a stock split or combination of the type set forth in Section 7(F)(i)(1) or a tender or exchange offer of the type set forth in Section 7(F)(i)(5)) if the Holder participates, at the same time and on the same terms as holders of Issuer Equity Interests, and solely by virtue of being the Holder of this Note, in such transaction or event without having to convert this Note and as if the Holder held a number of Issuer Equity Interests equal to the product of (i) the Conversion Rate in effect on the related record date; and (ii) the aggregate Principal Amount (expressed in thousands) of this Note held by this Holder on such date.
(2) Certain Events. The Company will not be required to adjust the Conversion Rate except as provided in Section 7(F) and Section 7(H). Without limiting the foregoing, the Company will not be obligated to adjust the Conversion Rate on account of:
(a) except as otherwise provided in Section 7(F), the sale of Issuer Equity Interests for a purchase price that is less than the market price per Issuer Equity Interest or less than the Conversion Price;
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(b) the issuance of any Issuer Equity Interests pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in Issuer Equity Interests under any such plan;
(c) the issuance of any Issuer Equity Interests, restricted securities or options or rights to purchase Issuer Equity Interests pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, the Company or any of its Subsidiaries;
(d) the issuance of any Issuer Equity Interests pursuant to any option, warrant, right or convertible or exchangeable security of the Company outstanding as of the Issue Date (other than an adjustment pursuant to Section 7(F)(i)(3)(a) in connection with the separation of rights under the Company’s stockholder rights plan existing, if any, as of the Issue Date);
(e) repurchases of Issuer Equity Interests, including structured or derivative transactions, that are not pursuant to a tender offer as contemplated by Section 7(F)(i)(5);
(f) solely a change in the par value of the Issuer Equity Interests; or
(g) accrued and unpaid interest on this Note.
(v) Adjustments Not Yet Effective. Notwithstanding anything to the contrary in this Note, if:
(1) this Note is to be converted;
(2) the record date, effective date or Expiration Time for any event that requires an adjustment to the Conversion Rate pursuant to Section 7(F)(i) or Section 7(F)(ii) has occurred on or before the Conversion Date for such conversion, but an adjustment to the Conversion Rate for such event has not yet become effective as of such Conversion Date;
(3) the Conversion Consideration due upon such conversion includes any whole Issuer Equity Interests; and
(4) such shares are not entitled to participate in such event (because they were not held on the related record date or otherwise),
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then, solely for purposes of such conversion, the Company will, without duplication, give effect to such adjustment on such Conversion Date. In such case, if the date on which the Company is otherwise required to deliver the consideration due upon such conversion is before the first date on which the amount of such adjustment can be determined, then the Company will delay the settlement of such conversion until the first (1st) Business Day after such first date (or, if earlier, the standard settlement period for the primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests) on which the Issuer Equity Interests are traded).
(vi) Conversion Rate Adjustments where the Converting Holder Participates in the Relevant Transaction or Event. Notwithstanding anything to the contrary in this Note, if:
(1) a Conversion Rate adjustment for any dividend or distribution becomes effective on any Ex-Dividend Date pursuant to Section 7(F)(i);
(2) a Note is to be converted;
(3) the Conversion Date for such conversion occurs on or after such Ex-Dividend Date and on or before the related record date;
(4) the Conversion Consideration due upon such conversion includes any whole Issuer Equity Interests based on a Conversion Rate that is adjusted for such dividend or distribution; and
(5) such shares would be entitled to participate in such dividend or distribution (including pursuant to Section 7(C)(ii)),
then (x) such Conversion Rate adjustment will not be given effect for such conversion; (y) the Issuer Equity Interests issuable upon such conversion based on such unadjusted Conversion Rate will not be entitled to participate in such dividend or distribution; and (z) there will be added, to the Conversion Consideration otherwise due upon such conversion, the same kind and amount of consideration that would have been delivered in such dividend or distribution with respect to such Issuer Equity Interests had such shares been entitled to participate in such dividend or distribution.
(vii) Stockholder Rights Plans. If any Issuer Equity Interests are to be issued upon conversion of any Note and, at the time of such conversion, the Company has in effect any stockholder rights plan, then the Holder of such Note will be entitled to receive, in addition to, and concurrently with the delivery of, the Conversion Consideration otherwise payable under this Note upon such conversion, the rights set forth in such stockholder rights plan, unless such rights have separated from Issuer Equity Interests at such time, in which case, and only in such case, the Conversion Rate will be adjusted pursuant to Section 7(F)(i)(3)(a) on account of such separation as if, at the time of such separation, the Company had made a distribution of the type referred to in such Section to all holders of Issuer Equity Interests, subject to readjustment in accordance with such Section if such rights expire, terminate or are redeemed.
(viii) Limitation on Effecting Transactions Resulting in Certain Adjustments. The Company will not engage in or be a party to any transaction or event that would require the Conversion Rate to be adjusted pursuant to Section 7(F)(i), Section 7(F)(ii) or Section 7(H) to an amount that would result in the Conversion Price per Issuer Equity Interest being less than the par value per Issuer Equity Interest.
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(ix) Equitable Adjustments to Prices. Whenever any provision of this Note requires the Company to calculate the average of the Last Reported Sale Prices, or any function thereof, over a period of multiple days (including to calculate an adjustment to the Conversion Rate), the Company will make proportionate adjustments, if any, to such calculations to account for any adjustment to the Conversion Rate pursuant to Section 7(F)(i) or Section 7(F)(ii) that becomes effective, or any event requiring such an adjustment to the Conversion Rate where the Ex-Dividend Date or effective date, as applicable, of such event occurs, at any time during such period.
(x) Calculation of Number of Outstanding Issuer Equity Interests. For purposes of this Section 7(F), the number of Issuer Equity Interests outstanding at any time will (i) include shares issuable in respect of scrip certificates issued in lieu of fractions of Issuer Equity Interests; and (ii) exclude Issuer Equity Interests held in the Company’s treasury (unless the Company pays any dividend or makes any distribution on Issuer Equity Interests held in its treasury).
(xi) Calculations. All calculations with respect to the Conversion Rate and adjustments thereto will be made to the nearest 1/10,000th of an Issuer Equity Interest (with 5/100,000ths rounded upward).
(xii) Notice of Conversion Rate Adjustments. Upon the effectiveness of any adjustment to the Conversion Rate pursuant to Section 7(F)(i) or Section 7(F)(ii), the Company will promptly send notice to the Holder containing (i) a brief description of the transaction or other event on account of which such adjustment was made; (ii) the Conversion Rate in effect immediately after such adjustment; and (iii) the effective time of such adjustment.
(G) Voluntary Adjustments.
(i) Generally. To the extent permitted by law and applicable stock exchange rules, the Company, from time to time, may (but is not required to) increase the Conversion Rate on any portion of this Note for any period of time by any amount if (i) the Directors determine in good faith that such increase is either (x) in the best interest of the Company; or (y) advisable to avoid or diminish any income tax imposed on holders of Issuer Equity Interests or rights to purchase Issuer Equity Interests as a result of any dividend or distribution of Issuer Equity Interests (or rights to acquire Issuer Equity Interests) or any similar event, (ii) such increase is irrevocable during such period and (iii) the Required Holders provide their prior written consent to any such adjustment. The Company and the Holder agree that any such voluntary adjustment to the Conversion Rate and any conversion of any portion of the Note based upon any such voluntary adjustment shall not constitute material non-public information with respect to the Company.
(ii) Notice of Voluntary Increases. If the Company’s Directors determine to increase the Conversion Rate pursuant to Section 7(G)(i), then, no later than the first Business Day following such determination, the Company will send notice to the Holder of such increase, the amount thereof and the period during which such increase will be in effect.
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(H) Effect of Certain Recapitalizations, Reclassifications, Consolidations, Mergers and Sales.
(i) Generally. If there occurs any:
(1) recapitalization, reclassification or change of the Issuer Equity Interests (other than (x) changes solely resulting from a subdivision or combination of Issuer Equity Interests, (y) a change only in par value or from par value to no par value or no par value to par value and (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities);
(2) consolidation, merger, combination or binding or statutory share exchange involving the Company;
(3) sale, lease or other transfer of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person; or
(4) other similar event,
and, in each case, as a result of such occurrence, the Issuer Equity Interests are converted into, or is exchanged for, or represents solely the right to receive, other securities or other property (including cash or any combination of the foregoing) (such an event, a “Equity Change Event,” and such other securities or other property, the “Reference Property,” and the amount and kind of Reference Property that a holder of one (1) Issuer Equity Interest would be entitled to receive on account of such Equity Change Event (without giving effect to any arrangement not to issue fractional shares of securities or other property), a “Reference Property Unit”), then, notwithstanding anything to the contrary in this Note, at the effective time of such Equity Change Event, (x) the Conversion Consideration due pursuant to any Note will be determined in the same manner as if each reference to any number of Issuer Equity Interests in this Section 7 (or in any related definitions) were instead a reference to the same number of Reference Property Units; (y) for purposes of Section 7(A), each reference to any number of Issuer Equity Interests in such Section (or in any related definitions) will instead be deemed to be a reference to the same number of Reference Property Units; and (z) for purposes of the definition of “Fundamental Change,” the term “Issuer Equity Interest” and “common equity” will be deemed to mean the common equity, if any, forming part of such Reference Property. For these purposes, (I) the Daily VWAP of any Reference Property Unit or portion thereof that consists of a class of common equity securities will be determined by reference to the definition of “Daily VWAP,” substituting, if applicable, the Bloomberg page for such class of securities in such definition; and (II) the Daily VWAP of any Reference Property Unit or portion thereof that does not consist of a class of common equity securities, and the Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities, will be the fair value of such Reference Property Unit or portion thereof, as applicable, determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars, the face amount thereof).
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If the Reference Property consists of more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of the Reference Property Unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per Issuer Equity Interest, by the holders of Issuer Equity Interests. The Company will notify the Holder of such weighted average as soon as practicable after such determination is made.
At or before the effective date of such Equity Change Event, the Company and the resulting, surviving or transferee Person (if not the Company) of such Equity Change Event (the “Successor Person”) will execute and deliver such instruments or agreements that (x) provides for subsequent conversions of this Note in the manner set forth in this Section 7(H); (y) provides for subsequent adjustments to the Conversion Rate pursuant to Section 7(F) or Section 7(G) in a manner consistent with this Section 7(H); and (z) contains such other provisions as the Company reasonably determines are appropriate to preserve the economic interests of the Holder and to give effect to the provisions of this Section 7(H). If the Reference Property includes shares of stock or other securities or assets of a Person other than the Successor Person, then such other Person will also execute such instruments or agreements and such instruments or agreements will contain such additional provisions the Company reasonably determines are appropriate to preserve the economic interests of the Holder. Notwithstanding the foregoing, the SPAC Transaction shall not be deemed to be an Equity Change Event.
(ii) Notice of Equity Change Events. As soon as practicable after learning the anticipated or actual effective date of any Equity Change Event, the Company will provide written notice to the Holder of such Equity Change Event, including a brief description of such Equity Change Event, its anticipated effective date and a brief description of the anticipated change in the conversion right of this Note.
(iii) Compliance Covenant. The Company will not become a party to any Equity Change Event unless its terms are consistent with this Section 7(H).
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(I) Beneficial Ownership Limitation. Notwithstanding anything to the contrary contained herein, the Company shall not effect the conversion of any portion of this Note, or otherwise issue Issuer Equity Interests pursuant to this Note, and the Holder shall not have the right to convert any portion of this Note, pursuant to the terms and conditions of this Note and any such conversion or issuance shall be null and void and treated as if never made, to the extent that after giving effect to such conversion or issuance, the Holder together with the other Attribution Parties collectively would beneficially own in the aggregate in excess of 9.99% (the “Maximum Percentage”) of the number of Issuer Equity Interests outstanding immediately after giving effect to such conversion or issuance. For purposes of the foregoing sentence, the aggregate number of Issuer Equity Interests beneficially owned by the Holder and the other Attribution Parties shall include the number of Issuer Equity Interests held by the Holder and all other Attribution Parties plus the number of Issuer Equity Interests issuable upon conversion of, or otherwise pursuant to, this Note with respect to which the determination of such sentence is being made, but shall exclude the number of Issuer Equity Interests which would be issuable upon (A) conversion of the remaining, unconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 7(I). For purposes of this Section 7(I), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Note, in determining the number of outstanding Issuer Equity Interests the Holder may acquire in connection with this Note without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding Issuer Equity Interests as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Commission, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent (as defined in the Securities Purchase Agreement) setting forth the number of Issuer Equity Interests outstanding (the “Reported Outstanding Interest Number”). If the Company receives a notice from the Holder related to the conversion of this Note or any issuance of Issuer Equity Interests in connection with this Note at a time when the actual number of outstanding Issuer Equity Interests are less than the Reported Outstanding Interest Number, the Company shall promptly notify the Holder in writing of the number of Issuer Equity Interests then outstanding and, to the extent that such conversion or issuance of Issuer Equity Interests would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 7(I), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Issuer Equity Interests to be issued pursuant to such notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Trading Day confirm in writing or by electronic mail to the Holder the number of Issuer Equity Interests then outstanding. In any case, the number of outstanding Issuer Equity Interests shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Interest Number was reported. In the event that the issuance of Issuer Equity Interests to the Holder upon conversion of, or otherwise pursuant to, this Note results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding Issuer Equity Interests (as determined under Section 13(d) of the Exchange Act), the number of Issuer Equity Interests so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Units”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Units. Upon delivery of a written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any Other Holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity, the Issuer Equity Interests issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to convert this Note or receive shares pursuant to this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 7(I) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 7(I) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Note.
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Section 8. Affirmative and Negative Covenants.
(A) Stay, Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted or in force) that may affect the covenants or the performance of this Note; and (B) expressly waives all benefits or advantages of any such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holder by this Note, but will suffer and permit the execution of every such power as though no such law has been enacted.
(B) Corporate Existence. Subject to Section 9, the Company will cause to be preserved and kept in full force and effect:
(i) its corporate existence and the corporate existence of its Subsidiaries in accordance with the organizational documents of the Company or its Subsidiaries, as applicable; and
(ii) the material rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company need not preserve or keep in full force and effect any such rights (charter and statutory), license or franchise or existence of any of its Subsidiaries if the Company’s Directors determine in good faith that (x) the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole; and (y) the loss thereof is not, individually or in the aggregate, materially adverse to the Holder.
(C) Ranking. All payments due under this Note shall rank (i) pari passu with all Other Notes, (ii) effectively senior to all unsecured indebtedness of the Company and its Subsidiaries to the extent of the value of the Collateral securing the Notes for so long as the Collateral so secures the Notes in accordance with the terms hereof and (iii) senior to any Subordinated Indebtedness.
(D) Indebtedness; Amendments to Indebtedness. The Company shall not and shall not permit any Subsidiary to: (a) create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, other than Permitted Indebtedness; (b) prepay any Indebtedness except by the conversion of Indebtedness into equity securities (other than Disqualified Stock) and the payment of cash in lieu of fractional shares in connection with such conversion or (c) amend or modify any documents or notes evidencing any Indebtedness in a manner that would be adverse to the Holders. The Company shall not and shall not permit any Subsidiary to incur any Indebtedness that would cause a breach or Default under the Notes or prohibit or restrict the performance of any of the Company’s or its Subsidiaries’ obligations under the Notes, including without limitation, the payment of interest and principal thereon.
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(E) Liens. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume, permit or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens.
(F) Investments. The Company shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments; provided that the Company may not make any Investment (including a Permitted Investment) or permit any of its Subsidiaries to make any Investment (including a Permitted Investment) if (i) any Event of Default has occurred hereunder and has not been waived by the Required Holders or (ii) any event or circumstance has occurred and is continuing which, with the giving of notice or passage of time or both, could constitute an Event of Default with respect to Section 10(A)(ii), Section 10(A)(iv), Section 10(A)(vi), Section 10(A)(ix), Section 10(A)(x), Section 10(A)(xi), Section 10(A)(xiii) or Section 10(A)(xv).
(G) Distributions. The Company shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest other than pursuant to employee, director or consultant repurchase plans or other similar agreements provided under plans approved by the Directors; provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or Equity Interest, (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other Equity Interest, except that, a Subsidiary of the Company may pay dividends or make distributions to the Company or a parent company that is a direct or indirect Wholly Owned Subsidiary of the Company, (c) lend money to any employees, officers or directors (except as permitted under clause (F) of the definition of Permitted Investment), or guarantee the payment of any such loans granted by a third party in excess of one hundred thousand dollars ($100,000) in the aggregate, (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of one hundred thousand dollars ($100,000) in the aggregate. If there are dividends or distributions made by the Company or any Subsidiary (other than a Subsidiary of the Company paying dividends or making distributions to the Company or a parent company that is a direct or indirect Wholly Owned Subsidiary of the Company the assets of which are subject to a Lien in favor of the Holder pursuant to the Security Agreements) following the SPAC Transaction Effective Date, within one (1) Business Day following the date on which the Company files an Annual Report on Form 10-K or Quarterly Report on Form 10-Q with the Commission, the Company will provide the Holder with a written notice setting forth the aggregate amount of dividends or distributions made by the Company or any Subsidiary pursuant to this Section 8(G) for the period covered by such Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable. Notwithstanding anything herein to the contrary, the Company shall not, and shall not allow any Subsidiary to, declare or pay any cash dividend or make a cash distribution on any class of stock or other Equity Interest if (A) any Event of Default has occurred hereunder and has not been waived by the Required Holders or (B) any event or circumstance has occurred and is continuing which, with the giving of notice or passage of time or both, could constitute an Event of Default with respect to Section 10(A)(ii), Section 10(A)(iv), Section 10(A)(vi), Section 10(A)(ix), Section 10(A)(x), Section 10(A)(xi), Section 10(A)(xiii) or Section 10(A)(xv), other than a Subsidiary of the Company paying dividends or making distributions to the Company or a parent company that is a direct or indirect Wholly Owned Subsidiary of the Company, the assets of which are subject to a Lien in favor of the Holder pursuant to the Security Agreements.
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(H) Intended Tax Treatment. The Company and the Holders intend that (i) the Notes will be treated as equity (and not debt) for U.S. federal income tax purposes, and as preferred stock for purposes of Section 305 of the Internal Revenue Code of 1986, as amended (the “Code”)(the “Intended Tax Treatment”), (ii) any conversion of the Notes will be treated for U.S. federal income tax purposes as a tax-free exchange into the shares, except solely to the extent specifically provided in Treasury Regulations section 1.305-7; and (iii) any redemption or repayment of the Notes would be treated as a sale or exchange (and not as a distribution) for U.S. federal income tax purposes. The Company shall, and shall cause any of its agents, report consistently with, and take no positions or actions inconsistent with (including on any information return), the Intended Tax Treatment (including by way of withholding) unless otherwise required by a change in law or a final determination within the meaning of Section 1313(a) of the Code. Furthermore, the Company and the Holders acknowledge that the Company does not expect to have any earnings and profits for any taxable year within the period the Notes are expected to be outstanding and therefore the Holders are not expected to be required to include in income as a dividend for U.S. federal income tax purposes, and no U.S. withholding tax is expected to apply to, any amounts in respect of the Notes. If notwithstanding such expectation, the Company determines that it is likely to have earnings and profits in any taxable year so that the Company may be required to withhold any U.S. federal income tax on any amount in respect of the Notes, the Company will promptly notify the Holders of such determination and will use its reasonable best efforts to cooperate with each Holder to reduce, eliminate, or otherwise mitigate the impact of, such withholding. The Company and the Holders further agree that if the Company is required to apply U.S. federal withholding to any amount in respect of the Notes, the Company (x) will not withhold any tax if the Holder delivers a valid IRS Form W-9 certifying that it is not subject to backup withholding; and (y) will determine the rate of any applicable U.S. federal withholding tax in accordance with the applicable withholding rate set forth in the IRS Form W-8BEN-E (or any successor form)(including as an attachment to an IRS Form W-8IMY) delivered by the applicable Holder to the Company (or its paying agent) prior to the applicable date with respect to which withholding is required to be applied.
(I) Transfers. The Company shall not, and shall not allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of the assets of the Company and its Subsidiaries (taken as a whole), except for Permitted Transfers and Permitted Investments.
(J) Taxes. The Company and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except where the failure to pay would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). The Company and its Subsidiaries shall file on or before the due date therefor all personal property tax returns (except where the failure to pay would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). Notwithstanding the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain adequate reserves therefor in accordance with GAAP.
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(K) Minimum Liquidity.
(i) The Company and its Subsidiaries shall have at all times liquidity calculated as unrestricted, unencumbered Cash and Cash Equivalents in one or more deposit accounts located in the United States other than the Controlled Cash Accounts and subject to a Control Agreement entered into in favor of the Collateral Agent that is in form and substance reasonably satisfactory to the Collateral Agent (each, a “Minimum Liquidity Control Account”) in a minimum amount equal to the lesser of (x) five million dollars ($5,000,000) and (y) twenty percent (20%) of the aggregate Principal Amount of this Note and all Other Notes then-outstanding, plus accrued and unpaid interest on this Note and all Other Notes.
(ii) On or prior to the first (1st) Business Day of each month (or, if requested by the Holder in its sole discretion, within one (1) Business Day of such request) or, if earlier, immediately in the event an Event of Default has occurred as a result of a breach of Section 8(D), Section 8(E), Section 8(F), Section 8(G), Section 8(K)(i), Section 8(Q), Section 8(R), Section 8(W), Section 8(Z), Section 8(AA) and Section 8(BB), the Company shall provide to the Holder a certification, in the form attached hereto as Exhibit B, executed on behalf of the Company by the Chief Financial Officer of the Company, certifying whether or not the Company has satisfied the requirements of Section 8(D), Section 8(E), Section 8(F), Section 8(G), Section 8(K)(i), Section 8(Q), Section 8(R), Section 8(W), Section 8(Z), Section 8(AA), and Section 8(BB) during the immediately preceding calendar month (a “Compliance Certification”). Following the SPAC Transaction Effective Date, if the Company determines in its sole discretion that such information constitutes material non-public information, then the Company will so indicate in the certification provided pursuant to the preceding sentence and the Company will concurrently disclose such material non-public information on a Current Report on Form 8-K or press release.
(L) Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company and each of its Subsidiaries on the Issue Date or any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.
(M) Maintenance of Properties, Etc. The Company shall maintain and preserve, and the Company shall cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful (as determined by the Company in good faith) to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply at all times in all material respects with the provisions of all leases to which it is a party as lessee or under which it occupies property, in each case to the extent that the failure to comply would reasonably be expected to result in any loss or forfeiture thereof or thereunder.
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(N) Maintenance of Intellectual Property. The Company will take, and the Company shall cause each of its Subsidiaries to take, all actions necessary or advisable to maintain and preserve all of the material Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company or such Subsidiary that are necessary or material (as determined by the Company in good faith) to the conduct of its business in full force and effect.
(O) Maintenance of Insurance. The Company shall maintain, and the Company shall cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.
(P) Transactions with Affiliates. Neither the Company, nor any of its Subsidiaries, shall enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate (other than the Company or any of its Wholly Owned Subsidiaries), except transactions for fair consideration and on terms no less favorable to it than would be obtainable in a comparable arm’s length transaction with a Person that is not an affiliate thereof.
(Q) Restricted Issuances. The Company shall not, and shall cause its Subsidiaries not to, directly or indirectly, without the prior written consent of the holders of a majority in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the Securities Purchase Agreement and the Notes) or (ii) issue any other securities or incur any Indebtedness, in each case, that would cause a breach or Default under the Notes or that by its terms would prohibit or restrict the performance of any of the Company’s or its Subsidiaries’ obligations under the Notes, including, without limitation, the payment of principal thereon.
(R) Share Reserve. Following the SPAC Transaction Effective Date, so long as this Note remains outstanding, the Company shall at all times have no less than a number of authorized but unissued Issuer Equity Interests reserved for any issuance equal to the sum of (x) the greater of (i) one hundred percent (100%) of the sum of the Principal Amount then outstanding of each Note and each Other Note divided by the applicable Conversion Price of such Note or Other Note (as applicable) and (ii) two hundred percent (200%) of a fraction, the numerator of which shall be the then outstanding principal amount of all Notes and all Other Notes, if any, issued pursuant to the Securities Purchase Agreement plus an amount equal to all interest accruable on such outstanding principal amount of all such Notes and Other Notes, if any, through the maturity dates thereof, and the denominator of which shall be the Market Equity Payment Price (as applicable) and (y) the maximum number of Issuer Equity Interests as shall be necessary to satisfy the Company’s obligation to issue Issuer Equity Interests under the Warrants (as defined in the Securities Purchase Agreement) (the “Required Reserve Amount”); provided that at no time shall the number of Issuer Equity Interests reserved pursuant to this Section 8(R) be reduced other than in connection with any stock combination, reverse stock split or other similar transaction. If at any time the number of Issuer Equity Interests authorized and reserved for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized Issuer Equity Interests, obtain stockholder approval (if required) of an increase in such authorized number of Issuer Equity Interests, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized Issuer Equity Interests is sufficient to meet the Required Reserve Amount.
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(S) Independent Investigation. At the request of the Required Holders at any time the Required Holders have determined in good faith that (i) an Event of Default has occurred or (ii) any event or circumstance has occurred and is continuing which, with the giving of notice or passage of time or both, could constitute an Event of Default but the Company has not timely agreed to such determination in writing, the Company shall hire an independent, reputable investment bank (or, at the sole option of the Required Holders, an independent, reputable accounting firm) selected by the Company and approved by the Required Holders to investigate as to whether such Event of Default or event or circumstance has occurred (the “Independent Investigator”). If the Independent Investigator determines that such Event of Default or event or circumstance has occurred, the Independent Investigator shall notify the Company of such Event of Default or occurrence of such event or circumstance and the Company shall promptly deliver written notice to the Holder of such Event of Default if such Event of Default has occurred. In connection with such investigation, the Independent Investigator may, during normal business hours and upon signing a confidentiality agreement in a form reasonably acceptable to the Company, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its accountants (including the accountants’ work papers) and any books of account, records, reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and operating data and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, any of the Company’s officers, directors, key employees and independent public accountants (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may be reasonably requested.
(T) Material, Non-Public Information.
(i) On the SPAC Transaction Effective Date, the Company shall publicly disclose on a Form 8-K or otherwise all material, non-public information relating to the Company that the Company provided or caused to be provided to the Holder on or prior to the SPAC Transaction Effective Date.
(ii) On and after the SPAC Transaction Effective Date, in the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company shall so indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 8(T) shall limit any obligations of the Company, or any rights of the Holder, under the Securities Purchase Agreement.
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(iii) On and after the SPAC Transaction Effective Date, upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York City time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Form 8-K or otherwise.
(U) The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company, the Holder will not have any obligations hereunder except those obligations expressly set forth herein (and in the Securities Purchase Agreement) and the Holder is acting solely in the capacity of an arm’s length contractual counterparty to the Company with respect to the Note and not as a fiduciary or agent of the Company. The Company agrees that it will not assert any claim against the Holder based on an alleged breach of fiduciary duty by the Holder in connection with the Note. The Company acknowledges that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.
(V) The Company and the SPAC shall use commercially reasonable efforts to cause this Note and any Issuer Equity Interests issuable pursuant to this Note to be registered on the Form S-4 filed in connection with the SPAC Transaction and remain registered pursuant to an effective registration statement through and including the Maturity Date.
(W) The Company shall pay when due any and all fees and expenses owed by it under the Controlled Cash Account, the Minimum Liquidity Control Account, and any other deposit account subject to a Control Agreement entered into in favor of the Collateral Agent.
(X) Information Rights. The Company shall provide the Holder such information relating to the financial condition, business, prospects, or corporate affairs of the Company as the Holder may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Section 8(X) to disclose any information to the extent that, upon the advice of counsel, such disclosure (i) would be prohibited by applicable law, (ii) would reasonably be expected to cause a violation of any contract or agreement to which the Company or any of its Subsidiaries is a party or (iii) would cause a loss of privilege to the Company or any of its Subsidiaries; provided that (x) the Company shall notify the Holder if it withholds information required by this Section 8(X) in reliance on the foregoing clauses (i), (ii) or (iii) and (y) the Company shall use its reasonable best efforts to make appropriate substitute disclosure arrangements under circumstances where the foregoing restrictions apply.
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(Y) SPAC Transaction Effective Date. The SPAC Transaction Effective Date shall occur on or before the six (6) month anniversary of the Initial Closing Date. The SPAC Transaction shall be governed by the SPAC Transaction Agreement, without any amendment, supplement or modification not otherwise consented to by the Required Holders, which consent may not be unreasonably withheld.
(Z) Controlled Cash Account.
(i) On the Issue Date, the Company shall deposit all gross proceeds from the issuance of the Notes purchased on such date, less any amounts withheld by the Holders thereof for the payment of applicable fees and expenses incurred by such Holders, into a deposit account (the “Controlled Cash Account”) located in the United States at a bank reasonably acceptable to the Collateral Agent and subject to a Control Agreement, in form and substance satisfactory to the Collateral Agent in its sole discretion, entered into in favor of the Collateral Agent that shall be a “holder directed” Control Agreement that does not provide the Company or its Subsidiaries access to the amounts in the Controlled Cash Account and only permits funds to be released from such Controlled Cash Account upon the direction of the Collateral Agent.
(ii) On the Subsequent Closing Date, the Company shall deposit all gross proceeds from the issuance of the Subsequently Purchased Notes (as defined in the Securities Purchase Agreement), less any amounts withheld by the Holders thereof for the payment of applicable fees and expenses incurred by such Holders, into the Controlled Cash Account.
(iii) Subject to Section 8(Z)(iv), the Collateral Agent shall be under no obligation to release, or permit to be released, Cash then-held in the Controlled Cash Account.
(iv) Upon the request of the Company, the Collateral Agent may release Cash then-held in the Controlled Cash Account in such amounts and at such times as the Required Holders shall determine in their sole and absolute discretion (for the avoidance of doubt, without regard to any duty of good faith or fair dealing); provided that (a) the Collateral Agent shall be under no obligation to release or permit to be released any Cash from the Controlled Cash Account absent such direction from the Required Holders and (b) no such release shall be made if an Event of Default has occurred hereunder or if any event or circumstance has occurred and is continuing which, with the giving of notice or passage of time or both, could constitute an Event of Default.
(v) To the extent the Company elects to make a payment of Stated Interest in kind pursuant to Section 4(C), the Company shall, on or before the related Interest Payment Date, deposit a cash amount into the Controlled Cash Account equal to the related PIK Amount.
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(vi) All interest, dividends and other distributions paid or credited on or with respect to the Cash and Cash Equivalents held in the Controlled Cash Account, as and when such amounts are earned or accrued, shall be the sole property of the Holder and each Other Holder on a pro rata basis (as calculated below) and shall be distributed by the Collateral Agent to each Holder and each Other Holder on a pro rata basis, calculated as a fraction, the numerator of which is the then-outstanding Principal Amount of such Holder’s or Other Holder’s Note (as applicable) as of the date of such distribution and the denominator of which is the aggregate then-outstanding Principal Amount of this Note and all Other Notes as of such date. For the avoidance of doubt, no such interest, dividends or other distributions shall (x) reduce or otherwise affect the Principal Amount outstanding under this Note or (y) be applied as a credit against, substitute for, or otherwise offset, reduce or replace, any amount due and owing to the Holder under this Note (including, for the avoidance of doubt, the payment of accrued and unpaid interest on this Note).
(AA) Sanctioned Persons; Anti-Corruption Laws; Anti-Money Laundering Laws.
(i) The Company shall not, and shall not permit any of its Subsidiaries to:
(1) Conduct, nor permit any of their Subsidiaries to conduct, any business or engage in any transaction or deal with or for the benefit of any Sanctioned Person (as defined in the Securities Purchase Agreement), including the making or receiving of any contribution of funds, goods or services to, from or for the benefit of any Sanctioned Person; or
(2) Use, nor permit any of its Subsidiaries or its or their respective directors, officers, employees, or agents to use, directly or indirectly, any of the proceeds of any Note or any Cash released from the Controlled Cash Account, the Minimum Liquidity Control Account, or any other deposit account subject to a Control Agreement entered into in favor of the Collateral Agent:
(a) to fund, finance, or facilitate any activities, business, or transaction of or with any Sanctioned Person or in any Sanctioned Country (as defined in the Securities Purchase Agreement), or in any other manner that would result in a violation of any Sanctions by any Person (including by any Person participating in any Indebtedness, whether as underwriter, advisor, investor or otherwise), or
(b) for the purpose or in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Law, or for any illegal or improper bribe, rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit.
(ii) The Company and the Company’s Subsidiaries shall:
(1) Maintain, and cause each of their Subsidiaries to maintain, policies and procedures designed to promote compliance by the Company and its Subsidiaries, and their respective directors, officers, employees and agents with all Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions (as defined in the Securities Purchase Agreement).
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(2) Comply, and cause each of their Subsidiaries to comply, with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.
(3) Not, to the best knowledge of any director, officer, employee or any Person acting on behalf of the Company or any of the Company’s Subsidiaries, engage in any activity that would breach any Anti-Corruption Law.
(4) Promptly notify the Holder of any action, suit or investigations by any court or Governmental Authority in relation to an alleged breach of the Anti-Corruption Law.
(5) Not directly or indirectly use, lend or contribute the proceeds of any Note for any purpose that would breach any Anti-Corruption Law or would constitute an illegal or improper bribe, rebate, payoff, influence payment, kickback, or other unlawful or improper payment or benefit.
(6) In order to comply with the “know your customer/borrower” requirements of the Anti-Money Laundering Laws, promptly provide to the Holders upon their reasonable request from time to time (A) information relating to individuals and entities affiliated with the Company or the Company’s Subsidiaries that maintain a business relationship with the Holders, and (B) such identifying information and documentation as may be available for the Company or such Subsidiary in order to enable any Holder to comply with Anti-Money Laundering Laws.
(BB) Variable Rate Transactions. Neither the Company nor any Subsidiary shall effect or enter into an agreement directly or indirectly to effect a Variable Rate Transaction.
Section 9. Successors.
The Company will not consolidate with or merge with or into, or (directly, or indirectly through one or more of its Subsidiaries) sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to another Person, other than the Holder or any of its Affiliates (a “Business Combination Event”), unless:
(A) the resulting, surviving or transferee Person either (x) is the Company or (y) if not the Company, is a corporation (the “Successor Corporation”) duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that expressly assumes (by executing and delivering to the Holder, at or before the effective time of such Business Combination Event, a supplement to this instrument) all of the Company’s obligations under this Note; and
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(B) immediately after giving effect to such Business Combination Event, no Event of Default will have occurred that has not been waived and no Default will have occurred and be continuing which has not been waived.
At the effective time of any Business Combination Event, the Successor Corporation (if not the Company) will succeed to, and may exercise every right and power of, the Company under this Note with the same effect as if such Successor Corporation had been named as the Company in this Note, and, except in the case of a lease, the predecessor Company will be discharged from its obligations under this Note.
Section 10. Defaults and Remedies
(A) Events of Default. “Event of Default” means the occurrence of any of the following (whose occurrence, for the avoidance of doubt, may be waived, but may not be cured):
(i) a default in the payment when due of an Amortization Payment, Accelerated Amortization Payment, Holder Redemption Payment, the Company Redemption Price, the Principal Amount or the Fundamental Change Repurchase Price under this Note;
(ii) a default for five (5) Business Days in the payment when due of the interest on this Note;
(iii) a default in the Company’s obligation to issue Issuer Equity Interests pursuant to this Note (or any portion of this Note) in accordance with Section 5(B) or Section 5(C) upon the exercise of the Company’s right with respect thereto or Section 5(E) or Section 7(C) upon the exercise of the Holder’s right with respect thereto;
(iv) (x) a default in the Company’s obligation to timely deliver a Fundamental Change Notice pursuant to Section 6(C), Compliance Certification, or Information Statement and such default continues for three (3) Business Days, (y) a default in the Company’s obligation to deliver an Amortization Stock Payment Notice pursuant to Section 5(C)(ii)(a) or (z) the delivery of a materially false or inaccurate Fundamental Change Notice, Company Redemption Notice, Company Redemption Certification, Compliance Certification, or Information Statement;
(v) any failure to timely deliver an Event of Default Notice or any delivery of a materially false or inaccurate certification (including a false or inaccurate deemed certification) by the Company (A) that the Equity Conditions are satisfied or (B) as to whether any Event of Default has occurred;
(vi) a default in any of the Company’s obligations or agreements under this Note or the Transaction Documents (in each case, other than a default set forth in clauses (i) - (v) or (vii) – (xviii) of this Section 10(A)), or a breach of any representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality qualifications, which may not be breached in any respect) of any Transaction Document as of the date when made (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date); provided, however, that if such default can be cured, then such default shall not be an Event of Default unless the Company has failed to cure such default within ten (10) days after its occurrence;
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(vii) any provision of any Transaction Document at any time for any reason (other than pursuant to the express terms thereof) ceases to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof is contested, directly or indirectly, by the Company or any of its Subsidiaries, or a proceeding is commenced by the Company or any of its Subsidiaries or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof;
(viii) the Company fails to comply with any covenant set forth in Section 8(D), Section 8(E), Section 8(F), Section 8(G), Section 8(H), Section 8(I), Section 8(K), Section 8(P), Section 8(Q), Section 8(R), Section 8(V), Section 8(W), Section 8(X), Section 8(Y), Section 8(Z), Section 8(AA), and Section 8(BB) of this Note;
(ix) following the SPAC Transaction Effective Date, the suspension from trading or failure of the Issuer Equity Interests to be trading or listed on the Company’s primary Eligible Exchange (measured in terms of trading volume for the Issuer Equity Interests) on which the Issuer Equity Interests are traded for a period of three (3) consecutive Trading Days;
(x) (i) the failure of the Company or any of its Subsidiaries to pay when due or within any applicable grace period any Indebtedness having a principal amount in excess of at least two hundred fifty thousand dollars ($250,000) (or its foreign currency equivalent) in the aggregate of the Company or any of its Subsidiaries, whether such Indebtedness exists as of the Issue Date or is thereafter created, and whether such default has been waived for any period of time or is subsequently cured; or (ii) the occurrence of any breach or default under any terms or provisions of any other Indebtedness of at least two hundred fifty thousand dollars ($250,000) (or its foreign currency equivalent) in the aggregate of the Company or any of its Subsidiaries, if the effect of such failure or occurrence is to cause or to permit the holder or holders of any such indebtedness, to cause, Indebtedness having a principal amount in excess of two hundred fifty thousand dollars ($250,000) to become or be declared due prior to its stated maturity;
(xi) one or more final judgments, orders or awards (or any settlement of any litigation or other proceeding that, if breached, could result in a judgment, order or award) for the payment of at least two hundred fifty thousand dollars ($250,000) (or its foreign currency equivalent) in the aggregate (excluding any amounts covered by insurance pursuant to which the insurer has been notified and has not denied coverage), is rendered against the Company or any of its Subsidiaries and remains unsatisfied and (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order, award or settlement or (ii) there shall be a period of ten (10) consecutive Trading Days after entry thereof during which (A) a stay of enforcement thereof is not in effect or (B) the same is not vacated, discharged, stayed or bonded pending appeal;
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(xii) Following the SPAC Transaction Effective Date, (A) the Company fails to timely file its quarterly reports on Form 10-Q or its annual reports on Form 10-K with the Commission in the manner and within the time periods required by the Exchange Act in a manner that results in the Company failing for any reason to satisfy the requirements of Rule 144(c)(1) under the Securities Act, including, without limitation, the failure to satisfy the current public information requirement under Rule 144(c), (B) the Company withdraws or restates any such quarterly report or annual report previously filed with the Commission or (C) the Company at any time ceases to satisfy the eligibility requirements set forth under Section I.A of the General Instructions to Form S-3;
(xiii) the Company fails to remove any restrictive legend on any certificate or any Issuer Equity Interest issued to the Holder pursuant to any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable federal securities laws and such failure continues for more than three (3) Trading Days;
(xiv) any Security Document shall for any reason fail or cease to create a separate valid and perfected, and, except to the extent permitted by the terms hereof or thereof, first priority Lien on the Collateral, in each case, in favor of the Collateral Agent in accordance with the terms thereof, or any material provision of any Security Document shall at any time for any reason cease to be valid and binding on or enforceable against the Company or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any governmental authority having jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof;
(xv) any material damage to, or loss, theft or destruction of, any Collateral (provided that any damage, loss, theft or destruction of the Collateral that reduces the value of such Collateral by one hundred thousand dollars ($100,000) or more shall be deemed to be material), whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could reasonably be expected to have a Space-Eyes Material Adverse Effect or McKinley Material Adverse Effect (each as defined in the Securities Purchase Agreement); for clarity, an Event of Default under this Section 10(A)(xv) will not require any curtailment of revenue;
(xvi) the Company or any of its Significant Subsidiaries, pursuant to or within the meaning of any Bankruptcy Law, either:
(1) commences a voluntary case or proceeding;
(2) consents to the entry of an order for relief against it in an involuntary case or proceeding;
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(3) consents to the appointment of a custodian of it or for any substantial part of its property;
(4) makes a general assignment for the benefit of its creditors;
(5) takes any comparable action under any foreign Bankruptcy Law; or
(6) generally is not paying its debts as they become due; or
(xvii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that either:
(1) is for relief against Company or any of its Significant Subsidiaries in an involuntary case or proceeding;
(2) appoints a custodian of the Company or any of its Significant Subsidiaries, or for any substantial part of the property of the Company or any of its Significant Subsidiaries;
(3) orders the winding up or liquidation of the Company or any of its Significant Subsidiaries; or
(4) grants any similar relief with respect to the Company or any of its Significant Subsidiaries under any foreign Bankruptcy Law,
and, in each case under this Section 10(A)(xvii), such order or decree remains unstayed and in effect for at least thirty (30) days.
(xviii) the Company’s equityholders approve any plan for the liquidation or dissolution of the Company.
(B) Acceleration.
(i) Automatic Acceleration in Certain Circumstances. If an Event of Default set forth in Section 10(A)(xvi) or Section 10(A)(xvii) occurs with respect to the Company (and not solely with respect to a Significant Subsidiary of the Company), then the then outstanding portion of the Principal Amount of, and all accrued and unpaid interest on, this Note will immediately become due and payable without any further action or notice by any Person.
(ii) Optional Acceleration. If an Event of Default (other than an Event of Default set forth in Section 10(A)(xvi) or Section 10(A)(xvii) with respect to the Company and not solely with respect to a Subsidiary of the Company) occurs and has not been waived by the Holder, then the Holder, by notice to the Company, may declare this Note (or any portion thereof) to become due and payable on the Business Day immediately following the date of such notice for cash in an amount equal to the Event of Default Acceleration Amount.
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(C) Notice of Events of Default. Promptly, but in no event later than one (1) Business Day after an Event of Default, the Company will provide written notice of such Event of Default to the Holder (an “Event of Default Notice”), which Event of Default Notice shall include (i) a reasonable description of the applicable Event of Default, (ii) the date on which the Event of Default occurred and (iii) the date on which the Default underlying such Event of Default initially occurred, if different than the date on which the Event of Default occurred.
(D) Default Interest. If a Default or an Event of Default occurs, then in each case, to the extent lawful, interest (“Default Interest”) will automatically accrue on the Principal Amount outstanding as of the date of such Default or Event of Default at a rate per annum equal to eighteen percent (18%), from, and including, the date of such Default or Event of Default, as applicable, to, but excluding, the date such Default is cured and all outstanding Default Interest under this Note has been paid. Default Interest hereunder will be computed on the basis of a 360-day year comprised of twelve 30-day months and will be payable in arrears on the earlier of (i) the first day of each calendar month, (ii) the date such Default is cured, (iii) the date on which any portion of the outstanding Principal Amount of this Note is reduced or otherwise retired (including, for the avoidance of doubt, a Fundamental Change Repurchase Date, Conversion Settlement Date, Amortization Date, Holder Redemption Date, or any date that the Company Redemption Price or an Event of Default Acceleration Amount is paid by the Company to the Holder), and (iv) the Maturity Date.
Section 11. Ranking.
All payments due under this Note shall rank (i) pari passu with all Other Notes, (ii) effectively senior to all unsecured indebtedness of the Company and its Subsidiaries to the extent of the value of the Collateral securing the Notes for so long as the Collateral so secures the Notes in accordance with the terms hereof and (iii) senior to any Subordinated Indebtedness.
Section 12. Replacement Notes.
If the Holder of this Note claims that this Note has been mutilated, lost, destroyed or wrongfully taken, then the Company will issue, execute and deliver a replacement Note upon surrender to the Company of such mutilated Note, or upon delivery to the Company of evidence of such loss, destruction or wrongful taking reasonably satisfactory to the Company. In the case of a lost, destroyed or wrongfully taken Note, the Company may require the Holder to provide such security or an indemnity that is reasonably satisfactory to the Company to protect the Company from any loss that it may suffer if this Note is replaced.
Section 13. Notices.
Any notice or communication to the Company will be deemed to have been duly given if in writing and delivered in person or by first class mail (registered or certified, return receipt requested), electronic transmission (including e-mail) or other similar means of unsecured electronic communication or overnight air courier guaranteeing next day delivery, or to the other’s address, which initially is as follows:
If to the Company:
Space-Eyes, Inc.
1200 Brickell Avenue
Penthouse 2010
Miami, FL 33131
Attention: Jatinder S. Bains
E-Mail: [email protected]
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With a copy (for informational purposes only) to:
Troutman Pepper Locke LLP
400 Berwyn Park Rd
Berwyn, PA 19312
Attention: Thomas Dwyer
E-Mail: [email protected]
The Company, by notice to the Holder, may designate additional or different addresses for subsequent notices or communications.
Any notice or communication to the Holder will be by e-mail to its e-mail address, which initially is as set forth in the Securities Purchase Agreement. The Holder, by notice to the Company, may designate additional or different addresses for subsequent notices or communications.
If a notice or communication is mailed in the manner provided above within the time prescribed, it will be deemed to have been duly given, whether or not the addressee receives it.
Section 14. Successors and Assigns.
All agreements of the Company in this Note will bind its successors and will inure to the benefit of the Holder’s successors and assigns.
Section 15. Severability.
If any provision of this Note is invalid, illegal or unenforceable, then the validity, legality and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
Section 16. Headings, Etc.
The headings of the Sections of this Note have been inserted for convenience of reference only, are not to be considered a part of this Note and will in no way modify or restrict any of the terms or provisions of this Note.
Section 17. Amendments
This Note may not be amended or modified unless in writing by the Company and the Required Holders, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit, provided, however, that in no event may Section 7(I) be amended or modified, it being understood that this does not affect the ability of the Holder to deliver written notice to the Company to increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as provided in Section 7(I).
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Section 18. Governing Law; Waiver of Jury Trial.
All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company and each Holder hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude any Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Holder or to enforce a judgment or other court ruling in favor of such Holder. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
Section 19. Submission to Jurisdiction.
The Company (A) agrees that any suit, action or proceeding against it arising out of or relating to this Note may be instituted in the Court of Chancery of the State of Delaware; (B) waives, to the fullest extent permitted by applicable law, (i) any objection that it may now or hereafter have to the laying of venue of any such suit, action or proceeding; and (ii) any claim that it may now or hereafter have that any such suit, action or proceeding in such a court has been brought in an inconvenient forum; and (C) submits to the nonexclusive jurisdiction of such court in any such suit, action or proceeding.
Section 20. Enforcement Fees.
The Company agrees to pay all costs and expenses of the Holder incurred as a result of enforcement of this Note and the collection of any amounts owed to the Holder hereunder (whether in cash, Issuer Equity Interests or otherwise), including, without limitation, reasonable attorneys’ fees and expenses.
Section 21. Electronic Execution.
The words “execution,” “signed,” “signature,” and words of similar import in the Note shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity, and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S.C. §§ 7001-7006), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech. §§ 301-309), or any other similar state laws based on the Uniform Electronic Transactions Act.
* * *
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Exhibit A
Form of Holder Conversion Notice
Space-Eyes, Inc.
Senior Secured Convertible Note due 2031
Subject to the terms of this Note, by executing and delivering this
Holder Conversion Notice, the undersigned Holder of this Note directs the Company to convert the following Principal Amount of this Note:
$ ___________,000 in accordance with the following details.
Issuer Equity Interests to be delivered:
Accrued interest amount:
Account Number:
DTC Participant Number (if applicable):
DTC Participant Name (if applicable):
| Date: _________________ | ||
| (Legal Name of Holder) | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit B
Form of Covenant Compliance Certification
The undersigned, the duly qualified and elected Chief Financial Officer of Space-Eyes, Inc., a Delaware corporation (the “Company”), does hereby certify in such capacity and on behalf of the Company, pursuant to the Senior Secured Convertible Note due 2031, issued [ ● ], 2026 (the “Note”), issued by the Company to [ ● ], that:
| i. | the Company satisfied the requirements of Section 8(D) of the Note during the calendar month ended [ ● ]; |
| ii. | the Company satisfied the requirements of Section 8(E) of the Note during the calendar month ended [ ● ]; |
| iii. | the Company satisfied the requirements of Section 8(F) of the Note during the calendar month ended [ ● ]; |
| iv. | the Company satisfied the requirements of Section 8(G) of the Note during the calendar month ended [ ● ]; |
| v. | the Company satisfied the requirements of Section 8(K)(i) of the Note during the calendar month ended [ ● ]; |
| vi. | the Company satisfied the requirements of Section 8(Q) of the Note during the calendar month ended [ ● ]; |
| vii. | the Company satisfied the requirements of Section 8(R) of the Note during the calendar month ended [ ● ]; |
| viii. | the Company satisfied the requirements of Section 8(W) of the Note during the calendar month ended [ ● ]; |
| ix. | the Company satisfied the requirements of Section 8(Z) of the Note during the calendar month ended [ ● ]; |
| x. | the Company satisfied the requirements of Section 8(AA) of the Note during the calendar month ended [ ● ]; and |
| xi. | the Company satisfied the requirements of Section 8(BB) of the Note during the calendar month ended [ ● ]. |
Capitalized terms used herein without definition shall have the meanings given to such terms in the Note.
Space-eyes, inc.
| ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | _______________ | |
Exhibit 10.6
Final Form
THE ISSUANCE AND SALE OF NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES THAT MAY BE ISSUABLE PURSUANT TO THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. UNTIL THE DATE THAT IS ONE (1) YEAR AFTER THE ISSUANCE DATE (AS DEFINED IN THIS WARRANT), THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS-DELIVERY REQUIREMENTS OF THE SECURITIES ACT.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
SPACE-EYES, INC.
| Warrant Shares: [ ● ]1 | Issuance Date: [ ● ] |
THIS WARRANT TO PURCHASE SHARES OF COMMON STOCK (this “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time or times on or after the Merger Effective Time (as defined below) (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on the five year anniversary of the Merger Effective Time (the “Termination Date”) but not thereafter, to subscribe for and purchase from Space-Eyes, Inc., a Delaware corporation (the “Company”), up to [ ● ]2 shares of Common Stock, par value $0.0001 per share (the “Common Stock”), of the Company (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant is being issued at the Subsequent Closing (as defined in the Securities Purchase Agreement) and covers all Notes funded across the Initial Closing (including any Closing with respect to an Initial Notes Increase) and the Subsequent Closing. For the avoidance of doubt, this Warrant shall not be exercisable prior to the Merger Effective Time.
1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of July [ ● ], 2026, among the Company and the Holder. “Merger” means the business combination contemplated by the Business Combination Agreement (as defined in the Securities Purchase Agreement), pursuant to which Space-Eyes, Inc. will merge with and into McKinley Acquisition Corp., a Cayman Islands exempted company (“McKinley”), or a subsidiary thereof. “Merger Effective Time” means the time at which the Merger is consummated. Upon and following the Merger Effective Time, (i) McKinley shall assume all obligations of Space-Eyes, Inc. under this Warrant, (ii) all references to the “Company” herein shall be deemed to refer to McKinley, and (iii) the term “Common Stock” shall be deemed to refer to the common stock of McKinley.
| 1 | To be a number of shares of Common Stock equal to the quotient of (i) the aggregate Initial Notes Purchase Price and Subsequent Notes Purchase Price actually paid to the Company in exchange for the Initial Purchased Notes and Subsequently Purchased Notes issued at the Initial Closing and any Subsequent Closing (including those issued pursuant to any Closing with respect to an Initial Notes Increase) divided by (ii) the Exercise Price as of the Issuance Date, rounded up to the nearest whole number. |
| 2 | To be a number of shares of Common Stock equal to the quotient of (i) the aggregate Initial Notes Purchase Price and Subsequent Notes Purchase Price actually paid to the Company in exchange for the Initial Purchased Notes and Subsequently Purchased Notes issued at the Initial Closing and any Subsequent Closing (including those issued pursuant to any Closing with respect to an Initial Notes Increase) divided by (ii) the Exercise Price as of the Issuance Date, rounded up to the nearest whole number. |
2. Exercise.
(a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form attached hereto as Exhibit A (the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by (I) wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise or (II) notifying the Company that the outstanding principal amount under one or more Senior Secured Convertible Notes due 2031 (each, a “Note” and collectively, the “Notes”) issued by the Company to the Holder shall be reduced, effective upon the Holder’s receipt of the applicable Warrant Shares, by an amount equal to any or all, at the Holder’s option, of such aggregate Exercise Price (each such notice, a “Principal Reduction Notice”) in the form attached hereto as Exhibit B. No ink-original Notice of Exercise or Principal Reduction Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise or Principal Reduction Notice be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise on the date of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
(b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $12.00 per share, subject to adjustment hereunder (the “Exercise Price”).
(c) Cashless Exercise. Notwithstanding anything to the contrary set forth herein, if at the time of exercise hereof there is no effective Registration Statement registering, or the prospectus contained therein is not available for the resale of Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) | = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (x) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (y) the highest Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) within two (2) hours of the time of the Holder’s delivery of the Notice of Exercise pursuant to Section 2(a) hereof if such Notice of Exercise is delivered during “regular trading hours,” or within two (2) hours after the close of “regular trading hours” on a Trading Day or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is delivered pursuant to Section 2(a) hereof after two (2) hours following the close of “regular trading hours” on such Trading Day; |
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| (B) | = the Exercise Price of this Warrant, as adjusted hereunder; and | |
| (X) | = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the holding period of the Warrant Shares being issued shall be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock are then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock are then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock are not then listed or quoted on a Trading Market and if the Common Stock are listed or quoted for trading on the OTC Market Group’s OTCQB exchange (“OTCQB”) or OTCQX exchange (“OTCQX”) (or any successors to either of the foregoing), the VWAP of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Trading Market” means any of the following markets or exchanges on which Common Stock are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Stock Market LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock are then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock are not then listed or quoted on a Trading Market and if the Common Stock are listed or quoted for trading on OTCQB or OTCQX (or any successors to either of the foregoing), the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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(d) Mechanics of Exercise
(i) Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective Registration Statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or book-entry certificate, registered in the Company’s stock ledger in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after (a) payment of the aggregate Exercise Price to the Company or (b) delivery of the Principal Reduction Notice, and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon the date of delivery of the Notice of Exercise (the “Exercise Date”), the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received or delivery of a Principal Reduction Notice is made within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery to the Company of the Notice of Exercise; and provided further, that the Holder shall be deemed to have waived any voting rights of any such Warrant Shares that may arise during the period commencing on such Exercise Date, through, and including, such applicable Warrant Share Delivery Date, as necessary, such that the aggregate voting rights of any Common Stock (including such Warrant Shares) beneficially owned by the Holder and/or any Attribution Parties, collectively, shall not exceed the Beneficial Ownership Limitation (as defined below) as a result of any such exercise of this Warrant. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a registrar (which may be the Company’s transfer agent (the “Transfer Agent”)) that is a participant in the Fast Automated Securities Transfer Program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
(ii) Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
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(iii) Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. Upon any such rescission, (A) if the Holder has paid the Exercise Price in cash, the Company shall promptly return to the Holder any Exercise Price paid in connection with such exercise and (B) if the Holder has delivered a Principal Reduction Notice in connection with such exercise, such Principal Reduction Notice shall be deemed void and the outstanding principal amount under the Note shall be restored to the amount in effect immediately prior to delivery of such Principal Reduction Notice.
(iv) Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Warrants with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
(v) No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
(vi) Charges, Taxes and Expenses. The issuance and delivery of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto as Exhibit C duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
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(vii) Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
(viii) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with (i) the Holder’s Affiliates, (ii) any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates, and (iii) any other Persons whose beneficial ownership of Common Stock would or could be aggregated with the Holder’s for the purposes of Section 13(d) (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Warrant Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Warrant Shares which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (collectively “Common Stock Equivalents”)) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(d)(viii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d)(viii), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Securities and Exchange Commission (the “Commission”), as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Warrant Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may decrease the Beneficial Ownership Limitation provisions of this Section 2(d)(viii) and, following any such decrease, may increase the Beneficial Ownership Limitation; provided that any such increase shall not exceed 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of Warrant Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d)(viii) shall continue to apply; provided further that any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d)(viii) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant and this Section 2(d)(viii) may not be amended by the Company and the Holder. If the Warrant is unexercisable as a result of the Holder’s Beneficial Ownership Limitation, no alternate consideration is owing to the Holder.
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(e) Stock Exchange Limitations. Notwithstanding anything to the contrary in this Warrant, upon and following the consummation of the Merger, in no event will the number of shares of Common Stock issuable upon conversion or otherwise pursuant to this Warrant and any other Warrants issued pursuant to the Purchase Agreement exceed in the aggregate a number of shares of Common Stock equal to one share of Common Stock less than twenty percent (20%) of the outstanding shares of Common Stock of the Company immediately following the consummation of the Merger (the “Exchange Cap”), provided that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by Nasdaq for issuances of Common Stock in excess of the Exchange Cap, or (ii) obtains a written opinion from outside counsel that such approval is not required, which opinion shall be reasonably satisfactory to the Company and the Holder. Until such approval or written opinion is obtained, the Company shall not issue to the Holder shares of Common Stock in an amount greater than the Exchange Cap. The Company shall use its commercially reasonable efforts to obtain such stockholder approval within one hundred eighty days (180) days following the Subsequent Closing Date. For the avoidance of doubt, in the event that the Holder’s exercise of this Warrant is limited by this Section 2(e), the Holder shall retain the right to exercise this Warrant for shares of Common Stock up to the Exchange Cap, and the portion of the Warrant that is not exercisable solely by reason of this Section 2(e) shall remain outstanding and exercisable upon the Company’s receipt of such stockholder approval. If on or after the earlier to occur of (i) June 30, 2027 and (ii) the date of the Company’s next annual stockholders meeting, any shares of Common Stock are not delivered as a result of the operation of this Section 2(e) (such shares of Common Stock, the “Withheld Shares”), then (1) on the date such shares of Common Stock are issuable hereunder, the Company will pay to the Holder cash in an amount equal to the product of (x) the number of such Withheld Shares; and (y) the VWAP on the applicable Exercise Date; and (2) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in settlement of a sale by the Holder of such Withheld Shares, the Company will reimburse the Holder for (x) any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection with such purchases and (y) the excess, if any, of (A) the aggregate purchase price of such purchases over (B) the product of (I) the number of such Withheld Shares purchased by the Holder; and (II) the VWAP on the applicable Exercise Date.
3. Certain Adjustments.
(a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on its shares of Common Stock or any other equity or Common Stock Equivalents payable in shares of Common Stock (which, for avoidance of doubt, shall not include any Warrant Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant remains unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
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(b) Six-Month Anniversary Adjustment. On the six (6) month anniversary of the Merger Effective Time (the “Reset Date”), the Exercise Price then in effect (after giving effect to any prior adjustments pursuant to this Section 3) shall be automatically adjusted to the Last Reported Sale Price (as defined in the Note) (which shall not be less than five dollars ($5.00)) of the Common Stock on the Trading Day immediately preceding the Reset Date if such Last Reported Sale Price is less than the Exercise Price then in effect. For the avoidance of doubt, no adjustment shall be made pursuant to this Section 3(b) if such adjustment would result in an increase in the Exercise Price. If the Reset Date is not a Trading Day, the Reset Date shall be deemed to be the next succeeding Trading Day. For the avoidance of doubt, any adjustment to the Exercise Price pursuant to this Section 3(b) shall not result in any adjustment to the number of Warrant Shares for which this Warrant is exercisable, and Section 3(e) shall not apply to any adjustment made pursuant to this Section 3(b).
(c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
(d) Subsequent Equity Sales. If, at any time following the date of the Securities Purchase Agreement while this Warrant is outstanding (such period, the “Adjustment Period”), the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase or other disposition), or, in accordance with this Section 3(d), is deemed to have issued or sold, any shares of Common Stock or Common Stock Equivalents (excluding any Exempt Issuance (as defined below) issued or sold or deemed to have been issued or sold) for a consideration per share (the “Dilutive Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such price is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then simultaneously with the consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the Dilutive Issuance Price (the “New Issuance Price”); provided that, no adjustment shall be made if such adjustment would result in an increase of the Exercise Price then in effect. For the avoidance of doubt, the “New Issuance Price” with respect to shares of Common Stock issued by the Company before the consummation of the Merger shall be adjusted to give effect to any conversion of such shares of Common Stock into shares of Common Stock of McKinley in connection with the Merger.
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Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(d) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any shares of Common Stock or Common Stock Equivalents subject to this Section 3(d), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(d), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the New Issuance Price regardless of whether the Holder accurately refers to the New Issuance Price in the Notice of Exercise. If the Company enters into a McKinley Variable Rate Transaction (as defined in the Securities Purchase Agreement), the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible price, conversion price or exercise price at which such securities may be issued, converted or exercised. “Exempt Issuance” means (A) the issuance of McKinley Options (as defined in the Securities Purchase Agreement) or McKinley Convertible Securities (as defined in the Securities Purchase Agreement) issued under any Approved Stock Plan (as defined below), so long as (i) the aggregate number of shares issued and issuable pursuant thereto does not exceed five percent (5%) of the shares of Common Stock issued and outstanding immediately prior to the date hereof and (ii) the exercise price of any such McKinley Options is not lowered and the conversion price of any such McKinley Convertible Securities is not lowered, none of such McKinley Options or McKinley Convertible Securities are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects the Holder, (B) the issuances of Underlying Shares (as defined in the Securities Purchase Agreement), (C) the issuance of Spaceport Bonds (as defined in the Notes) issued by the Company to finance qualified spaceport facilities of the applicable Project Financing Subsidiary (as defined in the Notes), (D) the issuance of shares of Common Stock in satisfaction of any Amortization Payments (as defined in the Notes) in accordance with Section 5(C) of the Notes for which the Company elected to reduce the applicable Amortization Conversion Price Floor (as defined in the Notes) in accordance with the terms thereof, (E) the issuance of shares of Common Stock issuable upon the conversion, exercise or exchange of Convertible Securities outstanding as of the date hereof; provided that the terms of such Convertible Securities have not been amended or modified (w) to reduce the exercise price, conversion price, or exchange price, (x) to increase the number of shares of Common Stock issuable upon exercise, conversion or exchange thereof, (y) to extend the term or expiration date thereof or (z) otherwise in any manner that adversely affects the Holder, or (F) the issuances of Common Stock or Common Stock Equivalents offered as consideration for the acquisition or license of any business or asset by the Company or any of its Subsidiaries, provided that (i) such transaction shall be approved by a majority of the disinterested directors of the Company, and (ii) such transaction shall not be effected by the Company primarily for the purpose of raising capital. An “Approved Stock Plan” means any security-based compensation plan which has been approved by the Board of Directors of the Company prior to the date hereof, pursuant to which Common Stock, options to purchase shares of Common Stock and other incentive equity awards may be issued to any employee, officer or director for services provided to the Company in their capacity as such, and not for the purpose of raising capital, pursuant to any agreement approved by the Board of Directors or the compensation committee thereof. The terms “McKinley Variable Rate Transaction,” “McKinley Options” and “McKinley Convertible Securities” shall apply, mutatis mutandis, to the surviving entity in connection with any merger in which the Company is not the surviving entity.
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i. Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any McKinley Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such McKinley Option or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such McKinley Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such shares of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale (or the time of execution of such agreement to grant, issue or sell, as applicable) of such McKinley Option for such price per share. For purposes of this Section 3(d)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such McKinley Options or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such McKinley Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant, issue or sell, as applicable) of such McKinley Option, upon exercise of such McKinley Option and upon conversion, exercise or exchange of any Common Stock Equivalent issuable upon exercise of such McKinley Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such McKinley Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such McKinley Options or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such McKinley Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such McKinley Option (or any other Person) upon the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) such McKinley Option, upon exercise of such McKinley Option and upon conversion, exercise or exchange of any Common Stock Equivalent issuable upon exercise of such McKinley Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such McKinley Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Common Stock Equivalents upon the exercise of such McKinley Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents.
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ii. Issuance of Common Stock Equivalents. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Common Stock Equivalents and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such shares of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Common Stock Equivalents for such price per share. For the purposes of this Section 3(d)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Common Stock Equivalent and upon conversion, exercise or exchange of such Common Stock Equivalent or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Common Stock Equivalent for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Common Stock Equivalent (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Common Stock Equivalent plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Common Stock Equivalent (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Common Stock Equivalents is made upon exercise of any McKinley Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(d), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
iii. Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any McKinley Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Common Stock Equivalents, or the rate at which any Common Stock Equivalents are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such McKinley Options or Common Stock Equivalents provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(d)(iii), if the terms of any McKinley Option or Common Stock Equivalent that was outstanding as of the Initial Exercise Date are increased or decreased in the manner described in the immediately preceding sentence, then such McKinley Option or Common Stock Equivalent and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(d) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
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iv. Calculation of Consideration Received. If any McKinley Option and/or Common Stock Equivalents and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such McKinley Option and/or Common Stock Equivalents and/or Adjustment Right, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is a McKinley Option and/or Common Stock Equivalent, the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(d)(i) or 3(d)(ii) above and (z) the lowest VWAP of the Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the applicable Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Warrant is exercised, on any given Exercise Date during any such Adjustment Period, solely with respect to such portion of this Warrant converted on such applicable Exercise Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date). If any shares of Common Stock, McKinley Options or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, McKinley Options or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, McKinley Options or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, McKinley Options or Common Stock Equivalents (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company. For purposes hereof, “Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with this Section 3(d)) of shares of Common Stock that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
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v. Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, McKinley Options or in Common Stock Equivalents or (B) to subscribe for or purchase shares of Common Stock, McKinley Options or Common Stock Equivalents, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(e) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 3(d), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the Original Aggregate Exercise Price (without regard to any limitations on exercise contained herein). For purposes hereof, “Original Aggregate Exercise Price” means $[●]3, as reduced proportionately for any Warrant Shares previously purchased upon exercise of this Warrant. For the avoidance of doubt, this Section 3(e) shall not apply to any adjustment to the Exercise Price made pursuant to Section 3(b).
(f) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
| 3 | To be the product of the aggregate Warrant Shares exercisable as of the Issuance Date multiplied by the Exercise Price as of the Issuance Date. |
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(g) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of the Company’s assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of greater than 50% of the outstanding Common Stock or greater than 50% of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of Common Stock or any compulsory share exchange pursuant to which the Common Stock are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires greater than 50% of the outstanding shares of Common Stock or greater than 50% of the voting power of the common equity of the Company (each a “Fundamental Transaction”); provided, however, that the Merger shall not constitute a Fundamental Transaction, then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d)(viii) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d)(viii) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within thirty (30) days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder, as described below, an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction, provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company or any Successor Entity, as of the date of the consummation of such Fundamental Transaction, the same type or form of consideration (and in the same proportion), valued at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received shares of the Successor Entity (which Successor Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility, (2) the 100 day volatility or (3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined utilizing a 365-day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the period beginning on the Trading Day immediately preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section 3(g) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(g) pursuant to written agreements in form and substance reasonably satisfactory to the Holder prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(g) regardless of whether the Company has sufficient authorized Common Stock for the issuance of Warrant Shares.
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(h) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share of Common Stock, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(i) Notice to Holder.
(A) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
(B) Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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(j) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
4. Transfer of Warrant.
(a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 2(h) of the Securities Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an Assignment Form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
(b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
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(d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 11(g) of the Securities Purchase Agreement.
(e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
5. Miscellaneous.
(a) Currency. All dollar amounts referred to in this Warrant are in United States Dollars (“U.S. Dollars”). All amounts owing under this Warrant shall be paid in U.S. Dollars. All amounts denominated in other currencies shall be converted in the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Warrant, the U.S. Dollar exchange rate as published in the Wall Street Journal (New York edition) on the relevant date of calculation.
(b) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this Warrant.
(c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
(d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day.
(e) Authorized Shares. The Company covenants that during the period that the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued and delivered, as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares underlying this Warrant which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
(f) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Securities Purchase Agreement.
(g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state, federal or foreign securities laws.
(h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant or the Securities Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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(i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Securities Purchase Agreement.
(j) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(k) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
(l) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
(m) Amendment. This Warrant, other than this Section 5(m) and the provision restricting the amendment of Section 2(d)(viii), may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder of this Warrant, on the other hand.
(n) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(o) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
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(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| SPACE-EYES, INC. | ||
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| Name: | ||
| Title: | ||
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EXHIBIT A
NOTICE OF EXERCISE
TO: SPACE-EYES, INC.
(1) The undersigned hereby gives notice to the Company of its election to subscribe for ________ Warrant Shares of the Company pursuant to that certain Warrant issued by the Company to the undersigned on [ ● ], 2026, and irrevocably undertakes to pay the exercise price of $________ in full, together with all applicable transfer taxes, if any, as set forth below.
(2) Payment shall take the form of (check applicable box(es)):
☐ in lawful money of the United States;
☐ a deduction, in the amount of ________, from the outstanding principal amount under one or more Senior Secured Convertible Notes due 2031 issued by the Company to the Holder on the Issuance Date; and/or
☐ if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
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| [SIGNATURE OF HOLDER] |
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Name of Investing Entity:
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Signature of Authorized Signatory of Investing Entity: _____________________________________________________________________________________ |
Title of Authorized Signatory:
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EXHIBIT B
PRINCIPAL REDUCTION NOTICE
TO: SPACE-EYES, INC.
Payment shall take the form of a deduction and set-off, in the amount of $ ________, from the outstanding principal amount under one or more Senior Secured Convertible Notes due 2031 issued by the Company to the Holder.
| [SIGNATURE OF HOLDER] |
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Name of Investing Entity:
_______________________________________________________________________________________________ |
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Signature of Authorized Signatory of Investing Entity:
_______________________________________________________________________________________________ |
Title of Authorized Signatory:
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EXHIBIT C
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Name: __________________________________________________________________________________________ |
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Address: _______________________________________________________________________________________ |
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Phone Number: ___________________________________________________________________________________ |
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Email Address: ___________________________________________________________________________________ |
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Dated: _________________________________________________________________________________________ |
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Holder’s Signature: _______________________________________________________________________________ |
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Holder’s Address: ________________________________________________________________________________ |
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Exhibit 99.1
Space-Eyes and McKinley Acquisition Corp. Announce Definitive Business Combination Agreement to Deliver AI-Driven Counter Drone Technology and Geospatial Intelligence Worldwide
The transaction will bring Space-Eyes’ intelligence platforms to public markets with real-time situational awareness for governments and enterprises to monitor and respond to mission critical threats across land, sea and air
Eric Trump announced as an investor and strategic adviser with deep experience in identifying and growing U .S. innovations indefense technology
| ● | Proposed transaction is expected to close in the fourth quarter of 2026. |
| ● | Implied Space-Eyes pro forma transaction equity valuation of $638 million, assuming no redemptions from McKinley’s trust accoun t and the in itialtranch e of $5 million received from PIPE. |
| ● | Sourced up to $75 million in a PIPE to augment $176.7 million of trust capital. |
Miami, Florida, July 31, 2026 (GLOBE NEWSWIRE) -- Space-Eyes, Inc. (“Space-Eyes”), a provider of next-generation geospatial intelligence and AI agents that orchestrate real-time situational awareness and control for Defense, Security, and Enterprise Operations Worldwide, and McKinley Acquisition Corp. (Nasdaq: MKLY) (“McKinley”), announced today that they have entered into a definitive business combination agreement ("BCA”). The proposed transaction was unanimously approved by the boards of directors of both Space-Eyes and McKinley and is expected to close in the fourth quarter of 2026, subject to customary closing conditions, including regulatory and shareholder approval. Upon closing, the combined company will be named Space-Eyes, Inc., and its common stock is expected to be listed on The Nasdaq Stock Market LLC (“Nasdaq”) and trade under the ticker symbol CUAS, subject to approval by Nasdaq.
Space-Eyes delivers AI-driven, sensor-agnostic Counter-Unmanned Aerial Systems (C-UAS) that detect, track, identify, and mitigate unauthorized and hostile drones across critical infrastructure, military installations, borders, and mass-gathering venues. The Company's C-UAS platforms are built on CATE AI, its proprietary fusion engine, which integrates radar, RF, EO/IR, and satellite inputs into a single decision-grade air picture. Because the platform is sensor-agnostic, customers deploy it over their existing sensor investments, compressing procurement and fielding timelines.
That same engine underpins Space-Eyes' broader geospatial intelligence platform, which fuses satellite and multi-sensor data to deliver decision-grade awareness across land, sea, and air for governments and enterprises. The result is a repeatable business model: a single AI core expanding across C-UAS, maritime domain awareness, wildfire detection, and satellite command and control. These capabilities are expected to enable rapid deployment into new applications and provide deeper penetration within existing customer accounts. Space-Eyes is now scaling from prototype deployments into large-scale, sole-source production contracts, increasing procurement velocity, contract size, and program durability.
Management Commentary
“The technology Space-Eyes is developing is absolutely critical for the safety of our nation,” said Eric Trump, strategic advisor. “America has to lead the way, and I am proud to be part of this important mission – leveraging AI and seamless data integration for real-time insights and next generation autonomous defense systems.”
“The world has never needed real-time intelligence more than it does today in order to understand and respond to dynamic and unpredictable environments,” said Capt. Jatin Bains, Space-Eyes CEO and founder. “Space-Eyes has spent two decades building technology, partnerships, and operational credibility to meet this challenge. This transaction gives us an opportunity with the capital and strategic foundation to accelerate growth, expand customer deployments, and fundamentally reshape how the world manages risk.”
“Autonomous defense is a secular trend drawing strong investor attention and market demand. With Space-Eyes' highly scalable, capital-efficient technology and a team that can secure meaningful contracts, we are well positioned to drive organic and inorganic growth and succeed as a public company,” said Peter Wright, CEO of McKinley Acquisition Corp.
Transaction Highlights:
| ● | Market Demand: The Geospatial Intelligence and Counter-Unmanned Aerial Systems (C-UAS) market is projected to continue its growth driven by increasing demand for AI-enabled defense systems, expanding deployment of satellites, and rising demand for high-frequency, multi-sensor data collection across defense and enterprise applications. |
| ● | Implied Valuation: The transaction values Space-Eyes at a pro-forma equity value of $638 million (assuming no redemptions from McKinley’s trust account and the initial tranche of $5 million from the PIPE) and an implied enterprise value of $370 million. |
| ● | Financing: McKinley Acquisition Corp. has sourced up to $75 million of capital through PIPE financing, of which $5 million will be invested upon the filing of a registration statement on Form S-4 (the “Registration Statement”) relating to the proposed business combination. |
| ● | Closing: The transaction is expected to close in the fourth quarter of 2026, subject to approval by McKinley shareholders and Space-Eyes, and the satisfaction or waiver of customary closing conditions. |
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PIPE Transaction:
On July 30, 2026, Space-Eyes, McKinley, and certain buyers, entered into a $75 million Securities Purchase Agreement (the “SPA”).
The SPA provides for the sale of $5 million in senior secured convertible notes at an initial closing, subject to certain conditions, that will take place upon the filing of the business combination registration statement. The proceeds of the initial closing will be funded into a control account, to be released in certain circumstances. The SPA also provides for the issuance of up to an additional $70 million in senior secured convertible notes and warrants at subsequent closings, subject to certain conditions. At the subsequent closing, Space-Eyes is obligated to issue to the buyers shares of common stock equal to 9.9% of McKinley’s outstanding common stock following the merger. The buyers may apply such shares to satisfy share issuance obligations under the notes. Any such shares which are not used to satisfy share issuance obligations under the notes will be returned upon the maturity date. The notes bear interest at 10% per annum and mature in 2031. The exercise price of the warrants is $12.00 per share, subject to adjustment.
The notes contain affirmative and negative covenants, including, among others, restrictions on additional indebtedness, liens, investments, distributions, asset transfers and transactions with affiliates, as well as minimum liquidity requirements.
The conversion price of the notes is equal to (A) one thousand dollars ($1,000) divided by (B) the conversion rate. The conversion rate is equal to $1,000 divided by the lower of (i) twelve dollars ($12.00) and (ii) one hundred twenty percent (120%) of the last reported sale price of the common stock on the closing of the business combination, subject to adjustment.
The securities issued under the SPA will be secured by a first priority security interest in substantially all tangible and intangible assets of Space-Eyes and its subsidiaries, together with control agreements over a controlled cash account. Concurrently with the consummation of the business combination, McKinley and the buyers will execute security agreements granting an equivalent first priority security interest in substantially all of McKinley’s and its subsidiaries’ assets.
In addition, in connection with the business combination, the notes, and warrants issued by Space-Eyes will be exchanged for corresponding notes and warrants issued by McKinley, on materially identical terms and the Space-Eyes securities will be cancelled.
For a summary of the material terms of the transaction, as well as a copy of the business combination agreement and investor presentation, please see the Current Report on Form 8-K to be filed by McKinley with the U.S. Securities and Exchange Commission (the "SEC") available at www.sec.gov. Additional information about the proposed business combination will be described in the registration statement which McKinley and Space-Eyes will file with the SEC at www.sec.gov or by directing a written request to McKinley Acquisition Corp., 75 Second Ave., Suite 605, Needham, MA 02494.
Advisors
Clear Street LLC is serving as lead advisor and placement agent on the transaction and Alexander Capital is a co-adviser and placement agent.
About Space-Eyes
Space-Eyes is a U.S. geospatial intelligence and technology company delivering space-driven awareness for high-stakes environments through advanced analytics and multi-sensor integration. The company develops data-driven systems that prioritize accuracy, integrity, and operational usefulness to support decision-makers. Its work spans maritime operations, disaster monitoring, and defense and security missions. With continued investment in analytics, sensor fusion, and space-layer infrastructure, Space-Eyes is building intelligence systems designed for scale, reliability, and mission impact.
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About McKinley Acquisition Corp.
McKinley Acquisition Corp. is a special purpose acquisition company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.
Cautionary Statement Regarding Forward-Looking Information
Certain statements made herein are not historical facts but may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” or the negatives of these terms or variations of them or similar terminology or expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding future events, the proposed business combination between McKinley and Space-Eyes, the estimated or anticipated future results and benefits of the combined company following the business combination, including the likelihood and ability of the parties to successfully consummate the business combination, future opportunities for the combined company and other statements that are not historical facts.
These statements are based on the current expectations of McKinley and/or Space-Eyes’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of McKinley and Space-Eyes. These statements are subject to a number of risks and uncertainties regarding Space-Eyes’ business and the business combination, and actual results may differ materially. These risks and uncertainties include, but are not limited to: general economic, political and business conditions; the inability of the parties to consummate the business combination or the occurrence of any event, change or other circumstances that could give rise to the termination of the business combination agreement; the number of redemption requests made by McKinley’s shareholders in connection with the business combination; the outcome of any legal proceedings that may be instituted against the parties following the announcement of the business combination; the risk that the approval of the shareholders of Space-Eyes or McKinley for the potential transaction is not obtained; failure to realize the anticipated benefits of the business combination, including as a result of a delay in consummating the potential transaction; the risk that the business combination disrupts current plans and operations as a result of the announcement and consummation of the business combination; the risks related to the rollout of Space-Eyes’ business and the timing of expected business milestones; the effects of competition on Space-Eyes’ business; the ability of the combined company to execute its growth strategy, manage growth profitably and retain its key employees; the ability of the combined company to obtain or maintain the listing of its securities on a U.S. national securities exchange following the business combination; costs related to the business combination; and other risks that will be detailed from time to time in filings with the SEC. The foregoing list of risk factors is not exhaustive. There may be additional risks that Space-Eyes and McKinley presently do not know or that Space-Eyes and McKinley currently believe are immaterial that could also cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements provide Space-Eyes’ and/or McKinley’s expectations, plans or forecasts of future events and views as of the date of this communication. Space-Eyes and McKinley anticipate that subsequent events and developments will cause their assessments to change. However, while Space-Eyes and/or McKinley may elect to update these forward-looking statements in the future, Space-Eyes and McKinley specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing Space-Eyes’ or McKinley’s assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements. Nothing herein should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or results of such forward-looking statements will be achieved.
Additional Information and Where to Find It
The business combination will be submitted to shareholders of McKinley for their consideration. In connection with the business combination, McKinley intends to file a Registration Statement with the SEC, which will include a proxy statement/prospectus and certain other related documents, which will serve as both the proxy statement to be distributed to its shareholders in connection with its solicitation for proxies for the vote by its shareholders in connection with the business combination and other matters to be described in the Registration Statement, as well as the prospectus relating to the offer and sale of the securities to be issued to Space-Eyes’ equity holders in connection with the completion of the business combination. After the Registration Statement is declared effective, McKinley will mail a definitive proxy statement and other relevant documents to its shareholders as of the record date established for voting on the business combination. This communication is not a substitute for the Registration Statement, the definitive proxy statement/prospectus or any other document that McKinley will send to its shareholders in connection with the business combination.
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INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE BUSINESS COMBINATION AND THE PARTIES TO THE BUSINESS COMBINATION. Investors and security holders will be able to obtain copies of these documents (if and when available) and other documents filed with the SEC free of charge at www.sec.gov. The definitive proxy statement/final prospectus (if and when available) will be mailed to shareholders of McKinley as of a record date to be established for voting on the business combination. Shareholders of McKinley will also be able to obtain copies of the proxy statement/prospectus without charge, once available, at the SEC’s website at www.sec.gov.
Participants in the Solicitation
McKinley and its directors, executive officers, and other members of management, and consultants may, under SEC rules, be deemed to be participants in the solicitation of proxies from McKinley’s shareholders with respect to the business combination. A list of the names of those directors and executive officers and a description of their interests in McKinley is contained in the sections entitled “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters” and “Directors, Executive Officers and Corporate Governance” of McKinley’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026, and which is available free of charge at the SEC’s website at www.sec.gov.
Additional information regarding the interests of such participants will be contained in the Registration Statement when available.
Space-Eyes, its directors, executive officers, other members of management, and employees, under SEC rules, may be deemed participants in the solicitation of proxies of McKinley’s shareholders in connection with the business combination. A list of the names of such directors and executive officers and information regarding their interests in the business combination will be included in the Registration Statement when available.
No Offer or Solicitation
This communication is for informational purposes only and is not (i) an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy any securities, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law nor (ii) the solicitation of any vote in any jurisdiction pursuant to the business combination or otherwise. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act. No securities commission or securities regulatory authority in the United States or any other jurisdiction has in any way passed upon the merits of the business combination or the accuracy or adequacy of this communication. INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN APPROVED BY THE SEC OR ANY OTHER REGULATORY AUTHORITY NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Investor Contact:
Mike Cummings
Alpha IR Group
617.461.1101
Media Contact:
James McCusker
Alpha Advisory Group
203.585.4750
CUAS@alpha-ir.com
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