As filed with the U.S. Securities and Exchange Commission on May 3, 2023

 

Registration Statement No. 333-                

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

SYRA HEALTH CORP.
(Exact name of registrant as specified in its charter)

 

Delaware   7361   85-4027995

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

1119 Keystone Way N. #201

Carmel, IN 46032

(463) 345-8950

(Address, including zip code, and telephone number,

Including area code, of registrant’s principal executive offices)

 

Deepika Vuppalanchi

Chief Executive Officer

Syra Health Corp.

1119 Keystone Way N. #201

Carmel, IN 46032

(463) 345-8950

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

Copies to:

 

Jeffrey J. Fessler, Esq.

Nazia J. Khan, Esq.

Sheppard, Mullin, Richter & Hampton LLP

30 Rockefeller Plaza

New York, NY 10112-0015

Telephone: (212) 653-8700

 

Richard I. Anslow, Esq.

Jonathan Deblinger, Esq.

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas

New York, NY 10105

Telephone: (212) 370-1300

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐   Accelerated filer ☐   Non-accelerated filer ☒   Smaller reporting company ☒
            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 to Section 7(a)(2)(B) of the Securities Act. ☐

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 
 

 

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED MAY 3, 2023

 

2,000,000 Units

Shares of Class A Common Stock and Warrants

 

 

Syra Health Corp.

 

This is the initial public offering of units of securities (the “Units”) of Syra Health Corp. Prior to this offering, there has been no public market for shares of our Class A common stock. The assumed public offering price per Unit is $4.125.

 

Each Unit consists of (a) one share of our Class A common stock (“Class A common stock”) and (b) one warrant (each, a “Warrant” and collectively, the “Warrants”) to purchase one share of our Class A common stock at an exercise price equal to $6.50 per share, exercisable until the fifth anniversary of the issuance date. The shares of our Class A common stock and the Warrants are immediately separable and will be issued separately, but will be purchased together in this offering.

 

We have applied to list our Class A common stock on The Nasdaq Capital Market under the symbol “SYRA.” Upon completion of this offering, we believe that we will satisfy the listing requirements and expect that our Class A common stock will be listed on The Nasdaq Capital Market. Such listing, however, is not guaranteed. If the application is not approved for listing on The Nasdaq Capital Market, we will not proceed with this offering. We do not intend to apply for a listing of the Warrants on The Nasdaq Capital Market or any other securities exchange or nationally recognized trading system, and we do not expect a market to develop for the Warrants.

 

Upon completion of this offering, we will be a “controlled company” as defined in the corporate governance rules of The Nasdaq Capital Market; however, we do not expect to utilize any related exemptions to governance rules as a result of being a controlled company.

 

We have two classes of common stock: Class A common stock and convertible Class B common stock (“Class B common stock”). The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 16.5 votes and is convertible at any time into 10 shares of Class A common stock. In addition, each share of Class B common stock will convert automatically into 10 shares of Class A common stock upon the death of the holder or any transfer, whether or not for value, except for certain permitted transfers described in our Amended and Restated Certificate of Incorporation, as amended (“Certificate of Incorporation”), including, but not limited to, trusts for the benefit of the stockholder, and partnerships, corporations and other entities owned by the stockholder. Following this offering, the holders of all of our outstanding Class B common stock will hold approximately 71.04% of the voting power of our outstanding capital stock, assuming the conversion of all outstanding notes into an aggregate of 442,367 shares of our Class A common stock and no exercise by the underwriters of their over-allotment option.

 

The dual-class structure of our common stock as contained in our Certificate of Incorporation has the effect of concentrating voting control with those stockholders who hold our Class B common stock after this offering. As of April 15, 2023, there are 1,000,000 shares of our Class B common stock outstanding, representing 79.39% of our total voting securities outstanding. Such Class B holders shall continue to have voting control until they hold under 50.1% of the voting power of our outstanding capital stock, or approximately 704,000 shares of Class B common stock, after the completion of this offering. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may adversely affect the trading price of our Class A common stock.

 

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements.

 

Investing in our Class A common stock involves risks. See “Risk Factors” beginning on page 9.

 

   Per Unit   Total 
Price to the public  $   $ 
Underwriting discounts and commissions  $   $ 
Proceeds to us (before expenses)1  $                  $              

 

(1) Underwriting discounts and commissions do not include a non-accountable expense allowance equal to 1% of the initial public offering price payable to the underwriters. The registration statement, of which this prospectus is a part, also registers for sale warrants to purchase shares of Class A common stock to be issued to the representative of the underwriters. We have agreed to issue the warrants to the representative of the underwriters as a portion of the underwriting compensation payable to the underwriters in connection with this offering. We refer you to “Underwriting” beginning on page 77 of this prospectus for additional information regarding underwriting compensation.

 

We have granted the underwriters a 45-day option, exercisable one or more times in whole or in part, to purchase up to 300,000 additional shares of Class A common stock and/or Warrants to purchase up to 300,000 shares of Class A common stock, in any combinations thereof, at the initial public offering price, less the underwriting discount.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The underwriters expect to deliver the Units on or about                       , 2023.

 

KINGSWOOD

a division of Kingswood Capital Partners, LLC

 

The date of this prospectus is               , 2023

 

 

 

 

TABLE OF CONTENTS

 

  Page
PROSPECTUS SUMMARY 1
RISK FACTORS 9
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS 28
INDUSTRY AND MARKET DATA 30
TRADEMARKS, SERVICE MARKS AND TRADENAMES 30
USE OF PROCEEDS 30
DIVIDEND POLICY 31
CAPITALIZATION 31
DILUTION 32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS 34
BUSINESS 40
MANAGEMENT 49
EXECUTIVE AND DIRECTOR COMPENSATION 54
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS 60
PRINCIPAL STOCKHOLDERS 62
DESCRIPTION OF CAPITAL STOCK 64
SHARES ELIGIBLE FOR FUTURE SALE 68
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF OUR CLASS A COMMON STOCK AND WARRANTS 70
UNDERWRITING 77
LEGAL MATTERS 81
EXPERTS 81
WHERE YOU CAN FIND MORE INFORMATION 81
INDEX TO FINANCIAL STATEMENTS F-1

 

We have not, and the underwriters have not, authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give to you. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities.

 

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of these securities.

 

i

 

 

PROSPECTUS SUMMARY

 

The following summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. It does not contain all the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless context requires otherwise, references to “we,” “us,” “our,” “Syra,” or “the Company” refer to Syra Health Corp.

 

Overview

 

We are a healthcare services company promoting preventative health, holistic wellness, health education, and equitable healthcare for all patient demographics. We leverage deep scientific and healthcare expertise to create strategic frameworks and develop patient-centric solutions for the betterment of patient lives and health outcome linked to developing a healthier population. We strive to offer comprehensive end-to-end solutions in health education services, population health management, behavioral and mental health, healthcare workforce and digital health.

 

Indiana Family and Social Services Administration accounted for approximately 98% of our revenues for each of the years ended December 31, 2022 and 2021 and 99% and 92% of our accounts receivable at December 31, 2022 and 2021, respectively, as due from the combined divisions (NeuroDiagnostic Institute and Division of Mental Health and Addiction) of the Indiana Family and Social Services Administration.

 

Our Services

 

Health Education Services

 

We believe that one of the main drivers of the healthcare education solutions market is the need to address challenges in the healthcare industry through effective and innovative medical and scientific training. With evolving healthcare technology, healthcare professionals must be knowledgeable with respect to various patient-care approaches to make better informed clinical decisions and assure patient satisfaction. We believe that targeted and continuous healthcare education solutions are needed to help healthcare professionals improve their competency, improve health equality and incorporate innovative and new therapeutic options into practice to improve overall patient care quality. We develop medical education content to drive the organizational and strategic brand goals and vision of our clients. Our education outreach plan utilizes omnichannel delivery approaches from a suite of solutions for in-person, virtual and hybrid arrangements, and our deliverables include traditional print and electronic formats. Some of our targeted education approaches include the utilization of artificial intelligence tools to provide real-time information to customers. Within our health education service line we offer the following services: medical communications, patient education, and healthcare training.

 

On September 3, 2021, we entered into a professional services contract with the Indiana Family and Social Services Administration, Division of Mental Health and Addiction, as amended on April 25, 2023, pursuant to which we are coordinating the work of the State Epidemiological Outcomes Workgroup and supporting data-driven decision-making regarding prevention efforts across state agencies and bodies.

 

Population Health Management

 

We define population health management as the process of assessing and analyzing healthcare and its delivery to create improvement for a population of individuals. We are developing end-to-end solutions and strategies to improve quality of care, access to care, health outcomes, and healthcare policies. We believe that our solutions will assist individuals in reaching their full health potential through preventative care, care coordination and patient engagement. Our team of service providers apply advanced health analytics to real-world data to provide meaningful insights to improve quality of clinical care and understand patterns and trends around diagnosis, treatment and continued care. We believe our team helps stratify health risks based on social determinants of health, predict utilization of resources and health care costs, identify patient-level interventions and recommend population-level strategies. Within our population health management service line we offer the following services: analytics as a service, epidemiology and health equity analytics solutions.

 

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Behavioral and Mental Health

 

We strongly believe in behavioral and mental health equity and our mission is to provide solutions that help improve health care and provide access to all populations, regardless of race, ethnicity, gender, socioeconomic status, sexual orientation, or geographic location. With our specialized services, we believe that we can help solve the behavioral and mental health needs of various organizations, including health organizations, large employers and schools. Currently, we offer telehealth and prevention program services; however, to date, we have not generated any revenue from such services. Specifically, we are developing Syrenity as a convenient, on-demand telehealth platform for mental health services that provides interactive patient experience. Through Syrenity, we intend to offer 24/7 access to safe and secure counseling and care coordination with a variety of medical health professionals such as psychiatrists, therapists, nurse practitioners and peer coaches and can provide similar services and solutions for employers and their employees. Furthermore, Syrenity is intended to provide valuable tips, solutions and potential treatment interventions for improving mental health.

 

Healthcare Workforce

 

Our healthcare staffing solutions are intended to help evaluate the immediate and longitudinal workforce needs of our client’s organization. Using agile implementation staffing methodologies we make it seamless and cost-efficient to expand our client’s clinical personnel. We recruit experienced nurses and allied health professionals for long-term fixed contract positions at hospitals and healthcare facilities across the country. Currently, we hold contracts with the State of Indiana psychiatric hospital to provide healthcare licensed and ancillary staff. Other staffing positions that we recruit include care coordinators, specialists to fill healthcare management roles, healthcare educators, therapists, healthcare technicians and health plan specialists.

 

On July 27, 2021, we entered into a professional services contract with the Indiana Family and Social Services Administration, NeuroDiagnostic Institute, as amended on April 6, 2022 and June 29, 2022, pursuant to which we provide medical staffing services to the NeuroDiagnostic Institute.

 

Digital Health

 

We use digital health to bring innovation into the healthcare practice. By providing stakeholders with data, we empower stakeholders to address factors that impact holistic health, including physical, behavioral and social elements. Currently, we are developing digital and cloud-based platforms to help improve cost savings through the automation of health operations which also provide clinical insights that personalize care and improve patient satisfaction; however, we have not generated any revenue to date. Our solutions include digital transformation, cloud and security, artificial intelligence, patient engagement, and health apps. Our Soulcial app which we intend to launch in the second half of 2023 is intended to connect the mind, body and soul elements and provides a way to connect to caregivers and peers, thus alleviating social isolation. The behavioral and mental health modules in Soulcial are intended to help self-assess stress, anxiety and depression and connect patients to service providers for treatment interventions. In addition, we offer an artificial intelligence chatbot trained to have human-like conversations using a process known as natural language processing to facilitate and provide end-to-end query resolution for the patients. Patients can utilize our chatbot for multiple features such as learning more about their condition, identifying healthcare professionals in their vicinity, scheduling, billing purposes, and learning about their health benefits from a health plan.

 

Growth Strategies

 

We hope to become a leader in clinical healthcare solutions by providing customized and comprehensive end-to-end solutions for our customers in the public and private healthcare sectors and expand our operations to other metropolitan areas. As we continue our expansion, we anticipate that our professional pool and infrastructure will grow to support the breadth and depth of our services. In addition, we may expand our footprint by acquiring companies that offer similar service lines.

 

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Risks Associated with Our Business

 

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this Prospectus Summary. These risks include, but are not limited to, the following:

 

  ● Although we have generated approximately $5.3 million and $1.3 million of revenues as of December 31, 2022 and 2021, respectively, our future profitability is uncertain. Even if this offering is successful, we will require substantial additional funding. If we are unable to raise capital on favorable terms when needed, we could be forced to curtail, delay or discontinue our business.
     
  ● Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
     
  ● Our business strategy and future success depend on our ability to cross-sell our solutions.
     
  ● If we are unable to successfully expand our sales force productivity, sales of our solutions and the growth of our business and financial performance could be harmed.
     
  ● Our ability to generate revenue could suffer if we do not continue to update and improve our existing solutions and develop new ones.
     
  ● Achieving market acceptance of new or updated solutions is necessary in order for them to become profitable and will likely require significant efforts and expenditures.
     
  ● Our business would be adversely affected if we cannot obtain, process or distribute data we require to provide our solutions.
     
  ● Disruptions in service or damages to our data or systems failures could have a material adverse impact on our business, results of operations or financial condition. In addition, breaches and failures of information technology (“IT”) systems and the sensitive information we transmit, use and store expose us to potential liability and reputational harm.
     
  ● We rely on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems in providing certain of our solutions to our customers, and any failure or interruption in the services provided by these third parties or our own systems could expose us to litigation and negatively impact our relationships with customers, adversely affecting our brand and our business.
     
  ● Failure by our customers to obtain proper permissions or provide us with accurate and appropriate information may result in claims against us or may limit or prevent our use of information, which could harm our business. Additionally, privacy concerns relating to our business could damage our reputation and deter current and potential customers from using our solutions.
     
  ● Our independent content providers may fail to perform adequately or comply with laws, regulations or contractual covenants.
     
  ● Our work with government clients exposes us to additional risks inherent in the government contracting environment.
     
  ● We may be liable for the misdiagnoses, mistreatment, injury or other harm to patients resulting from the use of data that we provide to health care providers, and any resulting claims could negatively impact our operating results and result in a decline in our stock price.

 

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  ● The protection of our intellectual property requires substantial resources and protections of our proprietary rights may not be adequate.
     
  ● We depend on a small number of large customers and the loss of one or more major customers could have a material adverse effect on our business, financial condition and results of operations.
     
  ● We are subject to federal and state healthcare industry regulation including conduct of operations, costs and payment for services and payment for referrals as well as laws regarding government contracting.
     
  ● The dual-class structure of our common stock as contained in our Certificate of Incorporation has the effect of concentrating voting control with those stockholders who held our Class B common stock prior to this offering. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may adversely affect the trading price of our Class A common stock.
     
  ● Our principal stockholders will continue to have significant influence over the election of our board of directors and approval of any significant corporate actions, including any sale of our Company.

 

Corporate Information

 

We were organized on November 20, 2020 as an Indiana corporation under the name Syra Health Corp. On March 11, 2022, we filed a Certificate of Conversion with the Delaware Secretary of State whereby we converted from an Indiana corporation to a Delaware corporation.

 

Implications of Being an Emerging Growth Company

 

As a company with less than $1.235 billion in revenues during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) enacted in 2012. As an emerging growth company, we expect to take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

 

  ● being permitted to present only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this prospectus;
     
  ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”);
     
  ● reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
     
  ● exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

We may use these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

 

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. As an emerging growth company, we intend to take advantage of an extended transition period for complying with new or revised accounting standards as permitted by the JOBS Act.

 

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (ii) scaled executive compensation disclosures; and (iii) the requirement to provide only two years of audited financial statements, instead of three years.

 

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THE OFFERING

 

Securities offered by us   2,000,000 Units. Each Unit consists of one share of our Class A common stock and one Warrant to purchase one share of our Class A common stock at an exercise price equal to $6.50 per share, exercisable until the fifth anniversary of the issuance date.
     
Class A common stock to be outstanding immediately after this offering   6,282,500 shares (6,582,500 shares if the underwriters exercise their option to purchase additional shares of Class A common stock and/or Warrants in full).
     
Class B common stock to be outstanding immediately after this offering   1,000,000 shares.
     
Option to purchase securities   The underwriters have an option, exercisable one or more times in whole or in part, for a period of 45 days to purchase up to an additional 300,000 shares of our Class A common stock and/or Warrants to purchase up to 300,000 shares of Class A common stock, in any combinations thereof to cover, over-allotments, if any.
     
Use of proceeds   We estimate that the net proceeds from this offering will be approximately $6.6 million (or $7.9 million if the underwriters exercise their over-allotment option in full), at an assumed initial public offering price of $4.125 per Unit, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for marketing and sales, application development, research and development and working capital and other general corporate purposes. We may also use a portion of the net proceeds to in-license, acquire or invest in complementary businesses or products, however, we have no current commitments or obligations to do so. See “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering.
     
Voting rights   We have two classes of common stock: Class A common stock and Class B common stock. Shares of our Class A common stock are entitled to one vote per share. Each share of our Class B common stock is entitled to 16.5 votes per share and is convertible at any time, at the option of the holder, into 10 shares of Class A common stock, or, subject to certain exceptions, will otherwise automatically convert into 10 shares of Class A common stock upon certain transfers or the death of the holder. Holders of our Class A common stock and Class B common stock will generally vote together as a single class, unless otherwise required by law or our Certificate of Incorporation. The holders of our outstanding Class B common stock will hold approximately 71.04% of the voting power of our outstanding capital stock following the completion of this offering, assuming the conversion of all outstanding notes into an aggregate of 442,367 shares of our Class A common stock and no exercise by the underwriters of their over-allotment option, and will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. See the sections titled “Principal Stockholders” and “Description of Capital Stock” for additional information.
     
Representative’s warrants   Upon the closing of this offering, subject to compliance with FINRA Rule 5510, we have agreed to issue to the underwriter and subject to compliance with FINRA Rule 5110, warrants that will be exercisable immediately and will expire five years from the commencement of sales, entitling the representative to purchase 10% of the number of Units sold in this offering (including shares of Class A common stock and/or Warrants sold to cover over-allotments, if any). The registration statement of which this prospectus is a part also covers the representative’s warrants and the Class A common stock issuable upon the exercise thereof. For additional information regarding our arrangement with the underwriters, please see “Underwriting.”
     
Lock-up agreements   We and our executive officers, directors and certain stockholders have agreed with the underwriters not to sell, transfer or dispose of any shares or similar securities for six months after the closing date of the offering. For additional information regarding our arrangement with the underwriters, please see “Underwriting.”
     
Risk factors   See “Risk Factors” on page 9 and other information included in this prospectus for a discussion of factors to consider carefully before deciding to invest in our securities.
     
Proposed Nasdaq Capital Market symbol   “SYRA”

 

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The number of shares of Class A common stock and Class B common stock that will be outstanding after this offering is based on 4,282,500 shares of Class A common stock and 1,000,000 shares of Class B common stock outstanding as of April 15, 2023, and excludes:

 

  ● 10,000,000 shares of Class A common stock issuable upon conversion of our Class B common stock;
     
  ● 22,000 shares of Class A common stock issuable upon exercise of options at an exercise price of $1.00 per share;

 

  ● 1,211,000 shares of Class A common stock reserved for future issuance under our 2022 Omnibus Equity Incentive Plan;
     
  ● 442,367 shares of Class A common stock issuable upon conversion of an aggregate of $1,459,790 of convertible notes including interest accrued thereon, calculated by dividing principal amount of the notes together with interest accrued thereon by the Conversion Price (as defined herein), based upon an assumed initial public offering price of $4.125 per Unit. “Conversion Price” means the price per share of Class A common stock in this offering multiplied by 80%;

 

  ● 2,000,000 shares of Class A common stock underlying the Warrants included in the Units; and
     
  ● 200,000 shares of Class A common stock (230,000 shares of Class A common stock if the underwriters exercise their option to purchase additional shares of Class A common stock and/or Warrants in full) issuable upon exercise of warrants to be issued to the representative of the underwriters as part of this offering at an exercise price of $4.95 based upon an assumed initial public offering price of $4.125 per Unit.

 

Except as otherwise indicated herein, all information in this prospectus assumes or gives effect to:

 

  ● no exercise by the underwriters of their option to purchase up to an additional 300,000 shares of Class A common stock and/or Warrants from us in this offering.

 

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Summary Financial Data

 

The following tables set forth our summary financial data as of the dates and for the periods indicated. We have derived the summary statement of operations data for the years ended December 31, 2022 and 2021 from our audited financial statements included elsewhere in this prospectus. The following summary financial data should be read with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes and other information included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.

 

Statement of Operations Data:

 

   For the Years Ended 
   December 31, 
   2022   2021 
Net services revenues  $5,617,706   $1,409,976 
Cost of services   4,555,924    979,622 
Gross profit   1,061,782    430,354 
           
Operating expenses:          
Salaries and benefits   1,524,971    235,802 
Professional services   1,035,902    94,964 
Selling, general and administrative   575,755    102,661 
Depreciation   14,849    207 
Total operating expenses   3,151,477    433,634 
           
Operating loss   (2,089,695)   (3,280)
           
Total other income (expense)   (28,470)   - 
           
Net loss  $(2,118,165)  $(3,280)
           
Basic and diluted net loss per share:          
Weighted average class A and B common shares outstanding – basic and diluted   3,649,288    1,000,000 
Net loss per share attributable to class A and B common stockholders – basic and diluted  $(0.58)  $(0.00)

 

(1)See Note 4 to our financial statements for an explanation of the method used to compute basic and diluted net loss per share.

 

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Balance Sheet Data:

 

   December 31, 2022 
       As 
   Actual  

Adjusted(1)(2)

(Unaudited)

 
Cash  $3,344   $7,891,969 
Working capital   (119,602)   7,769,023 
Total assets   2,319,642    9,982,582 
Total liabilities   1,609,544    1,609,544 
Total stockholders’ equity  $710,098   $8,598,723 

 

(1) On an as adjusted basis to give effect to our issuance and sale of 2,000,000 Units in this offering at an assumed initial public offering price of $4.125 per Unit, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

(2) Each $1.00 increase (decrease) in the assumed initial public offering price of $4.125 per Unit would increase (decrease) the as adjusted amount of each of cash, working capital, total assets and total stockholders’ equity by approximately $2,000,000, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 500,000 Units offered by us at the assumed initial public offering price of $4.125 per Unit would increase (decrease) the as adjusted amount of each of cash, working capital, total assets and total stockholders’ equity by approximately $2,120,000.

 

8
 

 

RISK FACTORS

 

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below as well as the other information included in this prospectus, including “Information Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the related notes thereto included elsewhere in this prospectus, before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

 

Risks Related to Our Financial Position and Need for Additional Capital

 

Although we have generated approximately $5.6 million and $1.4 million of revenues for the years ended December 31, 2022 and 2021, respectively, our future profitability is uncertain.

 

Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the development and expansion of a business enterprise. Our net losses for the years ended December 31, 2022 and 2021 were $2,118,165 and $3,280, respectively, and our accumulated deficit as of December 31, 2022 and 2021 was $2,126,612 and $8,447, respectively. If we are unable to achieve and maintain profitability, we may be unable to continue our operations.

 

Even if this offering is successful, we will require substantial additional funding. If we are unable to raise capital on favorable terms when needed, we could be forced to curtail, delay or discontinue our business.

 

Since our inception, we have not generated sufficient revenues from our operations to continue to fund the development and expansion of our business. To date, we have funded a significant portion of our operations through the sale of our equity securities. As of December 31, 2022 and 2021, we had cash of $3,344 and $100,012, respectively. We estimate that the net proceeds from this offering will be approximately $6.8 million (or $7.9 million if the underwriters exercise their over-allotment option in full), based upon an assumed initial public offering price of $4.125 per Unit, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We expect that the net proceeds from this offering and our existing cash will be sufficient to fund our current operations through at least 12 months from the date of this prospectus. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other third-party funding or a combination of these approaches. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or based upon specific strategic considerations.

 

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products and services. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities may dilute our stockholders. In addition, the future issuance of shares of Class B common stock may be dilutive to the holders of Class A common stock, particularly with respect to their voting power. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to make certain dividends, incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

 

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue our operations or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

 

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Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

 

Our financial statements as of December 31, 2022 have been prepared under the assumption that we will continue as a going concern for the next twelve months. Our independent registered public accounting firm included in its opinion for the year ended December 31, 2022 an explanatory paragraph referring to our recurring losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, reduce expenditures and generate significant revenue. Our financial statements as of December 31, 2022 did not include any adjustments that might result from the outcome of this uncertainty. The reaction of investors to the inclusion of a going concern statement by our auditors, and our potential inability to continue as a going concern, in future years could materially adversely affect our share price and our ability to raise new capital.

 

Risks Related to Our Business and Industry

 

We face significant competition, which may harm our business, results of operations or financial condition.

 

We face substantial competition in the healthcare services markets. Our key competitors include, among others, healthcare consulting service providers, healthcare payment accuracy companies and providers of other data products and data analytics solutions, including healthcare risk adjustment, quality, economic statistics and other data. We also compete with certain of our customers that internally provide some of the same solutions that we offer. The increasing standardization of certain healthcare services has made it easier for companies to enter these markets with competitive products and services. We cannot fully anticipate whether or when companies in adjacent or other product or service areas may launch competitive products and/or services, and any such entry may lead to obsolescence of our products and/or services or loss of market share or erosion of the prices for our solutions, or both. The extent of this competition may vary by the size of companies, geographical coverage and scope and breadth of products and services offered. Furthermore, some of our competitors are significantly larger and have greater financial or other resources than we do. The vigorous competition we face requires us to provide high quality, innovative products at a competitive price. We cannot guarantee that we will be able to upgrade our existing solutions, or introduce new solutions at the same rate as our competitors, or at all, nor can we guarantee that such upgrades or new solutions will achieve market acceptance over or among competitive offerings, or at all. Therefore, these competitive pressures could have a material adverse impact on our business, results of operations or financial condition.

 

If we are unable to retain our existing customers or attract new customers, our business, financial condition or results of operations could suffer.

 

Our success depends substantially upon the retention of our existing customers and attracting new customers. We may not be able to retain our existing customers or attract new customers if we are unable to provide solutions or services that our existing or prospective customers believe enable them to achieve improved efficiencies and cost-effectiveness. Our success in retaining and attracting customers will also depend, in part, on our ability to be responsive to pricing pressures and changing business models. To remain competitive in the healthcare services markets, we must continuously upgrade our existing solutions, and develop and introduce new solutions on a timely basis. Future advances in the healthcare services market could lead to new products or services that are competitive with our solutions, resulting in pricing pressure or rendering our solutions obsolete or not competitive. We also may not be able to retain or attract customers if our solutions contain errors or otherwise fail to perform properly, if our pricing structure is not competitive or if we are unable to renegotiate our customer contracts upon expiration. If we are unable to maintain our customer retention rates, or if we are unable to attract new customers, our business, results of operations or financial condition could be adversely impacted.

 

Our business strategy and future success depend on our ability to cross-sell our solutions.

 

Our ability to generate revenue and growth partly depends on our ability to cross-sell our solutions to our existing customers and new customers. We may not be successful in cross-selling our solutions because our customers may find our additional solutions unnecessary, unattractive or cost-ineffective. Our failure to sell additional solutions to our existing and new customers could negatively affect our ability to grow our business.

 

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If we are unable to successfully expand our sales force productivity, sales of our solutions and the growth of our business and financial performance could be harmed.

 

We continue to invest significantly in our sales force to obtain new customers and increase sales to existing customers. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth and profitably will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our sales efforts. A portion of our current sales personnel are new to our company. New hires require significant training and may require a lengthy onboarding process before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to recruit, train and retain a sufficient number of productive sales personnel, sales of our solutions and the growth of our business could be harmed. Additionally, if our efforts to improve sales force productivity do not result in increased revenue, our operating results could be negatively impacted due to increased operating expenses associated with these efforts.

 

An economic downturn or volatility could have a material adverse impact on our business, results of operations or financial condition.

 

The United States and world economies have experienced significant economic uncertainty and volatility during recent years. A weakening of economic conditions could lead to reductions in demand for our solutions. As a result of volatile or uncertain economic conditions, we may experience the negative effects of increased financial pressures on our customers. For instance, our business could be negatively impacted by increased competitive pricing pressure and a decline in our customers’ creditworthiness, which could result in us incurring increased bad debt expense. Additionally, volatile or uncertain economic conditions in the United States and other parts of world could lead our state and government customers to terminate, or elect not to renew, existing contracts with us, or not enter into new contracts with us. Furthermore, demand for staffing services is sensitive to changes in economic activity. Many healthcare facilities utilize temporary healthcare professionals to accommodate an increase in hospital admissions. Conversely, when hospital admissions decrease in economic downturns or periods of high inflation, due to reduced consumer spending, the demand for staffing healthcare professionals typically declines. In times of economic downturn and inflation, permanent full-time and part-time healthcare facility staff are generally inclined to work more hours and overtime, resulting in fewer available vacancies and less demand for our services. If we are not able to timely and appropriately adapt to changes resulting from a weak economic environment, it could have a material adverse impact on our business, results of operations or financial condition.

 

The novel coronavirus (“COVID-19”) pandemic has adversely impacted and could continue to adversely impact the business, results of operations, financial condition, liquidity and cash flows of us and our clients.

 

The COVID-19 pandemic and efforts to control its spread had a significant impact on our operations and the operations of our healthcare clients. Previously, our hospital and other health care provider clients prioritized their resources, capacity and staff as the COVID-19 outbreak strained their organizations which adversely affected our business, including by negatively impacting the demand and timing for implementing our solutions and the timing of payment for our services. For example, while the COVID-19 pandemic had a minimal impact on our revenue for the year ended December 31, 2022, it negatively impacted revenue for the year ended December 31, 2021, as we generated less revenue from sales of our professional staffing services than anticipated. In addition, we previously instituted a work-from-home policy for some of our employees and had limited employee travel to essential travel only, which restricted some sales, marketing and other important business activities.

 

The spread of COVID-19, which caused a broad impact globally, may have a material economic effect on our business. While the potential economic impact brought by the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which may reduce our ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained adverse market event resulting from COVID-19 could materially and adversely affect our business and the value of our common stock.

 

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Our ability to generate revenue could suffer if we do not continue to update and improve our existing solutions and develop new ones.

 

We must continually improve our existing solutions in a timely manner and introduce new and valuable solutions in order to respond to regulatory developments and customer demands and, thereby, retain existing customers and attract new ones. For example, from time to time, government agencies may alter format and data code requirements applicable to electronic transactions. In addition, our customers may request that our solutions be customized to satisfy particular needs. We may not be successful in responding to regulatory developments or changing customer needs. In addition, these regulatory or customer-imposed requirements may impact the profitability of particular solutions and customer engagements. If we do not respond successfully to regulatory changes, as well as evolving industry standards and customer demands, our solutions may become obsolete. If we lower our prices on some of our solutions, we will need to increase our margins on other solutions in order to maintain our overall profitability.

 

Achieving market acceptance of new or updated solutions is necessary in order for them to become profitable and will likely require significant efforts and expenditures.

 

Our future financial results will depend in part on whether our new or updated solutions receive sufficient customer acceptance. Achieving market acceptance for new or updated solutions may require substantial marketing efforts and expenditure of significant funds to create awareness and demand by our existing or prospective customers. Failure to achieve broad penetration in target markets with respect to new or updated solutions could have a material adverse impact on our business, results of operations or financial condition.

 

Our business would be adversely affected if we cannot obtain, process or distribute data we require to provide our solutions.

 

Our business relies on our ability to obtain, process, monetize and distribute data in the healthcare industry in a manner that complies with applicable law, regulation and contractual and restrictions. Our failure to obtain and distribute such data in a compliant manner could have a harmful effect on our ability to use and disclose such data which in turn could impair our ability to share such data with our customers or incorporate it into our services and offerings. In addition to complying with requirements in obtaining the data, the use, processing and distribution of such data may require us to obtain consent from third parties or follow additional laws, regulations or contractual restrictions that apply to the healthcare industry. Moreover, we may be subject to claims or liability for use or disclosure of information. Any such claims or liabilities and other failures to comply with applicable requirements could subject us to unexpected costs and adversely affect our operating results.

 

Poor service, system errors or failures of our solutions to conform to specifications could cause unforeseen liabilities or injury, harm our reputation and have a material adverse impact on our business, results of operations or financial condition.

 

Some of our solutions are intended to provide information to healthcare professionals in the course of delivering patient care. Although our contracts may disclaim liability for medical decisions and responsibility for patient care, if use of or inability to use our solutions leads to faulty clinical decisions or injury to patients, such disclaimers may be unenforceable and we could be subject to claims or litigation by healthcare professionals, their patients or our customers. Further, negative publicity regarding our services, whether accurate or inaccurate, could harm our reputation, decrease demand for our services, lead to withdrawals of our services or impair our ability to successfully launch and market our services in the future.

 

We attempt to limit, by contract, our liability for damages arising from our negligence, errors, mistakes or security breaches. However, contractual limitations on liability may not be accepted by our customers, may not be enforceable or may otherwise not provide sufficient protection to us from liability for damages. We maintain liability insurance coverage, including coverage for cyber-liability. It is possible, however, that claims could be denied or exceed the amount of our applicable insurance coverage, if any, or that this coverage may not continue to be available on acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them could be expensive and time consuming and could divert management’s attention away from our operations. In addition, negative publicity caused by these events may negatively impact our customer relationships, market acceptance of our solutions or may harm our reputation and our business.

 

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Disruptions in service or damages to our data or systems failures, could have a material adverse impact on our business, results of operations or financial condition.

 

Our business operations depend on our ability to maintain and protect our network and computer systems, some of which are outsourced to certain third-party hosting providers. Our operations are vulnerable to interruption and/or damage from a number of sources, many of which are beyond our control, including, without limitation: (1) power loss and telecommunications failures; (2) fire, flood, hurricane and other natural disasters; (3) software and hardware errors, failures or crashes; and (4) cyber and ransomware attacks, computer viruses, hacking, break-ins, sabotage, intentional acts of vandalism and other similar disruptive problems. The occurrence of any of these events could result in interruptions, delays or cessations in service to users of our solutions, which could impair or prohibit our ability to provide our solutions, reduce the attractiveness of our solutions to our customers and could have a material adverse impact on our business, results of operations or financial condition. If customers’ access to our solutions is interrupted, we could be in breach of our agreements with customers and/or exposed to significant claims. Any significant instances of system downtime could negatively affect our reputation and ability to provide our services, which could have a material adverse impact on our business, results of operations or financial condition.

 

Breaches and failures of IT systems and the sensitive information we transmit, use and store, expose us to potential liability and reputational harm.

 

Our business relies on information systems to obtain, process, analyze, and manage data. To the extent IT systems are not successfully implemented or fail, our business and results of operations may be adversely affected. Further, our business relies to a significant degree upon the secure transmission, use and storage of sensitive information, including protected health information and other personally identifiable information, financial information and other confidential information and data within these systems.

 

To protect this information, we seek to implement commercially reasonable security measures and maintain information security policies and procedures informed by requirements under applicable law and recommended practices, in each case, as applicable to the data collected, hosted and processed. Despite our security management efforts our business is vulnerable to unauthorized access to data and/or breaches of confidential information due to criminal conduct, physical break-ins, hackers, employee or insider malfeasance and/or improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks, ransomware events, phishing schemes, fraud, terrorist attacks, human error or other breaches by insiders or third parties or similar disruptive problems. It is not possible to prevent all security threats to our data. Techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time. Further, defects in the design or manufacture of applications we develop or procure from third parties could compromise our data. These events, including unauthorized access, misappropriation, disclosure or loss of sensitive information (including financial or personal health information) or a significant disruption of our network, expose us to risks including risks to our ability to provide our solutions, management distraction and the obligation to devote significant financial and other resources to mitigate such problems and increases to our future information security costs. Moreover, unauthorized access, use or disclosure of certain sensitive information in our possession or our failure to satisfy legal requirements, including requirements relating to safeguarding protected health information under the Health Insurance Portability and Accountability Act (“HIPAA”) or state data privacy laws could result in civil and criminal liability and regulatory action, which could result in potential fines and penalties, as well as costs relating to investigation of an incident or breach, corrective actions, required notifications to regulatory agencies and customers, credit monitoring services and other necessary expenses. In addition, actual or perceived breaches of our security management efforts can cause existing customers to terminate their relationship with us and deter existing or prospective customers from using or purchasing our solutions in the future. These events can have a material adverse impact on our business, results of operations, financial condition and reputation.

 

Because our products and services involve the storage, use and transmission of personal information of consumers, we may be the target of attempted cyber and other security threats by outside third parties, including technically sophisticated and well-resourced bad actors attempting to access or steal the data we store. Vendor, insider or employee cyber and security threats also occur and are a significant concern for all companies, including ours. There have, in the past, been a number of high-profile security breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. These breaches have resulted in lawsuits and governmental enforcement actions that have sought or obtained significant fines and penalties, and have required companies to enter into agreements with government regulators that impose ongoing obligations and requirements, including internal and external (third party) monitorships for five years or more. While we maintain liability insurance coverage including coverage for cyber-liability, claims may not be covered or could exceed the amount of our applicable insurance coverage, if any, or such coverage may not continue to be available on acceptable terms or in sufficient amounts.

 

13
 

 

We rely on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems in providing certain of our solutions to our customers, and any failure or interruption in the services provided by these third parties or our own systems could expose us to litigation and negatively impact our relationships with customers, adversely affecting our brand and our business.

 

Our ability to deliver our solutions is dependent on the development and maintenance of the infrastructure of the Internet and other telecommunications services by third parties. This includes maintenance of a reliable network connection with the necessary speed, data capacity and security. As a result, our information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems in order to keep pace with continuing changes in information technology, emerging cybersecurity risks and threats, evolving industry and regulatory standards and changing preferences of our customers.

 

We may experience interruptions in these systems, including server failures that temporarily slow down the performance of our solutions. We rely on internal systems as well as vendors, including bandwidth and telecommunications equipment providers, to provide our solutions. We do not maintain redundant systems or facilities for some of these services. Interruptions in these systems, whether due to system failures, computer viruses, physical or electronic break-ins or other catastrophic events, could affect the security or availability of our solutions and prevent or inhibit the ability of our customers to access our solutions.

 

If a catastrophic event were to occur with respect to one or more of these systems or facilities, we may experience an extended period of system unavailability, which could result in substantial costs to remedy those problems or negatively impact our relationship with our customers, results of operations and financial condition.

 

Failure by our customers to obtain proper permissions or provide us with accurate and appropriate information may result in claims against us or may limit or prevent our use of information, which could harm our business. Additionally, privacy concerns relating to our business could damage our reputation and deter current and potential customers from using our solutions.

 

To the extent we are not otherwise permitted to use and/or disclose customer information, we require our customers to provide necessary notices and obtain necessary permissions for the use and disclosure of such information. If they do not provide necessary notices or obtain necessary permissions, then our use and disclosure of information that we receive from them or on their behalf may be limited or prohibited by federal or state privacy or other laws. Such failures by our customers could impair our functions, processes and databases that reflect, contain or are based upon such information. Furthermore, such failures by our customers could interfere with or prevent creation or use of analyses or other data-driven activities that benefit us, or make our solutions less useful. Accordingly, we may be subject to claims or liability for inaccurate data. These claims or liabilities could damage our reputation, subject us to unexpected costs and could have a material adverse impact on our business, results of operations or financial condition.

 

Additionally, in recent years, consumer advocates, media and elected officials increasingly and publicly have criticized companies in data focused industries regarding the collection, storage and use of personal data. Concerns about our practices with regard to the collection, use, disclosure or security of personal information or other privacy related matters, even if unfounded, could damage our reputation and adversely affect our business, results of operations or financial condition.

 

It is difficult to predict the sales cycle and implementation schedule for our products and services.

 

The duration of the sales cycle and implementation schedule for our products and services depends on a number of factors, including the nature and size of the potential client and the extent of the commitment being made by the potential client, all of which may be difficult to predict. Our sales and marketing efforts with respect to hospitals and large health organizations generally involve a lengthy sales cycle due to these organizations’ complex decision-making processes. Additionally, in light of increased government involvement in healthcare and related changes in the operating environment for healthcare organizations, our current and potential clients may react by reducing or deferring investments, including their purchases of our solutions or services. If clients take longer than we expect to decide whether to purchase our solutions, our revenues could decrease, which could materially and adversely impact our business, financial condition and operating results.

 

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Our independent content providers may fail to perform adequately or comply with laws, regulations or contractual covenants.

 

We depend on some independent content providers for the development of health education and other scientific content resources. Our ability to rely on these services could be impaired as a result of the failure of such providers to comply with applicable laws, regulations and contractual covenants or as a result of events affecting such providers, such as power loss, telecommunication failures, software or hardware errors, computer viruses and similar disruptive problems, fire, flood and natural disasters. Any such failure or event could adversely affect our relationships with our clients and damage our reputation. This could materially and adversely impact our business, financial condition and operating results. We depend on our content providers to deliver high quality content from reliable sources and to continually upgrade their content in response to demand and evolving regulations. If these parties fail to develop and maintain high quality, attractive content, the value of our brand and our business, financial condition and operating results could be materially and adversely impacted.

 

We may be liable for use of content we provide.

 

If any of the content that we provide to our customers, including content we generate as a result of our grant writing services, is incorrect or incomplete, it may give rise to claims against us. While we maintain insurance coverage in an amount that we believe is sufficient for our business, we cannot provide assurance that this coverage will prove to be adequate or will continue to be available on acceptable terms, if at all. A claim that is brought against us that is uninsured or under-insured could materially and adversely impact our business, financial condition and operating results. Even unsuccessful claims could result in substantial costs and diversion of management and other resources.

 

Our financial results may be adversely affected if we underprice our contracts, overrun our cost estimates or fail to receive approval for or experience delays in documenting change orders.

 

Most of our grant writing service contracts are either fee for service contracts or fixed-fee contracts. Our past financial results have been, and our future financial results may be, adversely impacted if we initially underprice our contracts or otherwise overrun our cost estimates and are unable to successfully negotiate a change order. Change orders typically occur when the scope of work we perform needs to be modified from that originally contemplated by our contract with the client. Where we are not successful in converting out-of-scope work into change orders under our current contracts, we will bear the cost of the additional work. Such underpricing, significant cost overruns or delay in documentation of change orders could have a material adverse effect on our business, results of operations, financial condition or cash flows.

 

As we develop new services and clients, enter new lines of business, and focus more of our business on providing a full range of talent solutions, the demands on our business and our operating risks may increase.

 

As part of our strategy, we plan to extend our services. As we focus on developing new services, capabilities and clients, and engage in business in new geographic locations, our operations may be exposed to additional as well as enhanced risks. In particular, our growth efforts may place substantial additional demands on our management and other team members, as well as on our information, financial, administrative, compliance and operational systems. We may not be able to manage these demands successfully. Growth may require increased recruiting efforts, increased regulatory and compliance efforts, increased business development, selling, marketing and other actions that are expensive and entail increased risk. We may need to invest more in our people and systems, controls, compliance efforts, policies and procedures than we anticipate. As our business continues to evolve and we provide a wider range of services, we will become increasingly dependent upon our employees. Failure to identify, hire, train and retain talented employees who share our values could have a negative effect on our reputation and our business. The demands that our current and future growth place on our people and systems, controls, compliance efforts, policies and procedures may exceed the benefits of such growth, and our operating results may suffer, at least in the short-term, and perhaps in the long-term.

 

15
 

 

Consolidation in the healthcare industry could adversely impact our business, financial condition and operating results.

 

Many healthcare provider organizations are consolidating to create integrated healthcare delivery systems with greater market power. As provider networks and managed care organizations consolidate, thus decreasing the number of market participants, competition to provide products and services like ours will become more intense, and the importance of establishing and maintaining relationships with key industry participants will increase. These industry participants may try to use their market power to negotiate price reductions for our products and services. Any of these factors could materially and adversely impact our business, financial condition and operating results.

 

If we do not continue to recruit and retain sufficient quality healthcare professionals at reasonable costs, it could increase our operating costs and negatively affect our business and our profitability.

 

We rely significantly on our ability to recruit and retain a sufficient number of healthcare professionals who possess the skills, experience and licenses necessary to meet the requirements of our clients. With rising clinician burnout rates resulting from the COVID-19 pandemic, an ongoing shortage of certain qualified nurses and physicians in many areas of the United States and low unemployment rates for nurses and physicians, competition for the hiring of these professionals remains intense. Our ability to recruit temporary and permanent healthcare professionals may be exacerbated by continued low levels of unemployment.

 

We compete with healthcare staffing companies, recruitment and placement agencies, including online staffing and recruitment agencies, and with hospitals, healthcare facilities and physician practice groups to attract healthcare professionals based on the quantity, diversity and quality of assignments offered, compensation packages, the benefits that we provide and speed and quality of our service.

 

The costs of recruiting quality healthcare professionals and providing them with competitive compensation packages may be higher than we anticipate, or we may be unable to pass these costs on to our hospital and healthcare facility clients, which may reduce our profitability. Moreover, if we are unable to recruit temporary and permanent healthcare professionals, our service execution may deteriorate and, as a result, we could lose clients or not meet our service level agreements with these clients that have negative financial repercussions.

 

The ability of our clients to increase the efficiency and effectiveness of their staffing management and recruiting efforts may affect the demand for our services that could negatively affect our business.

 

If our clients are able to increase the effectiveness of their staffing and recruitment functions, their need for our services may decline. With the advent of technology and more sophisticated staffing management and recruitment processes, including internal “travel” and other healthcare staffing models, clients may be able to successfully increase the efficiency and effectiveness of their internal staffing management and recruiting efforts, through more effective planning and analytic tools, internet- or social media-based recruiting or otherwise. Such new technologies and processes could reduce the demand for our services, which could negatively affect our business.

 

Our work with government clients exposes us to additional risks inherent in the government contracting environment.

 

Our clients may include national, provincial, state, local and foreign governmental entities and their agencies. Our government work carries various risks inherent in contracting with government entities. These risks include, but are not limited to, the following:

 

  ● Government entities, particularly in the United States, often reserve the right to audit our contracts and conduct reviews, inquiries and investigations of our business practices and performance with respect to government contracts. If a government client discovers improper conduct during its audits or investigations, we may become subject to various civil and criminal penalties, including those under the civil U.S. False Claims Act, and administrative sanctions, which may include termination of contracts, suspension of payments, fines and civil money penalties, and suspensions or debarment from doing business with other government agencies.
     
  ● U.S. government contracting regulations impose strict compliance and disclosure obligations and our failure to comply with these obligations could be a basis for suspension or debarment, or both, from federal government contracting in addition to breach of the specific contract.

 

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  ● Government contracts are subject to heightened reputational and contractual risks compared to contracts with commercial clients and often involve more extensive scrutiny and publicity. Negative publicity, including allegations of improper or illegal activity, poor contract performance, or information security breaches, regardless of accuracy, may adversely affect our reputation.
     
  ● Terms and conditions of government contracts also tend to be more onerous, are often more difficult to negotiate and involve additional costs.
     
  ● Government entities typically fund projects through appropriated monies. Any change in presidential administrations may affect budget priorities for our ongoing work.
     
  ● Government entities reserve the right to change the scope of or terminate projects at their convenience for lack of approved funding or other reasons, which could limit our recovery of reimbursable expenses or investments. In addition, government contracts may be protested, which could result in administrative procedures and litigation, result in delays in performance and payment, be expensive to defend and be incapable of prompt resolution.

 

The occurrences or conditions described above could affect not only our business with the particular government entities involved, but also our business with other entities of the same or other governmental bodies or with certain commercial clients and could have a material adverse effect on our business, results of operations and financial condition.

 

We may be a party to legal, regulatory and other proceedings that could result in unexpected adverse outcomes.

 

From time to time, we may be a party to legal and regulatory proceedings and investigations, including matters involving governmental agencies and entities with which we do business and other proceedings and investigations arising in the ordinary course of business. In addition, there are an increasing number of, and we may be subject to, investigations and proceedings in the healthcare industry generally that seek recovery under the HIPAA, Anti-Kickback Statute, the False Claims Act, the Civil Money Penalty, the Stark Law, the Sunshine Act, state laws and other statutes and regulations applicable to our business. We also may be subject to legal proceedings under non-healthcare federal, and state laws affecting our business, such as the Telephone Consumer Protection Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Controlling the Assault of Non-Solicited Pornography and Marketing Act, Junk Fax Prevention Act, Foreign Corrupt Practices Act, employment, banking and financial services and USPS laws and regulations. Such proceedings are inherently unpredictable, and the outcome can result in verdicts and/or injunctive relief that may affect how we operate our business or we may enter into settlements of claims for monetary payments. In some cases, substantial non-economic remedies or punitive damages may be sought. Governmental investigations, audits and other reviews could also result in criminal penalties or other sanctions, including restrictions, changes in the way we conduct business or exclusion from participation in government programs. We evaluate our exposure to these legal and regulatory proceedings and intend to establish reserves for the estimated liabilities in accordance with accounting principles generally accepted in the United States of America, as necessary. Assessing and predicting the outcome of these matters involves substantial uncertainties. Unexpected outcomes in these legal proceedings, or changes in management’s evaluations or predictions and accompanying changes in established reserves, could have a material adverse impact on our business, results of operations or financial condition.

 

Litigation is costly, time-consuming and disruptive to normal business operations. The defense of these matters could also result in continued diversion of our management’s time and attention away from business operations, which could also harm our business. Even if these matters are resolved in our favor, the uncertainty and expense associated with unresolved legal proceedings could harm our business and reputation.

 

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We may be liable for the misdiagnoses, mistreatment, injury or other harm to patients resulting from the use of data that we provide to health care providers, and any resulting claims could negatively impact our operating results and result in a decline in our stock price.

 

We provide, and facilitate providing, information for use by health care providers in treating patients. If this data is incorrect or incomplete, the patient could be misdiagnosed or mistreated resulting in adverse consequences, including death, giving rise to claims against us. In addition, certain of our solutions relate to patient health information, and a court or government agency may take the position that our delivery of this information exposes us to personal injury liability or other liability for wrongful delivery or handling of health care services or erroneous health information. While we maintain liability insurance coverage in an amount that we believe is sufficient for the risks associated with our business, we cannot assure you that this coverage will prove to be adequate or will continue to be available on acceptable terms, if at all. A claim brought against us that is uninsured or under-insured could harm our business, financial condition and results of operations. Even unsuccessful claims could result in substantial costs and diversion of management resources and could cause the trading price of our common stock to decline.

 

Our success depends in part on our ability to identify, recruit and retain skilled management and technical personnel. If we fail to recruit and retain suitable candidates or if our relationship with our employees changes or deteriorates, there could be a material adverse impact on our business, results of operations or financial condition.

 

We are highly dependent upon our personnel, including Deepika Vuppalanchi, our Chief Executive Officer and member of our board of directors, and Sandeep Allam, our President and Chairman. The loss of Dr. Vuppalanchi’s or Mr. Allam’s services could impede the achievement of our business objectives. We have not obtained, do not own, nor are we the beneficiary of, key-person life insurance. Furthermore, our future success depends upon our continuing ability to identify, attract, hire and retain highly qualified personnel, including skilled management and scientific personnel, all of whom are in high demand and are often subject to competing offers. Competition for qualified personnel in the healthcare services industry is intense, and we may not be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or be able to do so at salary, benefit and other compensation costs that are acceptable to us. A loss of a substantial number of key or qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for expansion of our business, could have a material adverse impact on our business, results of operations or financial condition.

 

Our ability to utilize loss carry forwards may be limited.

 

We have incurred net operating losses (“NOLs”) during our history. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire (if at all).

 

Federal NOLs incurred in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five tax years preceding such loss, and NOLs arising in tax years beginning after December 31, 2020 may not be carried back. Moreover, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020. Our NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service (the “IRS”), and state tax authorities. In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (“Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs or tax credits to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who own at least 5% of a corporation’s stock increases their ownership by more than 50 percentage points over their lowest ownership percentage within a specified testing period. Our existing NOLs or credits may be subject to limitations arising from previous ownership changes and ownership changes as a result of this offering, which may further limit our ability to utilize NOLs or credits under Sections 382 and 383 of the Code. In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. If we were to determine that an ownership change has occurred and our ability to use our historical NOLs or credits is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. Section 382 and 383 of the Code would apply to all net operating loss and tax credit carryforwards, whether the carryforward period is indefinite or not.

 

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Unanticipated changes in tax laws may affect future financial results.

 

Syra is a U.S. corporation and thus subject to U.S. corporate income tax on its worldwide operations. Our principal operations and certain potential customers are located in the United States, and as a result, we are subject to various U.S. federal, state and local taxes. New U.S. laws and policies relating to taxes may have an adverse effect on our business and future profitability. Further, existing U.S. tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.

 

In recent years, the federal government has made significant changes to U.S. tax laws, including through the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income, effective for tax years beginning after December 31, 2022, and a 1% excise tax on share repurchases occurring after December 31, 2022. We may be subject to the new excise tax with respect to any redemptions of our stock. Further, the current administration had previously set forth several tax proposals that would, if enacted, make further significant changes to U.S. tax laws (including provisions enacted pursuant to the Tax Act). It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws could adversely affect our business and future profitability. Investors are urged to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of holding our securities.

 

Risks Related to Intellectual Property

 

The protection of our intellectual property requires substantial resources and protections of our proprietary rights may not be adequate.

 

We rely or intend to rely upon a combination of trade secret, copyright and trademark laws, patents, license agreements, confidentiality procedures, nondisclosure agreements and technical measures designed to protect the intellectual property used in our business. The steps we have taken to protect and enforce our proprietary rights and intellectual property may not be adequate. For instance, our agreements with employees, consultants and others who develop intellectual property for or on behalf of us could be breached and could result in our trade secrets and confidential information being publicly disclosed. We may not have adequate remedies for any such breach. Third parties also may infringe upon or misappropriate our intellectual property rights. If we believe a third party has misappropriated our intellectual property, litigation may be necessary to enforce and protect those rights, which would divert management resources, could be expensive and may not effectively protect our intellectual property. Even if we establish infringement, a court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. As a result, if we fail to maintain adequate intellectual property protection or if a third party infringes or misappropriates our intellectual property, it may have a material adverse impact on our business, results of operations or financial condition.

 

Many of our products are based on or incorporate proprietary information. We actively seek to protect our proprietary information, including our trade secrets and proprietary know-how, by generally requiring our employees, consultants, other advisors and other third parties to execute agreements that contain confidentiality provisions. Despite these efforts and precautions, we may be unable to prevent a third party from copying or otherwise obtaining and using our trade secrets or our other intellectual property without authorization and legal remedies may not adequately compensate us for the damages caused by such unauthorized use.

 

In addition, there can be no assurance that our competitors will not independently develop products or services that are equivalent or superior to our solutions.

 

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We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

 

We have received confidential and proprietary information from third parties. In addition, we may employ individuals who were previously employed at other healthcare services companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers. Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our solutions. We may also be subject to claims that former employees, consultants, independent contractors or other third parties have an ownership interest in our intellectual property. Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information. In addition to paying monetary damages, if we fail in defending against any such claims we may lose our rights therein, which could have a material adverse effect on our business. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.

 

We depend on a small number of large customers and the loss of one or more major customers could have a material adverse effect on our business, financial condition and results of operations.

 

For the year ended December 31, 2022, Indiana Family and Social Services Administration (“IFSSA”) accounted for approximately 98% of our revenues and 99% of our accounts receivable at December 31, 2022, as due from the combined divisions (NeuroDiagnostic Institute and Division of Mental Health and Addiction) of the IFSSA. For the year ended December 31, 2021, IFSSA accounted for approximately 98% of our revenues and 92% of our accounts receivable at December 31, 2021, as due from the combined divisions (NeuroDiagnostic Institute and Division of Mental Health and Addiction) of the IFSSA. It is possible that any of our large customers could decide to terminate their relationship with us in the future. The loss of one or both of our top customers, or a substantial decrease in demand by any of those customers for our services and solutions, could have a material adverse effect on our business, results of operations and financial condition.

 

Risks Related to Government Regulations

 

We are subject to federal and state healthcare industry regulation including conduct of operations, costs and payment for services and payment for referrals as well as laws regarding government contracting.

 

The healthcare industry is subject to extensive and complex federal and state laws and regulations related to conduct of operations, costs and payment for services and payment for referrals. We provide talent solutions on a contract basis to our clients, who pay us directly. Accordingly, Medicare, Medicaid and insurance reimbursement policy changes generally do not directly impact us. Nevertheless, reimbursement changes in government programs, particularly Medicare and Medicaid, can and do indirectly affect the demand and the prices paid for our services. For example, our clients could receive reduced or no reimbursements because of a change in the rates or conditions set by federal or state governments that would negatively affect the demand and the prices for our services. Moreover, our hospital, healthcare facility and physician practice group clients could suffer civil and criminal penalties, and be excluded from participating in Medicare, Medicaid and other healthcare programs for failure to comply with applicable laws and regulations that may negatively affect our profitability.

 

A portion of our hospital and healthcare facility clients are state and federal government agencies, where our ability to compete for new contracts and orders, and the profitability of these contracts and orders, may be affected by government legislation, regulation or policy. Additionally, in providing services to state and federal government clients and to clients who participate in state and federal programs, we are also subject to specific laws and regulations, which government agencies have broad latitude to enforce. If we were to be excluded from participation in these programs or should there be regulatory or policy changes or modification of application of existing regulations adverse to us, it would likely materially adversely affect our brand, business, results of operations and cash flows.

 

Risks Related to this Offering and Our Class A Common Stock

 

No active trading market for our Class A common stock currently exists, and an active trading market may not develop.

 

Prior to this offering, there has not been an active trading market for our Class A common stock. If an active trading market for our Class A common stock does not develop following this offering, you may not be able to sell your shares quickly or at the market price. Our ability to raise capital to continue to fund operations by selling shares of our Class A common stock and our ability to acquire other companies or technologies by using shares of our Class A common stock as consideration may also be impaired. The initial public offering price of our Class A common stock will be determined by negotiations between us and the underwriters and may not be indicative of the market prices of our Class A common stock that will prevail in the trading market.

 

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Nasdaq may delist our Class A common stock from trading on its exchange, which could limit investors’ ability to make transactions in our Class A common stock and subject us to additional trading restrictions.

 

We have applied to have our Class A common stock listed on Nasdaq on or promptly after the date of this prospectus. Although after giving effect to this offering we expect to meet the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot assure you that our Class A common stock will be, or will continue to be, listed on Nasdaq in the future. In order to continue listing our Class A common stock on Nasdaq, we must maintain certain financial, distribution and stock price levels and must maintain a minimum number of holders of our Class A common stock.

 

If Nasdaq delists our Class A common stock and we are not able to list our Class A common stock on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our stockholders:

 

  ● the liquidity of our Class A common stock;
     
  ● the market price of our Class A common stock;
     
  ● our ability to obtain financing for the continuation of our operations;
     
  ● the number of investors that will consider investing in our Class A common stock;
     
  ● the number of market makers in our Class A common stock;
     
  ● the availability of information concerning the trading prices and volume of our Class A common stock; and
     
  ● the number of broker-dealers willing to execute trades in shares of our Class A common stock.

 

The market price of our Class A common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our Class A common stock in this offering.

 

The market price of our Class A common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following:

 

  ● failure to successfully develop and commercialize our digital health platforms;
  ● regulatory or legal developments in the United States;
  ● changes in physician, hospital or healthcare provider practices that may make our solutions less useful;
  ● inability to obtain additional funding;
  ● failure to meet or exceed financial projections we provide to the public;
  ● failure to meet or exceed the estimates and projections of the investment community;
  ● changes in the market valuations of companies similar to ours;
  ● announcements of significant acquisitions, strategic collaborations, joint ventures or capital commitments by us or our competitors;
  ● additions or departures of key scientific or management personnel;
  ● sales of our Class A common stock by us or our stockholders in the future;
  ● trading volume of our Class A common stock;
  ● general economic, industry and market conditions;
  ● health epidemics and outbreaks, such as the COVID-19 pandemic, or other natural or manmade disasters which could significantly disrupt our operations; and
  ● the other factors described in this “Risk Factors” section.

 

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of our Class A common stock, regardless of our actual operating performance. The market price of our Class A common stock may decline below the initial public offering price, and you may lose some or all of your investment. Stock markets have and may continue to experience extreme volatility.

 

Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price.

 

The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflationary pressure and interest rate changes, increases in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the conflict between Russia and Ukraine, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. More recently, the closures of Silicon Valley Bank and Signature Bank and their placement into receivership with the Federal Deposit Insurance Corporation (“FDIC”) created bank-specific and broader financial institution liquidity risk and concerns. Although the Department of the Treasury, the Federal Reserve, and the FDIC jointly confirmed that depositors at SVB and Signature Bank would continue to have access to their funds, even those in excess of the standard FDIC insurance limits, under a systemic risk exception, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions. If the equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon our business plans. In addition, there is a risk that one or more of our current clients, financial institutions or other third parties with whom we do business may be adversely affected by the foregoing risks, which may have an adverse effect on our business.

 

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The dual-class structure of our common stock as contained in our Certificate of Incorporation has the effect of concentrating voting control with those stockholders who held our Class B common stock prior to this offering. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may adversely affect the trading price of our Class A common stock.

 

Our Class B common stock has 16.5 votes per share, and our Class A common stock, which is the stock we are selling in this offering, has one vote per share. As of April 15, 2023, there are 1,000,000 shares of our Class B common stock outstanding, representing 79.39% of our total voting securities outstanding. Following this offering, holders of all of the issued and outstanding shares of our Class B common stock will own 1,000,000 shares of Class B common stock representing approximately 71.04% of the voting power of our outstanding capital stock following this offering, assuming the conversion of all outstanding notes into an aggregate of 442,367 shares of our Class A common stock and no exercise by the underwriters of their over-allotment option. Such Class B holders shall continue to have voting control until they hold under 50.1% of the voting power of our outstanding capital stock, or approximately 704,000 shares of Class B common stock, after the completion of this offering. In addition, because of the 16.5-to-1 voting ratio between our Class B common stock and Class A common stock, the holders of our Class B common stock could continue to control a majority of the combined voting power of our common stock and therefore control all matters submitted to our stockholders for approval until converted by our Class B common stockholders. This concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring stockholder approval. In addition, this concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders. As a result, such concentrated control may adversely affect the market price of our Class A common stock.

 

Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions as specified in our Certificate of Incorporation, such as transfers to family members and certain transfers effected for estate planning purposes.

 

We cannot predict the effect our dual-class structure may have on the market price of our Class A common stock.

 

We cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A common stock, adverse publicity or other adverse consequences. For example, certain index providers have announced and implemented restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company’s voting rights (aggregated across all of its equity securities, including those that are not listed or trading) in the hands of public stockholders . Pursuant to the FTSE Russell, this 5% minimum voting rights requirement only applies to companies assigned a Developed market nationality within the FTSE Equity Country Classification scheme, and, based upon the FTSE Equity Country Classification Interim Announcement published on March 30, 2023, the United States is assigned a Developed market nationality within the FTSE. In addition, in July 2017, the S&P Dow Jones announced that it would no longer admit companies with multiple-class share structures to certain of its indices. In October 2022, the S&P Dow Jones announced that it will be conducting a consultation with market participants on the multiple share class eligibility methodology requirement via a survey that was closed on December 15, 2022; however, the S&P Dow Jones has not announced a final determination based on the consultation. Also in 2017, MSCI, a leading stock index provider, opened public consultations on its treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices. Additionally, MSCI announced that the securities of companies exhibiting unequal voting structures will be eligible for addition to the MSCI ACWI IMI and other relevant indexes effective March 1, 2019. Currently, MSCI offers the MSCI World Voting Rights-Adjusted Index. This index specifically includes voting rights in the weighting criteria and construction methodology and aims to better align constituent weights with economic rights and voting power, while continuing to represent the performance of a broad opportunity set. Under such announced and implemented policies, the dual-class structure of our common stock would make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices would not invest in our Class A common stock. These policies are relatively new and it is unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included. Due to the dual-class structure of our common stock, we will likely be excluded from certain indices and we cannot assure you that other stock indices (including Nasdaq) will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.

 

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The Warrants may not have value.

 

The Warrants being offered by us in this offering have an exercise price of $6.50 per share, and expire on the fifth anniversary from the date of issuance. In the event that our Class A common stock does not exceed the exercise price of the Warrants during the period when such Warrants are exercisable, such Warrants may not have any value.

 

Holders of our Warrants will have no rights as stockholders until they acquire shares of our Class A common stock, if ever.

 

If you acquire Warrants to purchase shares of our Class A common stock in this offering, you will have no rights with respect to our Class A common stock until you acquire shares of such Class A common stock upon exercise of your Warrants. Upon exercise of your Warrants, you will be entitled to exercise the rights of a holder of Class A common stock only as to matters for which the record date occurs after the exercise date.

 

There is no public market for the Warrants being offered by us in this offering and an active trading market for the Warrants is not expected to develop.

 

There is no established public trading market for the Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply for any listing of the Warrants offered hereby on The Nasdaq Capital Market or any other securities exchange or nationally recognized trading system. Without an active market, the liquidity of the Warrants may be severely limited.

 

Our principal stockholders will continue to have significant influence over the election of our board of directors and approval of any significant corporate actions, including any sale of the Company.

 

Deepika Vuppalanchi, our Chief Executive Officer, Sandeep Allam, our Chairman and President and Priya Prasad, our Chief Financial Officer and Chief Operating Officer, in the aggregate, beneficially own 79.00% of our Class B common stock and will beneficially own 56.13% of our outstanding voting securities after this offering. These stockholders currently have, and likely will continue to have, significant influence with respect to the election of our board of directors and approval or disapproval of all significant corporate actions. The concentrated voting power of these stockholders could have the effect of delaying or preventing an acquisition of the Company or another significant corporate transaction.

 

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We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

 

Our management will have broad discretion in the application of the net proceeds from this initial public offering, including for any of the currently intended purposes described in the section entitled “Use of Proceeds.” Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management may not apply our cash from this offering in ways that ultimately increases the value of any investment in our securities or enhances stockholder value. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply our cash in ways that enhance stockholder value, we may fail to achieve expected financial results, which may result in a decline in the price of our shares of Class A common stock, and, therefore, may negatively impact our ability to raise capital, invest in or expand our business, acquire products or licenses, commercialize our products and services, or continue our operations.

 

We could be subject to securities class action litigation.

 

In the past, securities class action litigation has been brought against companies following a decline in the market price of their securities. This risk is especially relevant for us because healthcare companies have experienced significant share price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

 

We do not expect to pay dividends in the foreseeable future after this offering, and you must rely on price appreciation of your shares of Class A common stock for return on your investment.

 

We have paid no cash dividends on any class of our stock to date, and we do not anticipate paying cash dividends in the near term. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our stock. Accordingly, investors must be prepared to rely on sales of their shares after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our shares. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.

 

As our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

 

If you purchase Units in this offering, you will pay more for your shares of Class A common stock than the amount paid by our existing stockholders for their shares on a per share basis. As a result, you will experience immediate and substantial dilution in net tangible book value per share in relation to the price that you paid for your shares. We expect the dilution as a result of the offering to be $0.25 per Class A common share to new investors purchasing our Units in this offering. In addition, you will experience further dilution to the extent that we issue shares of our Class A common stock upon the exercise of any warrants, including the Warrants issued in this offering, or exercise of stock options under any stock incentive plans. See “Dilution” for a more complete description of how the value of your investment in our shares will be diluted upon completion of this offering.

 

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We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

 

As a public company, and particularly after we no longer qualify as an emerging growth company, we will incur significant legal, accounting, and other expenses that we did not incur previously. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations impose various requirements on U.S. reporting public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified senior management personnel or members for our board of directors. In addition, these rules and regulations are often subject to varying interpretations, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Pursuant to Section 404 of the Sarbanes-Oxley Act, we will be required to furnish a report by our senior management on our internal control over financial reporting.

 

While we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To prepare for eventual compliance with Section 404, once we no longer qualify as an emerging growth company, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404.

 

Failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of our Class A common stock. If our internal controls are not effective, we may not be able to accurately report our financial results or prevent fraud.

 

Effective internal control over financial reporting is necessary for us to provide reliable financial reports in a timely manner. In connection with the preparation of our financial statements, our management has identified a material weakness. A material weakness is a significant deficiency, or a combination of significant deficiencies, in internal control over financial reporting such that it is reasonably possible that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, our management has identified the following material weakness: a lack of formal policy or written procedures for the approval, identification and reporting of related-party transactions; lack of formal executed agreements, policies and procedures which are not yet adequately documented; insufficient experience with accounting principles generally accepted in the United States of America (“GAAP”) regarding complex transactions and reporting, and insufficient number of staff to maintain optimal segregation of duties and levels of oversight. While we intend to take steps to remediate the material weakness in our internal control over financial reporting by adopting a formal policy or written procedures for the approval, identification and reporting of related-party transactions, providing written documentation of our internal control policies and procedures and adding staff members with requisite accounting experience at such time that adequate resources are available to us to remediate such weakness, we may not be successful in remediating such weakness in a timely manner, if at all, which may undermine our ability to provide accurate, timely and reliable reports on our financial and operating results. Furthermore, if we remediate our current material weakness but identify new material weakness in our internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock may be negatively affected. As a result of such failures, we could also become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission (“SEC”), or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation, financial condition or divert financial and management resources from our core business.

 

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Anti-takeover provisions contained in our Certificate of Incorporation and our Amended and Restated Bylaws (“Bylaws”) to be effective upon the closing of this offering, as well as provisions of Delaware law, could impair a takeover attempt.

 

Our Certificate of Incorporation, Bylaws to be effective upon the closing of this offering and Delaware law contain or will contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include or will include provisions:

 

  ● authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our Class A common stock;
     
  ● limiting the liability of, and providing indemnification to, our directors and officers;
     
  ● limiting the ability of our stockholders to call and bring business before special meetings;
     
  ● requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;
     
  ● controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings; and
     
  ● providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings.

 

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

 

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.

 

Any provision of our Certificate of Incorporation, Bylaws to be effective upon closing of this offering or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.

 

Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.

 

Our Certificate of Incorporation requires that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for each of the following:

 

  ● any derivative action or proceeding brought on our behalf;
  ● any action asserting a claim for breach of any fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders;
  ● any action asserting a claim against us or any of our directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or our Bylaws; or
  ● any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine;

 

except for, as to each of the above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction.

 

The exclusive forum provision is limited to the extent permitted by law, and it will not apply to claims arising under the Exchange Act, the Securities Act of 1933, as amended (the “Securities Act”), or for any other federal securities laws which provide for exclusive or concurrent federal and state jurisdiction.

 

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Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock are deemed to have notice of and consented to this provision.

 

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our Certificate of Incorporation provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States of America. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our Certificate of Incorporation.

 

Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, this provision may limit or discourage a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, and may result in increased costs to our stockholders, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

 

We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.

 

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General Risk Factors

 

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for the shares and trading volume could decline.

 

The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our Class A common stock or publishes inaccurate or unfavorable research about our business, the market price for our Class A common stock would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Class A common stock to decline.

 

We are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.

 

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock held by non-affiliates exceeds $700 million as of the end of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

 

In addition, under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards apply to private companies. We may, in the future, elect not to avail ourselves of this exemption from new or revised accounting standards and, therefore, may be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

 

We cannot predict if investors will find our Class A common stock less attractive because we may rely on these exemptions. If some investors find our Class A common less attractive as a result, there may be a less active trading market for our Class A common and our share price may be more volatile.

 

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. All statements other than statements of historical facts contained in this prospectus are forward-looking statements. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements include, but are not limited to, statements concerning the following:

 

  ● our projected financial position and estimated cash burn rate;
     
  ● our estimates regarding expenses, future revenues and capital requirements;
     
  ● our ability to continue as a going concern;
     
  ● our need to raise substantial additional capital to fund our operations;

 

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  ● our ability to compete in the healthcare industry;
     
  ● the timing, cost and success or failure of new product and service introductions, development and product upgrade releases;
     
  ● competitive pressures including offerings and pricing;
     
  ● our ability to establish and maintain strategic relationships;
     
  ● undetected errors or similar problems in our software products;
     
  ● compliance with existing laws, regulations and industry initiatives and future changes in laws or regulations in the healthcare industry;
     
  ● the possibility of services-related liabilities;
     
  ● our ability to obtain, maintain and protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights;
     
  ● our reliance on third-party content providers;
     
  ● the success of competing products or services that are or become available;
     
  ● our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel; and
     
  ● the successful development of our sales and marketing capabilities.

 

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

 

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

 

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

 

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INDUSTRY AND MARKET DATA

 

This prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as from industry and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty, including those discussed in “Risk Factors.” We caution you not to give undue weight to such projections, assumptions, and estimates. Further, industry and general publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these publications, studies, and surveys are reliable, we have not independently verified the data contained in them. In addition, while we believe that the results and estimates from our internal research are reliable, such results and estimates have not been verified by any independent source.

 

TRADEMARKS, SERVICE MARKS AND TRADENAMES

 

We may own or have rights to use a number of registered and common law trademarks, service marks and/or trade names in connection with our business in the United States and/or in certain foreign jurisdictions.

 

Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

USE OF PROCEEDS

 

We estimate that the net proceeds from our issuance and sale of Units in this offering will be approximately $6.6 million, based on an assumed initial public offering price of $4.125 per Unit, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds from this offering will be approximately $7.9 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

We intend to use approximately $2.5 million for marketing and sales, approximately $1 million for application development, approximately $250,000 for research and development and the remainder for general corporate purposes, including working capital, operating expenses, and capital expenditures. We may also use a portion of the net proceeds to in-license, acquire or invest in complementary businesses or products, however, we have no current commitments or obligations to do so.

 

A $1.00 increase or decrease in the assumed initial public offering price of $4.125 per Unit would increase or decrease the net proceeds from this offering by approximately $2 million, assuming that the number of Unit offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.

 

This expected use of the net proceeds from this offering and our existing cash represents our intentions based upon our current plans, financial condition and business conditions. Predicting the cost necessary to develop our products and services can be difficult and the amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering and our existing cash.

 

In the ordinary course of our business, we expect to from time to time evaluate the acquisition of, investment in or in-license of complementary products, technologies or businesses, and we could use a portion of the net proceeds from this offering for such activities. We currently do not have any agreements, arrangements, or commitments with respect to any potential acquisition, investment or license.

 

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments, and government securities.

 

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DIVIDEND POLICY

 

We have never paid or declared any cash dividends on our Class A common stock, and we do not anticipate paying any cash dividends on our Class A common stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

 

CAPITALIZATION

 

The following table sets forth our cash and capitalization as of December 31, 2022:

 

  ● on an actual basis;
     
  ● on a pro forma basis to reflect the $1,455,000 of proceeds received on the sale of convertible notes; and
     
  ● on a pro forma as adjusted basis to give further effect to (i) the conversion of $1,459,790 of principal and accrued interest of outstanding convertible notes into an aggregate of 442,367 shares of Class A common stock upon the closing of this offering based upon an assumed initial public offering price of $4.125 per Unit and (ii) our issuance and sale of 2,000,000 Units being sold in this offering at an assumed initial public offering price of $4.125 per Unit, after deducting the estimated underwriting discounts and commissions and our estimated offering expenses.

 

   Actual   Pro Forma   Pro Forma
As Adjusted(1)
 
Cash  $3,344   $1,458,344   $7,770,447 
                
Convertible notes   -    1,455,000    - 
                
Stockholders’ equity:               
Preferred stock, par value $0.001 per share; 1,000,000 shares authorized, no shares issued and outstanding, actual; no shares issued and outstanding, pro forma; no shares issued and outstanding, pro forma as adjusted   -    -    - 
Class A common stock, par value $0.001 per share; 100,000,000 shares authorized, 4,282,500 shares issued and outstanding, actual; 4,724,867 shares issued and outstanding, pro forma; 6,724,867 shares issued and outstanding, pro forma as adjusted   4,283    4,725    6,725 
Convertible class B common stock, par value $0.001 per share; 5,000,000 shares authorized, 1,000,000 shares issued and outstanding, actual; 1,000,000 shares issued and outstanding, pro forma; 1,000,000 shares issued and outstanding, pro forma as adjusted   1,000    1,000    1,000 
Additional paid-in capital   2,831,427    4,290,775    11,051,275 
Accumulated deficit   (2,126,612)   (2,126,612)   (2,126,612)
Total stockholders’ equity   710,098    2,169,888    8,932,388 
Total capitalization  $710,098   $2,169,888   $8,932,388 

 

(1) A $1.00 increase (decrease) in the assumed initial public offering price of $4.125 per Unit would increase (decrease) the as adjusted amount of each of cash, total stockholders’ equity and total capitalization by $2 million, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions. An increase (decrease) of 500,000 Units offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the as adjusted amount of each of cash, total stockholders’ equity and total capitalization by $2 million, assuming no change in the initial public offering price per Unit and after deducting estimated underwriting discounts and commissions.

 

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The number of shares of Class A common stock and Class B common stock that will be outstanding after this offering is based on 4,282,500 shares of Class A common stock and 1,000,000 shares of Class B common stock outstanding as of December 31, 2022, and excludes:

 

  ● 10,000,000 shares of Class A common stock issuable upon conversion of our Class B common stock;
     
  ● 22,000 shares of Class A common stock issuable upon exercise of options at an exercise price of $1.00 per share;
     
  ● 1,222,000 shares of Class A common stock reserved for future issuance under our 2022 Omnibus Equity Incentive Plan;
     
  ● 2,000,000 shares of Class A common stock underlying the Warrants included in the Units; and

 

  ● 300,000 shares of Class A common stock issuable upon exercise of warrants to be issued to the representative of the underwriters as part of this offering at an exercise price of $4.95 based upon an assumed initial public offering price of $4.125 per Unit.

 

DILUTION

 

If you invest in our Class A common stock, your ownership interest will be diluted to the extent of the difference between initial public offering price per share of our Class A common stock and the pro forma as adjusted net tangible book value per share of our Class A common stock immediately after this offering.

 

As December 31, 2022, we had a historical net tangible book value of $710,098, or $0.13 per share of Class A and B common stock, based on shares of common stock outstanding at December 31, 2022. Our historical net tangible book value per share is the amount of our total tangible assets less our total liabilities at December 31, 2022, divided by the number of shares of Class A and B common stock outstanding at December 31, 2022.

 

After giving effect to the conversion of $1,459,790 of principal and accrued interest on outstanding notes into an aggregate of 442,367 shares of Class A common stock upon the closing of this offering based upon an assumed initial public offering price of $4.125 per Unit, our pro forma net tangible book value as of December 31, 2022 was $2,169,888, or $0.38 per share of Class A and B common stock.

 

After giving further effect to the sale of 2,000,000 Units in this offering at an assumed initial public offering price of $4.125 per Unit, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at December 31, 2022 would have been $8,932,388, or $1.16 per share of Class A common stock. This represents an immediate increase in pro forma as adjusted net tangible book value of $1.02 per share of Class A common stock to existing stockholders and immediate dilution of $0.25 per share of Class A common stock to new investors purchasing securities in this offering.

 

The following table illustrates this dilution on a per share basis:

 

Initial public offering price per Unit  $4.125 
Pro forma net tangible book value per Class A share as of December 31, 2022  $0.17 
Pro forma increase in net tangible book value per Class A share attributable to new investors   1.55 
Pro forma as adjusted net tangible book value per Class A share immediately after this offering  $1.31 
Dilution per Class A share to new investors in this offering  $2.815 

 

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A $1.00 increase (decrease) in the assumed initial public offering price of $4.125 per Unit would increase (decrease) our as adjusted net tangible book value after this offering by $0.24 per share of Class A and B common stock and the dilution to new investors purchasing Class A and B common stock in this offering by $0.92 per share of Class A and B common stock, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discount and commissions. An increase of 500,000 Units offered by us, as set forth on the cover page of this prospectus, would increase our as adjusted net tangible book value after this offering by $0.16 per share of Class A and B common stock and decrease the dilution to new investors purchasing Class A common stock in this offering by $0.10 per share of Class A and B common stock, assuming no change in the initial public offering price per Unit and after deducting estimated underwriting discounts and commissions. A decrease of 500,000 in the number of Units offered by us would decrease the as adjusted net tangible book value after this offering by $0.23 per share of Class A and B common stock and decrease the dilution to new investors purchasing Class A and B common stock in this offering by $0.39 per share of Class A and B common stock, assuming no change in the initial public offering price per Unit and after deducting estimated underwriting discounts and commissions.

 

The number of shares of Class A common stock and Class B common stock that will be outstanding after this offering is based on 4,282,500 shares of Class A common stock and 1,000,000 shares of Class B common stock outstanding as of December 31, 2022, and excludes:

 

  ● 10,000,000 shares of Class A common stock issuable upon conversion of our Class B common stock;
     
  ● 22,000 shares of Class A common stock issuable upon exercise of options at an exercise price of $1.00 per share;
     
  ● 1,222,000 shares of Class A common stock reserved for future issuance under our 2022 Omnibus Equity Incentive Plan;
     
  ● 2,000,000 shares of Class A common stock underlying the Warrants included in the Units; and
     
  ● 300,000 shares of Class A common stock issuable upon exercise of warrants to be issued to the representative of the underwriters as part of this offering at an exercise price of $4.95 based upon an assumed initial public offering price of $4.125 per Unit.

 

The following table summarizes, on the as adjusted basis described above, the total number of shares of Class A common stock purchased from us, the total consideration paid or to be paid, and the average price per share paid or to be paid by existing stockholders and by new investors in this offering at an assumed initial public offering price of $4.125 per Unit, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

 

   Class A Shares Purchased   Total Consideration  

Average Price

Per Class A

 
   Number   Percentage   Amount   Percentage   Share 
Existing stockholders   4,724,867(1)   70%  $2,322,500    22%  $0.49 
New investors   2,000,000    30    8,250,000    78%  $4.125 
                          
Total   6,724,867    100%  $10,572,500    100%  $1.57 

 

(1) Includes 442,367 shares of Class A common stock issuable upon conversion of an aggregate of $1,459,790 of convertible notes including interest accrued thereon.

 

A $1.00 increase (decrease) in the assumed initial public offering price of $4.125 per Unit, would increase (decrease) the total consideration paid by new investors by $2 million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by 4 percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by 5 percentage points, assuming that the number of Units offered by us, as set forth on the cover page of this prospectus, remains the same. An increase (decrease) of 500,000 Units offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors by $2.25 million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by 4 percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by 6 percentage points, assuming no change in the initial public offering price.

 

To the extent stock options are issued under our equity incentive plan or we issue additional common stock or common stock equivalents in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations and that involve risks, uncertainties and assumptions. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those which we discuss under “Risk Factors” and elsewhere in this prospectus. See “Information Regarding Forward-Looking Statements.” All amounts in this report are in U.S. dollars, unless otherwise noted.

 

Overview

 

We are a healthcare services company promoting preventative health, holistic wellness, health education, and equitable healthcare for all patient demographics. We leverage deep scientific and healthcare expertise to create strategic frameworks and develop patient-centric solutions for the betterment of patient lives and health outcome linked to developing a healthier population. We are developing comprehensive end-to-end solutions in health education services, population health management, behavioral and mental health, healthcare workforce and digital health.

 

Recent Developments

 

From January 2023 until April 2023, we entered into subscription agreements with accredited investors pursuant to which we issued convertible promissory notes in the aggregate principal amount of $1,455,000. The notes mature on dates between July 10, 2024 and October 7, 2024, accrue interest at 2% per annum and may be prepaid by us at any time without any penalties. The holders may convert the principal amount of the notes together with accrued interest thereon at any time prior to the earlier of the maturity date and the effectiveness of this registration statement at a conversion price of $5.00 per share. Upon the closing of the Next Equity Financing (as defined herein), the principal amount of the notes together with accrued interest thereon shall automatically convert into such number of shares of our Class A common stock determined by dividing (x) the outstanding principal balance and unpaid accrued interest of the notes on the date of conversion by (y) the price per share equal to the product of the price per Equity Security (as defined in the notes) sold in the Next Equity Financing multiplied by 80%. This offering will qualify as a Next Equity Financing. “Next Equity Financing” means an initial public offering by us of our Equity Securities pursuant to which such Equity Securities are listed on a national securities exchange.

 

Results of Operations for the Years Ended December 31, 2022 and 2021

 

The following table summarizes selected items from the statements of operations for the years ended December 31, 2022 and 2021.

 

   For the Year   For the Year     
   Ended   Ended     
   December 31,   December 31,   Increase / 
   2022   2021   (Decrease) 
             
Net revenues  $5,617,706   $1,409,976   $4,207,730 
Cost of services   4,555,924    979,622    3,576,302 
Gross profit   1,061,782    430,354    631,428 
                
Operating expenses:               
Salaries and benefits   1,524,971    235,802    1,289,169 
Professional fees   1,035,902    94,964    940,938 
Selling, general and administrative expenses   575,755    102,661    473,094 
Depreciation   14,849    207    14,642 
Total operating expenses:   3,151,477    433,634    2,717,843 
                
Operating loss   (2,089,695)   (3,280)   2,086,415 
                
Total other income (expense)   (28,470)   -    28,470 
                
Net loss  $(2,118,165)  $(3,280)  $2,114,885 

 

Net Revenues

 

Our sales from services commenced during May of 2021. Net revenue during the year ended December 31, 2022 was comprised of $5,261,870 of healthcare staffing services revenue and $355,836 of medical communication services revenue compared to net revenue during the year ended December 31, 2021 of $1,245,413 of healthcare staffing services revenue and $164,563 of medical communication services revenue, an increase of $4,207,730, or 298%. Net revenues increased in 2022 as we had a full year of operations and the effects of the Covid-19 pandemic subsided.

 

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Cost of Services

 

Our cost of services included wages and related payroll taxes, employee benefits and certain other employee-related costs of our contract service employees while they work on contract assignments. We incurred $4,555,924 of cost of services for the year ended December 31, 2022 compared to $979,622 for the year ended December 31, 2021, an increase of $3,576,302, or 365%. Our gross profit was approximately 19% for the year ended December 31, 2022 compared to approximately 31% for the year ended December 31, 2021, a decrease of approximately 12%. Our cost of services increased primarily due to increased labor necessary to support our increased sales in 2022, while our gross margins declined due to inflationary pressures in 2022, as we had to pay higher labor rates to attract and retain qualified personnel. To the extent possible, we intend to factor these considerations into our new and existing contracts to improve our margins.

 

Operating Expenses

 

Salaries and Benefits

 

Our salaries and benefits included wages and related payroll taxes, employee benefits and certain other employee-related costs of our management and office personnel. We incurred $1,524,971 of salaries and benefits during the year ended December 31, 2022, compared to $235,802 for the year ended December 31, 2021, an increase of $1,289,169, or 547%. Salaries and benefits increased in 2022 as we supported our increased operations and added office personnel to support our initial public offering (“IPO”) process. Salaries and benefits included $579,599 and $141,515 of officer compensation for the years ended December 31, 2022 and 2021, respectively.

 

Professional Fees

 

Professional fees primarily consisted of expenses incurred from business development, accounting, legal fees, and consulting activities. We incurred $1,035,902 of professional fees for the year ended December 31, 2022, compared to $94,964 for the year ended December 31, 2021, an increase of $940,938, or 991%. Professional fees increased in 2022 due to increased reliance on outsourced professionals as we audited our financial statements and prepared for our IPO, compared to limited operations in the prior year.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses (“SG&A”) primarily consisted of marketing, rent, office, insurance, travel and repair and maintenance expenses incurred. We incurred $575,755 of SG&A expenses during the year ended December 31, 2022, compared to $102,661 for the year ended December 31, 2021, an increase of $473,094, or 461%. Our SG&A expenses increased primarily due to our increased operations in 2022. SG&A included $107,013 and $31,992 of rent incurred from STVentures, LLC, an entity beneficially owned by our principal owners, our management team and their affiliates, $47,736 and $13,657 of insurance and $30,738 and $17,418 of repairs and maintenance for the years ended December 31, 2022 and 2021, respectively, as we entered into our lease in July of 2021 and commenced operations.

 

Depreciation

 

We incurred $14,849 of depreciation expense for the year ended December 31, 2022, compared to $207 of depreciation expense for the year ended December 31, 2021, an increase of $14,642, or 7,073%. Depreciation increased as we expanded our office space and placed additional office equipment into service during 2022. We expect depreciation to increase in future periods, as we expanded our office space and incurred significant leasehold improvement costs during 2022.

 

Other Income (Expense)

 

Other expense on a net basis consisted of $28,533 of interest incurred on a line of credit that we entered into in 2022, as partially offset by $63 of interest. We did not have any other income (expense) for the year ended December 31, 2021.

 

Net Loss

 

Our net loss for the year ended December 31, 2022 was $2,118,165, compared to a net loss of $3,280 for the year ended December 31, 2021, an increase of $2,114,885. Net loss increased primarily due to costs incurred as we prepared for our IPO, including $510,000 of stock-based compensation paid to consultants in shares of our common stock in lieu of cash.

 

Liquidity and Capital Resources

 

We believe that our existing sources of liquidity, along with cash expected to be generated from sales and services, will not be sufficient to fund our operations, anticipated capital expenditures, working capital and other financing requirements for at least the next twelve months from the issuance of the financial statements included elsewhere in this prospectus. In the event we are unable to achieve profitable operations in the near term, we may require additional equity and/or debt financing; however, we cannot provide assurance that such financing will be available to us on favorable terms, or at all. We will continue to monitor our expenditures and cash flow position.

 

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The following table summarizes total current assets, liabilities, accumulated deficit and working capital (deficit) at December 31, 2022 and 2021.

 

   December 31,   December 31, 
   2022   2021 
Current Assets  $1,426,743   $382,143 
           
Current Liabilities  $1,546,345   $452,292 
           
Accumulated Deficit  $(2,126,612)  $(8,447)
           
Working Capital (Deficit)  $(119,602)  $(70,149)

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. To date, we have funded our operations through equity and debt financings. Our primary uses of cash have been for the development of operations, compensation, and professional fees. All funds received have been expended in the furtherance of growing our business and establishing our healthcare staffing and medical communication services. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

 

  ● A substantial increase in working capital requirements to finance our operations;
  ● Addition of administrative and professional personnel as our business continues to grow;
  ● The cost of being a public company; and
  ● Payments for seeking and securing quality staffing personnel.

 

Cash Flow Activities for the Years Ended December 31, 2022 and 2021

 

Net Cash Used in Operating Activities

 

Cash used in operating activities for the years ended December 31, 2022 and 2021 was $2,244,065 and $88,199, respectively, which was primarily attributable to our net loss for the years.

 

Net Cash Used in Investing Activities

 

Cash used in investing activities for the years ended December 31, 2022 and 2021 was $121,260 and $6,289, respectively, and related entirely to the purchase of property and equipment in each year.

 

Net Cash Provided by Financing Activities

 

Cash provided by financing activities for the year ended December 31, 2022 was $2,268,657 and consisted of $2,322,500 of proceeds from the sale of our Class A common stock, $2,819,275 of proceeds received from a line of credit, and $94,000 of advances received from related parties, as offset by $596,118 of payments on deferred offering costs, $2,082,800 of repayments on the line of credit, and $288,200 of repayments on advances from related parties. Cash provided by financing activities for the year ended December 31, 2021 was $191,500 and consisted primarily of $742,200 advances received from related parties offset by $551,000 related to repayment on advances from related parties.

 

Financing Transactions

 

Advances from Related Party

 

During the year ended December 31, 2021, our operations were primarily financed by short term advances from Sahasra Technologies Corp., doing business as STLogics, which is an entity beneficially owned by our principal owners and management team, culminating in an outstanding principal balance of $194,200 at December 31, 2021, which was repaid in 2022.

 

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Line of Credit

 

On February 7, 2022, we entered into a business loan agreement (as amended, the “loan agreement”) with Citizens State Bank of New Castle pursuant to which we originally received a revolving line of credit of up to $1,500,000, which was subsequently amended to $800,000 (as amended, the “Revolving Line of Credit”). Pursuant to the terms of the Revolving Line of Credit, the outstanding balance shall not exceed 75% of our accounts receivable due from the State of Indiana as aged more than 90 days together with all other accounts receivable aged less than 90 days. The Revolving Line of Credit was to terminate on December 31, 2022, unless extended pursuant to the terms thereof; however, we received extensions on the Revolving Line of Credit such that it will now terminate on August 3, 2023. In the event of a default, all commitments and obligations pursuant to the Revolving Line of Credit will terminate immediately and, at Citizens State Bank of New Castle’s request, all Indebtedness (as defined in the business loan agreement) shall become immediately due and payable. Advances on the Revolving Line of Credit are pursuant to a promissory note dated February 7, 2022, which accrues interest at a variable rate of 1.5% above the national prime interest rate as quoted in the Wall Street Journal, not to be less than 4.75% per annum or more than 21% per annum or the maximum rate allowed by law. Interest shall increase by an 2.0% in the event of a default. Pursuant to the promissory note, we have been required to pay monthly payments of unpaid interest since March 7, 2022. We may prepay all or a portion of the amount due prior to the date upon which it is due without any penalty. In connection with the Revolving Line of Credit, we entered into a commercial security agreement with Citizens State Bank of New Castle dated February 7, 2022, pursuant to which we granted Citizens State Bank of New Castle a security interest in all of our assets to secure the Indebtedness. As of December 31, 2022 and March 31, 2023, the balance outstanding under the Revolving Line of Credit was $750,551 and $300,154, respectively.

 

Common Stock Sales

 

In March 2022, we sold an aggregate of 2,000,000 shares of our Class A common stock at a price of $0.50 per share for gross proceeds of $1 million. In addition, from June to August 2022 we sold an aggregate of 1,322,500 shares of our Class A common stock at a price of $1.00 per share for gross proceeds of $1,322,500.

 

Critical Accounting Policies and Estimates

 

The preparation of the financial statements included elsewhere in this prospectus requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

 

The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our financial statements are described below.

 

Accounts Receivable

 

Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. We had an allowance for doubtful accounts of $4,533 at December 31, 2022. No allowance for doubtful accounts was necessary at December 31, 2021.

 

Impairment of Long-Lived Assets

 

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 360, “Impairment or Disposal of Long-Lived Assets,” all long-lived assets such as property and equipment held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

 

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Leases

 

We account for our leases under ASC 842 - Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on our balance sheets.

 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As our lease does not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

 

Revenue Recognition

 

We recognize revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as we satisfy a performance obligation.

 

We account for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

 

We have two main forms of revenue – healthcare staffing revenue and medical communication revenue. We primarily provide healthcare staffing services to state mental health agencies, and our medical communication revenue is primarily comprised of contracted data analysis and medical writing services to state agencies and universities. Healthcare staffing and medical communication revenue are both accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of our performance on an hourly or daily basis. The contracts stipulate bi-weekly or monthly billing, and we have elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date. The medical communication contracts also contain certain additional performance obligations that contain single performance obligations that are satisfied when services are rendered. We may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. We recognize revenue net of penalties. Revenue during the years ended December 31, 2022 and 2021 was comprised of $5,261,870 and $1,245,413 of healthcare staffing revenue and $355,836 and $164,563 of medical communication revenue, respectively.

 

Significant Concentrations

 

The majority of accounts receivable and revenue contracts are between our Company and different divisions within the IFSSA. Most contracts require monthly payments as the projects progress. We generally do not require collateral or advance payments. For the years ended December 31, 2022 and 2021, IFSSA accounted for approximately 98% of our revenues which was derived through a combination of divisions within the State of Indiana, including the IFSSA NeuroDiagnostic Institute, representing $5,214,128 and $1,245,413 of our healthcare staffing services revenues and the IFSSA-Division of Mental Health and Addiction, which commenced on September 3, 2021, representing $306,000 and $132,000 of our medical communication services revenues for the years ended December 31, 2022 and 2021, respectively. In addition, the combined divisions of the IFSSA represented 99% and 92% of our accounts receivable at December 31, 2022 and 2021, respectively.

 

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Recent Accounting Standards

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by us as of the specified effective date.

 

In March 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-02, amendments related to Troubled Debt Restructurings (“TDRs”) for all entities after they adopt 2016-13 and amendments related to vintage disclosures that affect public business entities with investments in financing receivables, under Financial Instruments-Credit Losses (Topic 326). The amendments in the accounting guidance for TDRs by creditors eliminates the recognition and measurement guidance for TDRs in Subtopic 310-40. The effective dates for the amendments in this update are the same as the effective dates in update 2016-13. The amendments in this update should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. We are currently evaluating the potential impact on adoption of this ASU on our financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We have elected the early adoption of ASU 2020-06 as of January 1, 2021. We do not expect that the adoption of this standard will have a material impact on our financial statements.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. The amendments contained in ASU 2016-13 were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years for our Company. In November 2019, the FASB issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined in Rule 12b-2 of the Exchange Act) to fiscal years beginning after December 15, 2022, including interim periods. Early adoption is permitted. We meet the definition of a smaller reporting company and are adopting the deferral period for ASU 2016-13. The guidance requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are currently evaluating the impact of the adoption of ASU 2016-13 on our financial statements but do not expect that the adoption of this standard will have a material impact on our financial statements.

 

There are no other recently issued accounting pronouncements that we have yet to adopt that are expected to have a material effect on our financial position, results of operations, or cash flows.

 

JOBS Act

 

On April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

 

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We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

 

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

 

BUSINESS

 

Our Company

 

We are a healthcare services company promoting preventative health, holistic wellness, health education, and equitable healthcare for all patient demographics. We leverage deep scientific and healthcare expertise to create strategic frameworks and develop patient-centric solutions for the betterment of patient lives and health outcome linked to developing a healthier population. We are developing comprehensive end-to-end solutions in health education services, population health management, behavioral and mental health, healthcare workforce and digital health.

 

IFSSA accounted for approximately 98% of our revenues for each of the years ended December 31, 2022 and 2021 and 99% and 92% of our accounts receivable at December 31, 2022 and 2021, respectively, as due from the combined divisions (NeuroDiagnostic Institute and Division of Mental Health and Addiction) of the IFSSA.

 

Our Services

 

Health Education Services

 

We believe that one of the main drivers of the healthcare education solutions market is the need to address challenges in the healthcare industry through effective and innovative medical and scientific training. With evolving healthcare technology, healthcare professionals must be knowledgeable with respect to various patient-care approaches to make better informed clinical decisions and assure patient satisfaction. We believe that targeted and continuous healthcare education solutions are needed to help healthcare professionals improve their competency, improve health equality and incorporate innovative and new therapeutic options into practice to improve overall patient care quality. Therefore, we aim to provide medical education solutions to pharmaceutical and medical device manufacturers, biotechnology companies, payers, large employers, academic institutions, and government agencies. Specifically, we develop medical education content to drive the organizational and strategic brand goals and vision of our clients. Our education outreach plan utilizes omnichannel delivery approaches from a suite of solutions for in-person, virtual and hybrid arrangements, and our deliverables include traditional print and electronic formats. Some of our targeted education approaches include the utilization of artificial intelligence tools to provide real-time information to customers.

 

Within our health education service line we offer the following services: medical communications, patient education, and healthcare training.

 

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Medical Communications

 

We offer expertise in medical communications focused on developing scientific communications based on complex scientific and clinical data, novel therapies and drugs, disease guidelines and real-world perspectives on diseases and their current treatments. We provide pharmaceutical manufactures and medical devices and biotechnology companies with communications and marketing materials to help them better engage with patients and healthcare professionals. Our target learning audience includes various healthcare professions such as specialists, primary care physicians, nurses, pharmacists, and hospital staff. Our teams that deliver communications and marketing materials to our end-users are well-versed with the regulatory and compliance requirements established by the FDA for the development of promotional materials for a branded therapeutic products. We offer content development services in the following areas: disease state and product-specific education; value propositions; sales aides; advisory board meetings; conference coverage; and medical affairs resources.

 

On September 3, 2021, we entered into a professional services contract with the IFSSA, Division of Mental Health and Addiction, as amended on April 25, 2023 (as amended, the “Mental Health Agreement”), pursuant to which we are coordinating the work of the State Epidemiological Outcomes Workgroup and supporting data-driven decision-making regarding prevention efforts across state agencies and bodies. The Mental Health Agreement shall remain in effect until June 30, 2025, unless earlier terminated pursuant to the terms thereof. Pursuant to the Mental Health Agreement, we may receive up to approximately $1,246,000. The Mental Health Agreement may be terminated by the state, for, among other reasons, (i) a material breach of the Mental Health Agreement; (ii) failure by us to provide insurance required by the Mental Health Agreement; (iii) upon the occurrence of a default; (iv) if the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of performance of the Mental Health Agreement; or (v) for any reason if the state determines that such termination is in its best interest. We may terminate the Mental Health Agreement if the state, 60 days after receipt of written notice, fails to correct or cure any material breach of the Mental Health Agreement, and we may institute measures to collect monies due up to and including the date of termination. We generated $306,000 and $132,000, or 5% and 9% of our net revenues pursuant to this contract during the years ended December 31, 2022 and 2021, respectively.

 

Patient Education

 

We define patient education as the process of influencing patient behavior and attitudes and empowering patients with the knowledge and skills necessary to maintain or improve their health. A key driver of the growth in patient education has been the increasing adoption of digital health technologies, preventative health, and holistic wellness awareness programs in the private and public sector.

 

We offer comprehensive patient education solutions and services to patients, provider groups, payers, health care institutions, and government health agencies to improve intrinsic health education which we believe will lead to increased patient satisfaction, positive experiences and better health outcomes. We develop evidence-based, compliant content, incorporating the principles of instructional designing models so that the learning experience resonates with people of all demographics, including those of varied backgrounds and age groups. We offer educational content in the following areas: disease education and management; preventative health and wellness; behavioral and mental health; and public health awareness and campaigns. Our educational content is adaptable for integration into any electronic health record, care management platform, and learning management system. We offer our educational materials in various formats including American with Disabilities Act of 1990 (“ADA”) compliant print and electronic resources (i.e. brochures, toolkits, reports), app-based outreach, health blog, microsites, social media content, infographics, email campaigns and video formats.

 

Healthcare Training

 

According to BMC Public Health, health disparities are linked to up to $135 billion in economic losses in the United States per year. We believe health equity will be achieved when all sections of the population have attained their full potential for health and well-being regardless of race, age, sex, health conditions, social position or other socially determined circumstances. To decrease health disparities and improve patient outcomes and satisfaction, we have a team of subject matter experts that create trainings for employees and staff of health organizations, pharmaceutical companies, payers, and large healthcare employers. We offer our trainings in a variety of formats including virtual and classroom training, e-learning trainings, videos, surveys, and online assessments coupled with metrics. Our comprehensive training toolkits include facilitator and discussion guides, work mats and other resources for training. We offer customized training programs in the following areas: health equity, cultural competency, social determinants of health, preventative health, workforce and sales training; behavioral and mental health; care coordination; and caregiver training.

 

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Population Health Management

 

We define population health management as the process of assessing and analyzing healthcare and its delivery to create improvement for a population of individuals. We are developing end-to-end solutions and strategies to improve quality of care, access to care, health outcomes, and healthcare policies. We believe that our solutions will assist individuals in reaching their full health potential through preventative care, care coordination and patient engagement. Our team of service providers includes health economists, public health experts, subject matter experts, data scientists, and biostatisticians who apply advanced health analytics to real-world data to provide meaningful insights to improve quality of clinical care and understand patterns and trends around diagnosis, treatment and continued care. We believe our team helps stratify health risks based on social determinants of health, predict utilization of resources and health care costs, identify patient-level interventions and recommend population-level strategies.

 

Within our population health management service line we intend to offer the following services: analytics as a service, epidemiology and health equity analytics solutions. As of December 31, 2022, we had not yet entered into any agreements to provide these services.

 

Analytics as a Service

 

We perform in-depth research and provide end-to-end high-quality analysis on health and healthcare data and derive insights that can be developed into strategic interventions. We develop predictive analytics on healthcare utilization and cost and test the effectiveness of care management programs. Overall, we conduct data analytics and develop solutions from a health equity lens to help improve health equality and access to care. Some of our analytical capabilities include: data collection, traditional to advanced analytics, predictive analytics, risk stratification, intervention analytics, spatial analytics gap analysis, analytics workforce public policy, and evidence-based research.

 

Epidemiology

 

Epidemiological solutions are a hallmark of our services. We believe that data-driven analysis of emerging trends, patterns and determinants of health across various populations can provide a deeper understanding of public health issues thereby enabling organizations to influence policy and evidence-based practices. We are currently providing state and local agencies with various epidemiological services to improve public health in the State of Indiana and in the District of Columbia. Some of our epidemiology services include: managing and technical assistance to the state epidemiological outcomes workgroups; monitoring program evaluation substance use, mental health, epidemic and endemic, chronic, and infectious conditions; conducting data-driven discussions; establishing health priorities; and evaluation of regional prevention system.

 

Health Equity Analytics Solutions

 

Achieving health equity requires analysis of healthcare gaps, population risk stratification and strategic interventions involving social determinants of health. Using our health economics specialists and data scientists, we collect data on social determinants of health and provide an in depth analysis to help develop strategies for interventions at the individual and population level. Our solutions are intended to target health disparities and promote more equitable healthcare for all. Some of our services and solutions include: health risk stratification analytics and programs; health equity gap analysis and solutions; regional health equity dashboard; caregiver vulnerability mapping assessments health equity analysis; strategies to engage with community based organizations; patient/member engagement; and care coordination improvements.

 

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Behavioral and Mental Health

 

Mental health concerns are rapidly growing on a global scale, yet the shortage of mental health professionals and access to treatment is leaving millions of people without access to mental health resources. According to a Health Affairs report, almost half of all counties in the United States have zero psychiatrists, and according to the U.S. Department of Health and Human Services, 111 million people live in areas where there is a mental health professional shortage. Mental health issues are impacting all segments of the population, especially college students. According to the BestColleges.com survey, nearly half of all students believe that mental health issues have impacted their education and, as a result of the COVID-19 pandemic, 9 in 10 students experienced negative mental health symptoms.

 

We strongly believe in behavioral and mental health equity and our mission is to provide solutions that help improve health care and provide access to all populations, regardless of race, ethnicity, gender, socioeconomic status, sexual orientation, or geographic location. With our specialized services, we believe that we can help solve the behavioral and mental health needs of various organizations, including health organizations, large employers, and schools.

 

Behavioral and Mental Health Prevention & Telehealth App – Syrenity

 

Syrenity is a comprehensive telehealth application being developed by Syra, aimed at providing cutting-edge solutions for behavioral and mental health. With its evidence-based approach, Syrenity is being designed to identify and prevent the progression of negative factors that can influence individuals’ mental health, by offering targeted assignments, education, monitoring symptoms, and providing timely interventions.

 

We believe one of the key unique selling points of Syrenity will be its evidence-based approach. The app will utilize scientifically proven methods and techniques to assess and address behavioral and mental health concerns. Through a series of assessments, Syrenity will create a personalized profile for each user, which will serve as a starting point for developing targeted activities, education, and interventions. It is anticipated that the app will also generate reports and analytics on the user’s behavioral health.

 

Syrenity will enable users to connect with licensed mental health professionals through the telehealth and therapist matching features. Users can schedule virtual consultations with psychologists, psychiatrists, or mental health coaches, eliminating the need for in-person visits and providing convenient access to professional mental health care from the comfort of their own homes.

 

Engagement and interventions are crucial components of Syrenity, as the app is being designed to actively engage users in their mental health journey. Using innovative active and passive interventions such as gamification and personalized goal setting, we believe Syrenity will encourage users to actively participate in their mental health care. The app will also provide evidence-based interventions, such as cognitive behavioral therapy and mindfulness techniques, to help individuals effectively manage their symptoms and improve their mental well-being.

 

We anticipate that Syrenity will utilize an artificial intelligence-driven user diary for engagement, and there will be provision for accessing a virtual coach 24/7. We anticipate that other features will include ADA accessibility, alerts and notifications, and access to community resources.

 

Education is also given a key importance in our telehealth solution, as it empowers users with knowledge about mental health and equips them with skills to manage their condition effectively. The app will provide educational resources, such as articles, videos, and interactive modules, to help users understand their mental health concerns and learn coping strategies. This knowledge will empower users to actively participate in their mental health care and make informed decisions about their well-being.

 

Overall, we believe Syrenity will stand out as a comprehensive and evidence-based digital health app that addresses behavioral and mental health concerns through targeted assignments, education, monitoring symptoms, and evidence-based interventions. We believe its unique features, including profile assessments, engagement and interventions, telehealth services, and education, will make it a powerful tool for individuals looking to improve their mental well-being and prevent the progression of negative factors influencing their mental health.

 

Healthcare Workforce

 

Our healthcare staffing solutions are intended to help evaluate the immediate and longitudinal workforce needs of our client’s organization. Using agile implementation staffing methodologies we make it seamless and cost-efficient to expand our client’s clinical personnel. We recruit experienced nurses and allied health professionals for long-term fixed contract positions at hospitals and healthcare facilities across the country. Currently, we hold contracts with the State of Indiana psychiatric hospital to provide healthcare licensed and ancillary staff. Other staffing positions that we recruit include care coordinators, specialists to fill healthcare management roles, healthcare educators, therapists, healthcare technicians and health plan specialists. Our team of recruiters acts as an extension of our clients’ talent acquisition teams, working with our clients to fill vacant positions. Diversity, equity and inclusion is at the core of our Company and we support and help with the recruitment of a diverse workforce for our clients which include government agencies and private sector organizations in the local community and nationally. We provide dedicated account managers and administrative teams to ensure accountability and transparency.

 

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On July 27, 2021, we entered into a professional services contract with the IFSSA, NeuroDiagnostic Institute, as amended on April 6, 2022 and June 29, 2022 (as amended, the “NeuroDiagnostic Agreement”) pursuant to which we provide medical staffing services to the NeuroDiagnostic Institute. The NeuroDiagnostic Agreement shall remain in effect until January 21, 2025, unless earlier terminated pursuant to the terms thereof. Pursuant to the NeuroDiagnostic Agreement, we shall receive up to approximately $14.7 million. The NeuroDiagnostic Agreement may be terminated by the state, for, among other reasons, (i) a material breach of the NeuroDiagnostic Agreement; (ii) failure by us to provide insurance required by the NeuroDiagnostic Agreement; (iii) upon the occurrence of a default; (iv) based upon the state’s audit findings; (v) if the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of performance of the NeuroDiagnostic Agreement; or (vi) for any reason if the state determines that such termination is in its best interest. We may terminate the NeuroDiagnostic Agreement if the state, 60 days after receipt of written notice, fails to correct or cure any material breach of the NeuroDiagnostic Agreement, and we may institute measures to collect monies due up to and including the date of termination. We generated $5,214,128 and $1,245,413, or 93% and 88% of our net revenues, pursuant to this contract during the years ended December 31, 2022 and 2021, respectively.

 

Digital Health

 

We use digital health to bring innovation into the healthcare practice. Our goal is to transform patient care and engagement by connecting physicians, patients, caregivers, payers, and other key stakeholders through healthcare digital platforms with are supported by robust datasets and algorithms powered by artificial intelligence. By providing stakeholders with data, we empower stakeholders to address factors that impact holistic health, including physical, behavioral and social elements. Currently, we are developing digital and cloud-based platforms to help improve cost savings through the automation of health operations, which also provide clinical insights that personalize care and improve patient satisfaction. Our solutions include digital transformation, cloud and security, artificial intelligence, patient engagement, and health apps.

 

Within our digital health service line, we offer Soulcial app and patient engagement and education services; however, we have not generated any revenue to date.

 

Cloud and Security

 

We offer cloud-based healthcare solutions with secure and scalable infrastructure for healthcare organizations to store and manage patient data. Our cost-effective solution allows healthcare providers to access patient information from anywhere, with enhanced data security measures.

 

Artificial Intelligence

 

Our AI-powered healthcare solutions leverage advanced capabilities like natural language processing and predictive analytics to automate tasks, enable data-driven decisions, and enhance patient care. We believe our innovative approach to healthcare uses AI to drive progress and innovation.

 

Patient Engagement

 

Our patient engagement solutions provide patients with easy access to their health information, personalized health plans, and communication channels with healthcare providers. Our tools include reminders for appointments and medication, empowering patients to take an active role in their healthcare journey.

 

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Health Apps

 

Our digital health solutions, developed using the latest health information technologies, enable seamless and sustainable transformation for healthcare providers. We help unlock their full care potential in an ever-changing healthcare environment.

 

Soulcial App

 

We have designed and developed a customizable app that caters to holistic wellness, preventative health and mental health for various demographics. Our Soulcial app, which we intend to launch in the second half of 2023, is intended to connect the mind, body and soul elements and provides a way to connect to caregivers and peers, thus alleviating social isolation. The behavioral and mental health modules in Soulcial are intended to help self-assess stress, anxiety and depression and connect patients to service providers for treatment interventions.

 

Patient Engagement and Education

 

We offer an artificial intelligence chatbot trained to have human-like conversations using a process known as natural language processing to facilitate and provide end-to-end query resolution for the patients. Our chatbot provides instant resolution and reduces the time taken to resolve repetitive queries. Our chatbot is equipped to handle user queries and drive the conversation toward query resolution. Patients can utilize our chatbot for multiple features such as learning more about their condition, identifying healthcare professionals in their vicinity, scheduling, billing purposes, and learning about their health benefits from a health plan.

 

Market Opportunity

 

Due to the currently unmet healthcare needs, challenges, and attention to behavioral and mental health, we believe the overall market opportunity for all the services we offer is growing at a rapid pace.

 

Health Education Services: According to Verified Market Research, the global health education market size was valued at approximately $31.6 billion in 2020 and is projected to reach approximately $41.4 billion by 2028, growing at a compound annual growth rate (“CAGR”) of 3.59% from 2021 to 2028. Furthermore, according to Arizton Advisory and Intelligence, the U.S. continuing medical education market size was valued at approximately $2,712.6 million in 2021 and is expected to reach approximately $3,830.5 million by 2027. According to Market Research Future, the medical writing market is expected to cross $5,285.3 billion by 2030 at a CAGR of 10.31% with North America holding the largest share in this market. Furthermore, according to Precedence Research, the medical affairs outsourcing market for the U.S. was estimated at $470.2 million in 2021 and is anticipated to reach $1,288.2 million by 2030.

 

Population Health: According to Grand View Research, the U.S. population health management market size was valued at $20.6 billion in 2021 and is anticipated to growth at a CAGR of 19.5% from 2022 to 2030 which is mainly driven by the growing demand for healthcare IT services and solutions that support value-based healthcare delivery, resulting in a transition from fee-for-service to a value-based payment model. Moreover, according to Verified Market Research, the healthcare quality management market size was valued at $3.2 billion in 2020 and is projected to reach $6.8 billion by 2028, growing at a CAGR of 13.2% from 2021 to 2028. According to Verified Market Research, the rise in the aging population, healthcare expenditure and medical errors, and increase in the volume of unstructured data in healthcare are some of the factors fueling the growth of the healthcare quality management market.

 

Behavioral and Mental Health: According to Precedence Research, the U.S. behavioral health market size is expected to reach approximately $132.4 billion by 2027 with a growing CAGR of 5.3% during the period of 2021 to 2027. Furthermore, according to the National Alliance on Mental Illness, one in five U.S. adults experience mental illness each year and one in six U.S. youth aged 6 to 17 experience a mental health disorder each year. Moreover, according to National Alliance on Mental Illness, suicide is the second leading cause of death among people aged 10 to 34.

 

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Healthcare Workforce: According to Grand View Research, the U.S. healthcare staffing market size was valued at $24.1 billion in 2021 and is estimated to grow at a CAGR of 5.6% from 2022 to 2030 as a result of increasing demand for temporary staffing for medical professionals due to the rising elderly population and the lack of skilled nursing staff across the country.

 

Digital Health: According to Grand View Research, the U.S. patient engagement solutions market size was valued at approximately $5.2 billion in 2021 and is expected to grow at a CAGR of 15.1% from 2022 to 2030. Furthermore, according to Healthcaredive, the U.S. care coordination software market is expected to reach approximately $3.2 billion by 2022, growing at a CAGR of 15.4%.

 

Growth Strategies

 

We hope to become a leader in clinical healthcare solutions by providing customized and comprehensive end-to-end solutions for our customers in the public and private healthcare sectors and expand our operations to other metropolitan areas. As we continue our expansion, we anticipate that our professional pool and infrastructure will grow to support the breadth and depth of our services. With our rapid growth of sales and business development teams, we intend to replicate our current projects with similar customers across the country. We plan to open offices in multiple geographical locations to support our sales and business development efforts and intend to invest in partnerships with subject matter experts to further enhance our service lines and provide real-world insights. In addition, we are developing in-house proposal teams to ensure appropriate opportunities across government agencies are timely tracked and quality proposals are submitted. In addition to organic efforts, we may expand our footprint by acquiring companies that offer similar service lines. It is anticipated that such companies will strengthen our current service offerings and may also include new services that we may offer to our clients.

 

Competition

 

We compete on the basis of the breadth and functionality of the solutions we offer on both an integrated and modular basis, the return on investment realized by our customers from our solutions, our value proposition and our pricing models. The principal competitive factors in attracting, retaining, and expanding business with healthcare customers nationally include: (i) understanding the customer’s work environment; (ii) offering a comprehensive suite of services; (iii) timely filling of customers’ needs; (iv) price; (v) customer service; (vi) quality assurance and screening capabilities; (vii) risk management policies; (viii) insurance coverage; and (ix) general industry reputation. We face competition from major healthcare consulting companies. Some of the companies we compete with include the following:

 

  ● Health Education Services: Ashfield Healthcare Communications, IQVIA Holdings Inc, Paraxel International Corporation, Cactus Communications, The Medical Affairs Company, Syneos Health Inc. and DWA Healthcare Communications Group.

 

  ● Population Health Management: Allscripts Healthcare, Cerner Corp., Conifer Health Solutions, LLC, EClinicalWorks, Enli Health Intelligence, McKesson Corp., Medecision, Optum, Inc., Athenahealth, Inc., RedBrick Health, Welltok and Resultant.

 

  ● Behavioral and Mental Health: Universal Health Services, Behavioral Health Group Inc., Acadia Healthcare, IBH, CuraLinc Healthcare, Omada, Lyra Health, Spring Health and IU Health Physicians.

 

  ● Healthcare Workforce: Envision Healthcare Corporation, AMN Healthcare, CHG Management, Inc., Maxim Healthcare Group, Cross Country Healthcare, Inc., Aya Healthcare and RepuCare, Inc.

 

  ● Digital Health: IBM, McKesson Corporation, Allscripts, Cerner Corporation, Epic Systems Corporation, GetWellNetwork, athenahealth, MEDITECH, IQVIA, Get Real Health, Cognizant, Symphony Care Harris Healthcare and Leaf Software Solutions.

 

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Many of our competitors have significantly greater financial resources and have more expertise in providing services similar to our services. Mergers and acquisitions in the healthcare industry may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel. Earlier stage companies, such as startups, may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products and services that are more cost-effective and efficient than our products and services.

 

Government Regulations

 

Our business is heavily regulated. We are subject to oversight by governmental entities in the U.S., and a failure, or alleged failure, by us to comply with statutes, regulations, or other laws could have a material adverse impact to our business operations, reputation, results of operations and financial position.

 

Government Contracts: Our contracts with government entities typically are subject to procurement laws that include socio-economic, employment practices, environmental protection, recordkeeping and accounting, and other requirements. These statutory and regulatory requirements complicate our business and increase our compliance burden. We are subject to audits, investigations and oversight proceedings about our compliance with contractual and legal requirements. If we fail to comply with these requirements, or we fail an audit, we may be subject to sanctions such as monetary damages, criminal and civil penalties, termination of contracts and suspension or debarment from government contract work. Furthermore, the government may terminate any of our government contracts and subcontracts either at its convenience or for default based on our performance. If a contract is terminated for convenience, we generally are protected by provisions covering reimbursement for costs incurred on the contract and profit on those costs. If a contract is terminated for default, we generally are entitled to payments for our work that has been accepted by the government; however, the government could make claims to reduce the contract value or recover its procurement costs and could assess other special penalties. Additionally, our programs for the government often operate for periods of time under undefinitized contract actions (“UCAs”), which means that we begin performing our obligations before the terms, specifications or price are finally agreed to between the parties. The government’s power to unilaterally definitize a contract can affect our ability to negotiate mutually agreeable contract terms and, if a contract is unilaterally imposed upon us, it may negatively affect our expected profit and cash flows on a program or impose burdensome terms.

 

Governmental entities in the U.S. continue to strengthen their position and scrutiny of practices that may indicate fraud, waste, and abuse affecting government healthcare programs such as Medicare and Medicaid. Our relationships with pharmaceutical and medical product manufacturers, healthcare providers, and other companies and individuals, as well as our provision of products and services to government entities, subject our business to statutes, regulations, and government guidance that are intended to prevent fraud and abuse. Many of these laws are vague or indefinite and have not been interpreted by the courts and, as such, may be interpreted or applied by a prosecutorial, regulatory, or judicial authority in a manner that could require us to make changes in our operations at added expense. Failure to comply with these laws could subject us to federal or state government investigations or qui tam actions, and to liability for damages and civil and criminal penalties, including the loss of pursue government contracts.

 

Healthcare Regulation: Our marketing practices are subject to state laws, as well as federal laws, such as the Anti-Kickback Statute and False Claims Act, intended to prevent fraud and abuse in the healthcare industry. The Anti-Kickback Statute generally prohibits corruptly soliciting, offering, receiving, or paying anything of value to generate business. The False Claims Act generally prohibits anyone from knowingly and willingly presenting, or causing to be presented, any claims for payment for goods or services, including to government payers, such as Medicare and Medicaid, that are false or fraudulent and generally treat claims generated through kickbacks as false or fraudulent. The federal government and states also regulate sales and marketing activities and financial interactions between manufacturers and healthcare providers, requiring disclosure to government authorities and the public of such interactions, and the adoption of compliance standards or programs. Furthermore, the U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits U.S. corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate to obtain or retain business abroad. The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Other countries have enacted similar anti-corruption laws and/or regulations.

 

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Data Security and Privacy: We are subject to a variety of privacy and data protection laws that change frequently and have requirements that vary from jurisdiction to jurisdiction. For example, under HIPAA we must maintain administrative, physical, and technological safeguards to protect individually identifiable health information (“protected health information”) and ensure the confidentiality, integrity, and availability of electronic protected health information. We are subject to significant compliance obligations under privacy laws some of which prohibit the transfer of personal information to certain other jurisdictions or otherwise limit our use of data. Many of these laws also require us to provide access or other data rights (modification, deletion, portability, etc.) to consumers’ and patients’ individual personal data records within specified periods of time. Laws such as the federal Cyber Incident Reporting for Critical Infrastructure Act of 2022 may require us to provide notifications of significant data privacy breaches or cybersecurity incidents before our investigations are complete. We are subject to privacy and data protection compliance audits or investigations by various government agencies. Failure to comply with these laws subjects us to potential regulatory enforcement activity, fines, private litigation including class actions, reputational impacts, and other costs. We may also have contractual obligations that might be breached if we fail to comply with privacy and data security laws.

 

Employees

 

As of April 15, 2023, we employed 64 full-time employees and 26 part-time employees. We are not a party to any collective bargaining agreements, and we believe that we maintain good relations with our employees.

 

Facilities

 

Our corporate headquarters are located at 1119 Keystone Way N. #201 Carmel, IN 46032 pursuant to a three-year lease which commenced on July 1, 2021 and was amended on May 1, 2022 and provides for a monthly rent of $10,711. We believe this to be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms.

 

Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

Our Corporate History

 

We were organized on November 20, 2020 as an Indiana corporation under the name Syra Health Corp. On March 11, 2022, we filed a Certificate of Conversion with the Delaware Secretary of State whereby we converted from an Indiana corporation to a Delaware corporation.

 

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MANAGEMENT

 

Directors and Executive Officers

 

The following table sets forth the name, age and position of each of our executive officers, directors and director nominees as of April 15, 2023.

 

Name   Age   Position
Deepika Vuppalanchi, PhD   44   Chief Executive Officer and Director
Sandeep Allam   47   President and Chairman
Priya Prasad   45   Chief Financial Officer and Chief Operating Officer
Sherron Rogers   43   Director Nominee
Andrew M. Dahlem, PhD   62   Director Nominee
Vijayapal R. Reddy, DABT, DVM, PhD   67   Director Nominee
Ketan Paranjape   50   Director Nominee
Avutu S. Reddy, PhD   67   Director Nominee

 

Deepika Vuppalanchi, PhD – Chief Executive Officer and Director

 

Deepika Vuppalanchi has served as Chief Executive Officer and director of the Company since November 2020. Dr. Vuppalanchi has over 10 years of experience in medical research and healthcare. From August 2017 to November 2020, Dr. Vuppalanchi served as a senior medical director of Precision For Value, a company assisting pharmaceutical and life-sciences clients with strategy for product development and commercialization. From May 2016 to August 2017 Dr. Vuppalanchi served as medical director of Symbiotix (HAVAS Network), a scientific medical communications company. From February 2013 to April 2016, Dr. Vuppalanchi served as medical director of DWA Healthcare Communications (AVANT Healthcare Marketing), a medical education strategies company. Dr. Vuppalanchi holds a Doctor of Philosophy degree and Master of Science degree in Molecular Biology and Genetics from the University of Delaware and a Bachelor of Science in Microbiology from Osmania University. We believe that Dr. Vuppalanchi is qualified to serve as a member of the Company’s board of directors because of her medical and science background and experience working with stakeholders in academia, pharmaceutical and biotechnology companies.

 

Sandeep Allam – President and Chairman of the Board

 

Sandeep Allam has served as President of the Company and Chairman of the board of directors of the Company since January 2021. Mr. Allam has over 16 years of experience in information technology services and consulting. Since August 2010, Mr. Allam has served as the Chief Executive Officer of Sahasra Technologies Corp., doing business as STLogics Corporation, a diversified technology holding company, and from 2006 to 2010, Mr. Allam served as Vice President of Information Technology Services at STLogics Corporation. In addition, since December 2015, Mr. Allam has served as an executive board member at RADcube, a technology consulting company, and as executive board member at Skill Demand Corp, an energy and utility solutions company. Furthermore, since January 2021, Mr. Allam has served as an executive board member at Blue Agilis Corp., an agile transformation software solutions company. Mr. Allam holds a Master of Science degree in Information Technology from Ferris State University and a Bachelor of Science degree in Ceramics and Cement Technology from Gulbarga University. We believe that Mr. Allam is qualified to serve as a member of the Company’s board of directors because of his experience in senior leadership roles and background in consulting.

 

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Priya Prasad – Chief Financial Officer and Chief Operating Officer

 

Priya Prasad has served as Chief Operating Officer of the Company since March 2022 and Chief Financial Officer of the Company since January 2023. Since March 2005, Mrs. Prasad has served as President of Sahasra Technologies Corp., doing business as STLogics Corporation, a diversified technology holding company. Since January 2015, Mrs. Prasad has served as board member at RADcube, a technology company providing enterprise solutions and business consulting, and since January 2015, she has served as board member at Skill Demand Corp., an energy and utility solutions company. In addition, since January 2021, Mrs. Prasad has served as an advisory board member at Blue Agilis Corp., an agile transformation software solutions company. Mrs. Prasad holds a Master of Business Administration degree from the University of Massachusetts – Boston, a Master of Science degree in Environmental Science from Bangalore University and a Bachelor of Science degree in Environmental Science from Mount Carmel College.

 

Sherron Rogers – Director Nominee

 

Sherron Rogers has agreed to become a director of the Company upon consummation of this offering. Ms. Rogers has over 19 years of senior leadership experience. Since March 2022, Ms. Rogers has served as the Chief Financial Officer of Johns Hopkins All Children’s Hospital. Previously, from August 2020 to March 2022, Ms. Rogers served as the Chief Financial Officer and Chief Strategy Officer of Eskenazi Health, a public hospital that offers a comprehensive range of inpatient, primary and specialty care services. Prior to serving in those roles, Ms. Rogers served as the Vice President of Business Development and Operational Excellence and Strategy at Eskenazi Health. In addition, from 2005 to 2016 Ms. Rogers served in a variety of leadership roles at Indiana University Health, including as Vice President and Transformation Officer, and from 2003 to 2005, Ms. Rogers served as a director and Lean Six Sigma Black Belt at Cummins Inc. (NYSE: CMI). Ms. Rogers holds a Master of Science degree in Information Science and a Bachelor of Arts degree in Psychology from Indiana University, Bloomington. We believe that Ms. Rogers is qualified to serve as a member of the Company’s board of directors because of her experience in senior leadership roles and background in healthcare.

 

Andrew M. Dahlem, PhD – Director Nominee

 

Andrew Dahlem has agreed to become a director of the Company upon consummation of this offering. Since November 2018, Dr. Dahlem has served as Senior Research Professor of Medicine at the Indiana University School of Medicine and also served as Chief of the Division of Clinical Pharmacology until May 2022. Dr. Dahlem is co-founder and has served as an advisor to Gate Neurosciences, a biotechnology company focused on new therapies for treatment resistant depression, since April 2019 and President of Dr. Dahlem Consulting LLC, advising on the discovery and development of novel therapeutics for academia, biotech and the pharmaceutical industry since May 2018. Furthermore, Dr. Dahlem also served as Vice President of Research Operations and Chief Operating Officer of Lilly Research Laboratories and Lilly Research Laboratories Europe at Eli Lilly and Company until his retirement in December 2017. Moreover, Dr. Dahlem has served in various other capacities at Eli Lilly and Company including Vice President of Toxicology, Drug Disposition, Pharmacokinetics; Executive Director of Toxicology and Drug Disposition; Director of Drug Disposition and Biochemical Toxicology; Head of Biochemical Toxicology; and Senior Pharmacologist. Dr. Dahlem holds a Doctor of Philosophy degree in Toxicology from the College of Veterinary Medicine at the University of Illinois at Urbana-Champaign and a Bachelor of Science degree from The Ohio State University. We believe that Dr. Dahlem is qualified to serve as a member of the Company’s board of directors because of his medical background and diverse experience in biotechnology over more than 30 years.

 

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Vijayapal R. Reddy, DABT, DVM, PhD – Director Nominee

 

Vijayapal Reddy has agreed to become a director of the Company upon consummation of this offering. Dr. Reddy is a drug development professional with over 30 years of experience in drug discovery and development in global pharmaceutical industry. Since August 2017, Dr. Reddy has served as an advisor as well as a Director of VIPRA, LLC, a consulting company. Dr. Reddy currently serves as a consultant for various pharmaceutical, biotechnology and vaccine companies. From 2007 to 2017, Dr. Reddy served as a Senior Researcher Advisor/Executive Director at Lilly Research Laboratories, at Lilly, where he led nonclinical safety and regulatory assessments on several cross functional programs at different stages of development. In addition, Dr. Reddy has served in various other capacities including Head of Cancer Research, Nonclinical Safety Assessment (2004-2006); Senior Research Scientist, Nonclinical Safety Assessment (2000-2004); Research Scientist, Nonclinical Safety Assessment (1998-2001); and Senior Toxicologist, Nonclinical Safety Assessment (1995-1997). Dr. Reddy was previously Senior Research Investigator at Sterling Winthrop/Sanofi Pharmaceuticals (1994-1995). Dr. Reddy holds a post-Doctoral degree in Toxicology from the University of Nebraska Medical Center, a Doctor of Philosophy degree in Toxicology from Utah State University, a Master of Science degree in Toxicology from the University of Mississippi Medical Center and a Veterinary Medicine degree from the AP Agricultural University. We believe that Dr. Reddy is qualified to serve as a member of the Company’s board of directors because of his medical and scientific background and experience in scientific research.

 

Ketan Paranjape, PhD – Director Nominee

 

Ketan Paranjape has agreed to become a director of the Company upon consummation of this offering. Since April 2018, Dr. Paranjape has served as the Vice President of Roche Information Solutions, and since September 2020, he has served as the Vice President of Commercial Business Operations, Business Intelligence and Analytics at Roche Diagnostics, a multinational healthcare company. Since September 2019, Dr. Paranjape has been included on the World Health Organization’s roster of digital health experts which was established to advise the World Health Organization Secretariat. Since June 2022, Dr. Paranjape has served as a member of the board of directors of Indy Chamber, a non-profit organization that is dedicated to economic development in the Indianapolis region. Since September 2021, he has served on the Dean’s Advisory Council at Indiana University’s Luddy School of Informatics, Computing, and Engineering, and since February 2021, he has served as Advisory Board Member at the University of Wisconsin-Madison, Department of Electrical and Computer Engineering. Since February 2021, he has also been a member of the digital health executive leadership group at AdvaMed, a medical technology trade association, and since June 2021, he has served as an Advisory Council Member at Human Health Education and Research Foundation, a non-profit organization bringing health and awareness to the top of global agendas in an equitable and holistic approach. From September 2017 to December 2020, Dr. Paranjape served as an Honorary Research Fellow at Imperial College of London, School of Public Health, and from September 2017 to December 2020, he served as a Visiting Technical Advisor in Artificial Intelligence for Health at Lee Kong Chian, School of Medicine. From July 2015 to December 2020, Dr. Paranjape served as a Member of the U.S. Department of Health and Human Services Precision Medicine Task Force (U.S. Health IT Standards Committee), and from April 2018 to April 2019, he served as Advisory Board Member at Health 2047, a business formation and commercialization enterprise, and Managing Director at Health 2047 from October 2016 to March 2018. Dr. Paranjape holds a Doctor of Philosophy degree in Artificial Intelligence in Healthcare from Amsterdam University Medical Center, a Master of Business Administration degree from the University of Oregon, a Master of Science degree in Electrical and Computer Engineering from the University of Wisconsin-Madison and a Bachelor of Science degree in Electrical Engineering from the University of Pune. We believe that Dr. Paranjape is qualified to serve as a member of the Company’s board of directors because of his engineering and commercial background and experience in advisory roles, technology and product development.

 

Avutu S. Reddy, PhD – Director Nominee

 

Dr. Avutu Reddy has agreed to become a director of the Company upon consummation of this offering. Dr. Reddy has over 20 years of leadership experience in both in research and development and business. Since October 2017, Dr. Reddy has served as the Strategic Scientific and Emerging Business Intelligence Leader at Corteva Agriscience (NYSE: CTVA), an agricultural chemical and seed company and spin-off from Dow-DuPont. Dr. Reddy joined Dow AgroSciences in January 1999 and served in various roles including R&D Innovation Incubator Leader from January 2015 to December 2017; Competitive Intelligence Leader from January 2009 to December 2017; Global Traits Discovery Platform Leader from January 2005 to December 2008; Global Leader of Molecular Biology and Traits from January 2002 to December 2004; and Global Leader of Genomics from January 1999 to December 2001. He has served on various committees and management teams including The Dow Chemical Company Biotechnology Advisory Board, Dow Agrosciences Global Leadership Team, Global Discovery Investment Strategy Team, and Technology Strategy Committee. Prior to joining Dow AgroSciences, he was an Assistant Professor in the Department of Soil & Crop Sciences, and the Director of the Crop Genome Technology Unit of Norman Borlaug Crop Biotechnology Center at Texas A&M University from January 1994 to December 1998. From April 1990 to December 1993, Dr. Reddy completed post-doctoral research at Texas A&M University Department of Biology supported by Rhône-Poulenc and at the CNRS Unit, Université de Perpignan, France supported by The Rockefeller Foundation from January1989 to March 1990. Dr. Reddy holds a Doctor of Philosophy degree and Master of Science from Acharya Nagarjuna University, a Master of Education degree from Annamalai University and Bachelor of Science and Bachelor of Education degrees from S.V. University. We believe that Dr. Reddy is qualified to serve as a member of the Company’s board of directors because of his academic background and diverse experience in a multinational company.

 

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Family Relationships

 

There are no family relationships among any of our executive officers or directors.

 

Director Independence

 

Prior to the consummation of this offering, our board of directors undertook a review of the independence of our directors and considered whether any director has a relationship with us that could compromise that director’s ability to exercise independent judgment in carrying out that director’s responsibilities. Our board of directors has affirmatively determined that upon consummation of this offering, each of Sherron Rogers, Ketan Paranjape, Avutu S. Reddy, Vijayapal R. Reddy and Andrew M. Dahlem will be an “independent director,” as defined under the Nasdaq rules.

 

Committees of Our Board of Directors

 

Our board of directors directs the management of our business and affairs, as provided by Delaware law, and conducts its business through meetings of the board of directors and its standing committees. We will have a standing audit committee, compensation committee and nominating and corporate governance committee. In addition, from time to time, special committees may be established under the direction of the board of directors when necessary to address specific issues.

 

Audit Committee

 

Our audit committee will be responsible for, among other things:

 

  ● approving and retaining the independent auditors to conduct the annual audit of our financial statements;

 

  ● reviewing the proposed scope and results of the audit;

 

  ● reviewing and pre-approving audit and non-audit fees and services;

 

  ● reviewing accounting and financial controls with the independent auditors and our financial and accounting staff;

 

  ● reviewing and approving transactions between us and our directors, officers and affiliates;

 

  ● establishing procedures for complaints received by us regarding accounting matters;

 

  ● overseeing internal audit functions, if any; and

 

  ● preparing the report of the audit committee that the rules of the SEC require to be included in our annual meeting proxy statement.

 

Upon the consummation of this offering, our audit committee will consist of Sherron Rogers, Ketan Paranjape and Avutu S. Reddy, with Sherron Rogers serving as chair. Our board of directors has affirmatively determined that Sherron Rogers, Ketan Paranjape and Avutu S. Reddy each meet the definition of “independent director” under the Nasdaq rules, and that they meet the independence standards under Rule 10A-3. Each member of our audit committee meets the financial literacy requirements of the Nasdaq rules. In addition, our board of directors has determined that Sherron Rogers will qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. Our board of directors will adopt a written charter for the audit committee, which will be available on our website at www.syrahealth.com concurrently with the consummation of this offering.

 

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Compensation Committee

 

Our compensation committee will be responsible for, among other things:

 

  ● reviewing and recommending the compensation arrangements for management, including the compensation for our President and Chief Executive Officer;

 

  ● establishing and reviewing general compensation policies with the objective to attract and retain superior talent, to reward individual performance and to achieve our financial goals;

 

  ● administering our stock incentive plans; and

 

  ● preparing the report of the compensation committee that the rules of the SEC require to be included in our annual meeting proxy statement.

 

Upon the consummation of this offering, our compensation committee will consist of Vijayapal R. Reddy and Avutu S. Reddy, with Avutu S. Reddy serving as chair. Our board has determined that Vijayapal R. Reddy and Avutu S. Reddy are independent directors under Nasdaq rules. Our board of directors will adopt a written charter for the compensation committee, which will be available on our website at www.syrahealth.com concurrently with the consummation of this offering.

 

Nominating and Governance

 

Our nominating and governance committee will be responsible for, among other things:

 

  ● nominating members of the board of directors;
     
  ● developing a set of corporate governance principles applicable to our Company; and
     
  ● overseeing the evaluation of our board of directors.

 

Upon the consummation of this offering, our nominating and corporate governance committee will consist of Vijayapal R. Reddy and Avutu S. Reddy with Vijayapal R. Reddy serving as chair. Our board has determined that Vijayapal R. Reddy and Avutu S. Reddy are independent directors under Nasdaq rules. Our board of directors will adopt a written charter for the nominating and governance committee, which will be available on our website at www.syrahealth.com concurrently with the consummation of this offering.

 

Code of Business Conduct and Ethics

 

We have adopted a written code of business conduct and ethics that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code will be posted on our website, www.syrahealth.com, concurrently with the consummation of this offering. In addition, we intend to post on our website all disclosures that are required by law or the Nasdaq rules concerning any amendments to, or waivers from, any provision of the code.

 

Limitations on Liability and Indemnification Matters

 

Our Certificate of Incorporation contains provisions that limit the liability of our current and former directors to the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for:

 

  ● any breach of the director’s duty of loyalty to the corporation or its stockholders;

 

  ● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

  ● unlawful payments of dividends or unlawful stock repurchases, or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

 

  ● any transaction from which the director derived an improper personal benefit.

 

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This limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

 

Our charter documents provide that we are authorized to indemnify our directors and officers to the fullest extent permitted by Delaware law. In addition, our charter documents also provide that, upon satisfaction of certain conditions, we are required to advance expenses incurred by a director or executive officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We expect to enter into agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. With certain exceptions, these agreements will provide for indemnification for related expenses, including, among other things, attorneys’ fees, judgments, fines, and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers. We also intend to obtain customary directors’ and officers’ liability insurance upon consummation of this offering.

 

The limitation of liability and indemnification provisions in our Certificate of Incorporation and our Bylaws to be effective upon the completion of this offering may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

 

EXECUTIVE AND DIRECTOR COMPENSATION

 

Summary Compensation Table

 

The following table presents the compensation awarded to, earned by or paid to (i) our Chief Executive Officer (our principal executive officer), (ii) our President and (iii) our Chief Operating Officer and Chief Financial Officer who we also refer to as our “named executive officers,” for each of the years ended December 31, 2022 and 2021.

 

Name and Principal Position  Year   Salary ($)   Bonus ($)   Stock Awards ($)   Option Awards ($)   Nonequity Incentive Plan Compensation ($)   Nonqualified Deferred Compensation Earnings ($)   All Other Compensation ($)(3)   Total ($) 
Deepika Vuppalanchi,   2022   $279,640   $-   $-   $-   $      -   $     -   $6,533   $286,173 
Chief Executive Officer   2021   $126,515   $15,000(2)  $-   $-   $-   $-   $-   $141,515 
                                              
Sandeep Allam,   2022   $180,391   $-   $-   $-   $-   $-   $3,893   $184,284 
President and Chairman   2021   $-   $-   $-   $-   $-   $-   $-   $- 
                                              
Priya Prasad,   2022   $119,568   $-   $-   $-   $-   $-   $2,667    122,235 
Chief Operating Officer and Chief Financial Officer (1)   2021   $-   $-   $-   $-   $-   $-   $-   $- 

 

(1) Priya Prasad’s employment with the Company commenced in 2022 and, as such, she did not receive any compensation during the year ended December 31, 2021. In addition, Priya Prasad was appointed as Chief Financial Officer of the Company effective as of January 12, 2023.

 

(2) Discretionary bonus paid to Dr. Vuppalanchi, as determined by the Board.

 

(3) The amounts in this column represent the Company’s 401(k) plan Company-matching contributions for each named executive officer.

 

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Outstanding Equity Awards at December 31, 2022

 

There were no equity awards held by our named executive officers as of December 31, 2022.

 

Employment Agreements

 

Deepika Vuppalanchi

 

On April 15, 2021, the Company entered into an employment agreement with Deepika Vuppalanchi, which was subsequently amended by (i) that certain Amendment No. 1 thereto dated September 1, 2021; (ii) that certain Amendment No. 2 thereto dated March 1, 2022; and (iii) that certain Amendment No. 3 thereto dated October 18, 2022 (as amended, the “Vuppalanchi Employment Agreement”). Pursuant to the Vuppalanchi Employment Agreement, Dr. Vuppalanchi shall receive a base salary of $301,500 per year effective as of March 1, 2022. In addition, Dr. Vuppalanchi shall be entitled to participate in employee benefit plans such as medical, vision, basic life and dental insurance. The Vuppalanchi Employment Agreement may be terminated by the Company without cause upon 14 days prior written notice to Dr. Vuppalanchi or immediately for cause. In addition, Dr. Vuppalanchi may terminate her employment at any time without cause upon 30 days prior written notice to the Company. Furthermore, the Vuppalanchi Employment Agreement will terminate upon Dr. Vuppalanchi’s death. Upon termination of the Vuppalanchi Employment Agreement, Dr. Vuppalanchi shall receive all sums due to her under the Vuppalanchi Employment Agreement as compensation or expense reimbursements.

 

Sandeep Allam

 

On February 29, 2022, the Company entered into an employment agreement with Sandeep Allam, which was subsequently amended by that certain Amendment No. 1 thereto dated October 18, 2022 (as amended, the “Allam Employment Agreement”) pursuant to which Mr. Allam serves as President of the Company. Pursuant to the Allam Employment Agreement, Mr. Allam shall receive a base salary of $214,000 per year. In addition, Mr. Allam shall be entitled to participate in employee benefit plans such as medical, vision, basic life and dental insurance. The Allam Employment Agreement may be terminated by the Company without cause upon 14 days prior written notice to Mr. Allam or immediately for cause. In addition, Mr. Allam may terminate his employment at any time without cause upon 30 days prior written notice to the Company. Furthermore, the Allam Employment Agreement will terminate upon Mr. Allam’s death. Upon termination of the Allam Employment Agreement, Mr. Allam shall receive all sums due to him under the Allam Employment Agreement as compensation or expense reimbursements.

 

Priya Prasad

 

On February 29, 2022, the Company entered into an employment agreement with Priya Prasad, which was subsequently amended by (i) that certain Amendment No. 1 thereto dated May 27, 2022; and (ii) that certain Amendment No. 2 thereto dated October 18, 2022 (as amended, the “Prasad Employment Agreement”) pursuant to which Mrs. Prasad serves as Chief Operating Officer of the Company. Pursuant to the Prasad Employment Agreement, Mrs. Prasad shall receive a base salary of $150,000 per year effective as of May 1, 2022. In addition, Mrs. Prasad shall be entitled to participate in employee benefit plans such as medical, vision, basic life and dental insurance. The Prasad Employment Agreement may be terminated by the Company without cause upon 14 days prior written notice to Mrs. Prasad or immediately for cause. In addition, Mrs. Prasad may terminate her employment at any time without cause upon 30 days prior written notice to the Company. Furthermore, the Prasad Employment Agreement will terminate upon Mrs. Prasad’s death. Upon termination of the Prasad Employment Agreement, Mrs. Prasad shall receive all sums due to her under the Prasad Employment Agreement as compensation or expense reimbursements.

 

Bonus Arrangements

 

Dr. Vuppalanchi received a discretionary annual bonus in the amount of $15,000 for 2021, while none of our named executive officers received such annual bonuses for 2022.  For 2023, our named executive officers are expected to be eligible to earn a discretionary annual bonus, based upon Company and individual performance measures.

 

Other Benefits

 

All employees are eligible to participate in broad-based and comprehensive employee benefit programs, including medical, dental, vision, life and disability insurance. In addition, we sponsor a 401(k) plan whereby we match participants’ contributions up to 4% of a participant’s compensation, subject to the IRS’ annual contribution limit. Our named executive officers are eligible to participate in these plans generally on the same basis as our other employees.

 

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Director Compensation

 

During the year ended December 31, 2022, the Company did not have any non-employee directors, as Dr. Vuppalanchi and Mr. Allam were the only acting directors during such year.

 

The Company does not currently have a non-employee director compensation policy. Following the completion of this offering, we intend to adopt a non-employee director compensation policy pursuant to which our non-employee directors will be eligible to receive cash compensation and equity awards for service on our board of directors and committees of our board of directors. It is intended that each of our non-employee directors will receive cash compensation in the amount of $15,000 annually, which shall be paid in quarterly installments. Additional cash compensation will be paid to the chairpersons of our audit, nominating and corporate governance and compensation committees, in the amounts of $10,000, $5,000 and $5,000, respectively. Following the completion of this offering, we intend to grant each non-employee director stock options to purchase 10,000 shares of our Class A common stock, with an exercise price equal the price of such shares in this offering. These stock options will be subject to time vesting, and will vest in four equal annual installments from the date of grant.

 

Each member of the Company’s board of directors will be entitled to reimbursement for reasonable travel and other expenses incurred in connection with attending board meetings and meetings for any committee on which he or she serves.

 

2022 Omnibus Equity Incentive Plan

 

On April 11, 2022 and October 18, 2022, our board of directors adopted, and our stockholders, respectively, approved, the Syra Health Corp. 2022 Omnibus Equity Incentive Plan (“2022 Plan”) which was subsequently amended by our board of directors and stockholders on April 19, 2023. We intend to use the 2022 Plan to provide incentives that will enable us to attract, retain, and motivate employees, officers, consultants, and directors.

 

Types of Awards. The 2022 Plan provides for the issuance of incentive stock options (“ISOs”), non-statutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards, each of which may be subject to the attainment of performance goals or a period of continued provision of service or employment or other terms and conditions, to selected employees, directors, and independent contractors of our Company or our affiliates whose contributions are (i) essential to the growth and success of our Company, (ii) strengthen the commitment of such individuals to our Company and our affiliates, (iii) motivate those individuals to faithfully and diligently perform their responsibilities and (iv) attract and retain competent and dedicated individuals whose efforts will result in the long-term growth and profitability of our Company.

 

Shares Available; Certain Limitations. The maximum number of shares of Class A common stock reserved and available for issuance under the 2022 Plan is 1,250,000 shares of Class A common stock; provided that shares of Class A common stock issued under the 2022 Plan with respect to an Exempt Award (as defined herein) will not count against the share limit. We use the term “Exempt Award” to mean (i) an award granted in the assumption of, or in substitution for, outstanding awards previously granted by another business entity acquired by us or any of our subsidiaries or with which we or any of our subsidiaries merge, or (ii) an award that a participant purchases at fair market value.

 

No more than 1,250,000 shares of our Class A common stock shall be issued pursuant to the exercise of ISOs.

 

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The shares reserved for issuance under the 2022 Plan may be authorized but unissued shares of our Class A common stock or shares of our Class A common stock that will have been or may be reacquired by us in the open market, in private transactions or otherwise. If any shares of our Class A common stock subject to an award are forfeited, cancelled, exchanged or surrendered or if an award terminates or expires without a distribution of shares to the participant, the shares of our Class A common stock with respect to such award will, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for awards under the 2022 Plan except that (i) any shares of our Class A common stock reacquired by us on the open market or otherwise using cash proceeds from the exercise of options, and (ii) any shares of our Class A common stock surrendered or withheld as payment of either the exercise price of an award and/or withholding taxes in respect of an award will not again be available for awards under the 2022 Plan. If an award is denominated in shares of our Class A common stock, but settled in cash, the number of shares of our Class A common stock previously subject to the award will again be available for grants under the 2022 Plan. If an award can only be settled in cash, it will not be counted against the total number of shares of our Class A common stock available for grant under the 2022 Plan. However, upon the exercise of any award granted in tandem with any other awards, such related awards will be cancelled as to the number of shares as to which the award is exercised and such number of shares of our Class A common stock will no longer be available for grant under the 2022 Plan.

 

Administration. The 2022 Plan will be administered by our compensation committee (the “plan administrator”). The plan administrator may interpret the 2022 Plan and may prescribe, amend and rescind rules and make all other determinations necessary or desirable for the administration of the 2022 Plan.

 

The 2022 Plan permits the plan administrator to select the eligible recipients who will receive awards, to determine the terms and conditions of those awards, including, but not limited to, the exercise price or other purchase price of an award, the number of shares of our Class A common stock or cash or other property subject to an award, the term of an award and the vesting schedule applicable to an award, and to amend the terms and conditions of outstanding awards. No participant who is our director, but is not also an employee or consultant shall receive awards under the 2022 Plan and be paid cash compensation during any calendar year that exceed, in the aggregate, $150,000 in total value (with cash compensation measured for this purpose at its value upon payment and any awards under the 2022 Plan measured for this purpose at their grant date fair market value, as determined for our financial reporting purposes), increased to $195,000 in the calendar year of his or her initial service as a non-employee director.

 

Eligibility. Awards may be granted pursuant to the 2022 Plan only to persons who are Eligible Recipients. Under the 2022 Plan, “Eligible Recipient” means an employee, director or independent contractor of our Company or any affiliate thereof who has been selected as an eligible participant by the plan administrator; provided, however, that an Eligible Recipient of an option or SAR means an employee, non-employee director or independent contractor of our Company or any of our affiliates with respect to whom our Company is an “eligible issuer of service recipient stock” within the meaning of Section 409A of the Code. ISOs may be granted only to employees of our Company, our “parent corporation” (as such term is defined in Section 424(e) of the Code) or a subsidiary of our Company.

 

Restricted Stock and Restricted Stock Units. Restricted stock and RSUs may be granted under the 2022 Plan. The plan administrator will determine the purchase price, vesting schedule and performance goals, if any, and any other conditions that apply to a grant of restricted stock and RSUs. If the restrictions, performance goals or other conditions determined by the plan administrator are not satisfied, the restricted stock and RSUs will be forfeited. Subject to the provisions of the 2022 Plan and the applicable award agreement, the plan administrator has the sole discretion to provide for the lapse of restrictions in installments.

 

Unless the applicable award agreement provides otherwise, participants with restricted stock will generally have all of the rights of a stockholder; provided that dividends will only be paid if and when the underlying restricted stock vests. RSUs will not be entitled to dividends prior to vesting, but may be entitled to receive dividend equivalents if the award agreement provides for them. The rights of participants granted restricted stock or RSUs upon the termination of employment or service to us will be set forth in the award agreement.

 

Options. ISOs and non-statutory stock options may be granted under the 2022 Plan. An “incentive stock option” means an option intended to qualify for tax treatment applicable to ISO sunder Section 422 of the Code. A “non-statutory stock option” is an option that is not subject to statutory requirements and limitations required for certain tax advantages that are allowed under specific provisions of the Code. A non-statutory stock option under the 2022 Plan is referred to for federal income tax purposes as a “non-qualified” stock option. Each option granted under the 2022 Plan will be designated as a non-qualified stock option or an ISO. At the discretion of the plan administrator, ISOs may be granted only to our employees, employees of our “parent corporation” (as such term is defined in Section 424(e) of the Code) or employees of our subsidiaries.

 

The exercise period of an option may not exceed ten years from the date of grant and the exercise price may not be less than 100% of the fair market value of a share of Class A common stock on the date the option is granted (110% of fair market value in the case of ISOs granted to 10% stockholders). The exercise price for shares of our Class A common stock subject to an option may be paid in cash, or as determined by the plan administrator in its sole discretion, (i) through any cashless exercise procedure approved by the plan administrator (including the withholding of shares of our Class A common stock otherwise issuable upon exercise), (ii) by tendering unrestricted shares of our Class A common stock owned by the participant, (iii) with any other form of consideration approved by the plan administrator and permitted by applicable law or (iv) by any combination of these methods. The option holder will have no rights to dividends or distributions or other rights of a stockholder with respect to the shares of our Class A common stock subject to an option until the option holder has given written notice of exercise and paid the exercise price and applicable withholding taxes.

 

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In the event of a participant’s termination of employment or service, the participant may exercise his or her option (to the extent vested as of such date of termination) for such period of time as specified in his or her option agreement.

 

Stock Appreciation Rights.

 

SARs may be granted either alone (a “free-standing right”) or in conjunction with all or part of any option granted under the 2022 Plan (a “related right”). A free-standing right will entitle its holder to receive, at the time of exercise, an amount per share up to the excess of the fair market value (at the date of exercise) of a share of Class A common stock over the base price of the free-standing right (which shall be no less than 100% of the fair market value of the related shares of Class A common stock on the date of grant) multiplied by the number of shares in respect of which the SAR is being exercised. A related right will entitle its holder to receive, at the time of exercise of the SAR and surrender of the applicable portion of the related option, an amount per share up to the excess of the fair market value (at the date of exercise) of a share of Class A common stock over the exercise price of the related option multiplied by the number of shares in respect of which the SAR is being exercised. The exercise period of a free-standing right may not exceed ten years from the date of grant. The exercise period of a related right will also expire upon the expiration of its related option.

 

The holder of a SAR will have no rights to dividends or any other rights of a stockholder with respect to the shares of our Class A common stock subject to the SAR until the holder has given written notice of exercise and paid the exercise price and applicable withholding taxes.

 

In the event of a participant’s termination of employment or service, the holder of a SAR may exercise his or her SAR (to the extent vested as of such date of termination) for such period of time as specified in his or her SAR agreement.

 

Other Stock-Based Awards. The plan administrator may grant other stock-based awards under the 2022 Plan, valued in whole or in part by reference to, or otherwise based on, shares our Class A of common stock. The plan administrator will determine the terms and conditions of these awards, including the number of shares of our Class A common stock to be granted pursuant to each award, the manner in which the award will be settled, and the conditions to the vesting and payment of the award (including the achievement of performance goals). The rights of participants granted other stock-based awards upon the termination of employment or service to us will be set forth in the applicable award agreement. In the event that a bonus is granted in the form of shares of our Class A common stock, the shares of our Class A common stock constituting such bonus shall, as determined by the plan administrator, be evidenced in uncertificated form or by a book entry record or a certificate issued in the name of the participant to whom such grant was made and delivered to such participant as soon as practicable after the date on which such bonus is payable. Any dividend or dividend equivalent award issued under the 2022 Plan shall be subject to the same restrictions, conditions and risks of forfeiture as apply to the underlying award.

 

Equitable Adjustment and Treatment of Outstanding Awards Upon a Change in Control

 

Equitable Adjustments. In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase, reorganization, special or extraordinary dividend or other extraordinary distribution (whether in the form of common shares, cash or other property), combination, exchange of shares, or other change in corporate structure affecting our Class A common stock, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance under the 2022 Plan, (ii) the kind and number of securities subject to, and the exercise price of, any outstanding options and SARs granted under the 2022 Plan, (iii) the kind, number and purchase price of shares of our Class A common stock, or the amount of cash or amount or type of property, subject to outstanding restricted stock, RSUs and other stock-based awards granted under the 2022 Plan and (iv) the terms and conditions of any outstanding awards (including any applicable performance targets). Equitable substitutions or adjustments other than those listed above may also be made as determined by the plan administrator. In addition, the plan administrator may terminate all outstanding awards for the payment of cash or in-kind consideration having an aggregate fair market value equal to the excess of the fair market value of the shares of our Class A common stock, cash or other property covered by such awards over the aggregate exercise price, if any, of such awards, but if the exercise price of any outstanding award is equal to or greater than the fair market value of the shares of our Class A common stock, cash or other property covered by such award, the plan administrator may cancel the award without the payment of any consideration to the participant. With respect to awards subject to foreign laws, adjustments will be made in compliance with applicable requirements. Except to the extent determined by the plan administrator, adjustments to ISOs will be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code.

 

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Change in Control. The 2022 Plan provides that, unless otherwise determined by the plan administrator and evidenced in an award agreement, if a “change in control” (as defined below) occurs and a participant is employed by us or any of our affiliates immediately prior to the consummation of the change in control, then the plan administrator, in its sole and absolute discretion, may (i) provide that any unvested or unexercisable portion of an award carrying a right to exercise will become fully vested and exercisable; and (ii) cause the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to any award granted under the 2022 Plan to lapse, and the awards will be deemed fully vested and any performance conditions imposed with respect to such awards will be deemed to be fully achieved at target performance levels. The plan administrator shall have discretion in connection with such change in control to provide that all outstanding and unexercised options and SARs shall expire upon the consummation of such change in control.

 

For purposes of the 2022 Plan, a “change in control” means, in summary, the first to occur of the following events: (i) a person or entity becomes the beneficial owner of more than 50% of our voting power; (ii) an unapproved change in the majority membership of our board of directors; (iii) a merger or consolidation of us or any of our subsidiaries, other than (A) a merger or consolidation that results in our voting securities continuing to represent 50% or more of the combined voting power of the surviving entity or its parent and our board of directors immediately prior to the merger or consolidation continuing to represent at least a majority of the board of directors of the surviving entity or its parent or (B) a merger or consolidation effected to implement a recapitalization in which no person is or becomes the beneficial owner of our voting securities representing more than 50% of our combined voting power; or (iv) stockholder approval of a plan of our complete liquidation or dissolution or the consummation of an agreement for the sale or disposition of substantially all of our assets, other than (A) a sale or disposition to an entity, more than 50% of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of us immediately prior to such sale or (B) a sale or disposition to an entity controlled by our board of directors. However, a change in control will not be deemed to have occurred as a result of any transaction or series of integrated transactions following which our stockholders, immediately prior thereto, hold immediately afterward the same proportionate equity interests in the entity that owns all or substantially all of our assets.

 

Tax Withholding

 

Each participant is required to make arrangements satisfactory to the plan administrator regarding payment of up to the maximum statutory tax rates in the participant’s applicable jurisdiction with respect to any award granted under the 2022 Plan, as determined by us. We have the right, to the extent permitted by applicable law, to deduct any such taxes from any payment of any kind otherwise due to the participant. With the approval of the plan administrator, the participant may satisfy the foregoing requirement by either electing to have us withhold from delivery of shares of Class A common stock, cash or other property, as applicable, or by delivering already owned unrestricted shares of Class A common stock, in each case, having a value not exceeding the applicable taxes to be withheld and applied to the tax obligations. We may also use any other method of obtaining the necessary payment or proceeds, as permitted by applicable law, to satisfy our withholding obligation with respect to any award.

 

Amendment and Termination of the 2022 Plan

 

The 2022 Plan provides our board of directors with authority to amend, alter or terminate the 2022 Plan, but no such action may impair the rights of any participant with respect to outstanding awards without the participant’s consent. The plan administrator may amend an award, prospectively or retroactively, but no such amendment may materially impair the rights of any participant without the participant’s consent. Stockholder approval of any such action will be obtained if required to comply with applicable law. The 2022 Plan will terminate on the tenth anniversary of the effective date of the 2022 Plan (although awards granted before that time will remain outstanding in accordance with their terms).

 

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Clawback

 

If we are required to prepare a financial restatement due to material non-compliance (whether one occurrence or a series of occurrences of noncompliance) with any financial reporting requirement under the securities laws (including if we are required to prepare an accounting restatement to correct an error (or a series of errors)), then the plan administrator may require any of our executive officers whom our board of directors has determined is subject to the reporting requirements of Section 10D-1(d) of the Exchange Act (such officer, a “Executive Officer”) to repay or forfeit to us, and each Executive Officer agrees to so repay or forfeit, that part of any cash bonus and any award made pursuant to any employment agreement, equity award agreement or similar agreement (including any award made under the 2022 Plan) (collectively, “Incentive Compensation”) received by that Executive Officer during the three completed fiscal years (together with any intermittent stub fiscal year period(s) of less than nine months resulting from our transition to different fiscal year measurement dates) preceding the date we are deemed to be required to prepare an accounting restatement of our financial statements that the plan administrator determines was in excess of the amount that such Executive Officer would have received had such Incentive Compensation been calculated based on the restated numbers, and irrespective of any fault, misconduct or responsibility of any Executive Officer for the accounting restatement of our financial statements. The amount and form of the Incentive Compensation to be recouped shall be determined by the plan administrator in its sole and absolute discretion and calculated on a pre-tax basis, and the form of such recoupment of Incentive Compensation may be made, in the plan administrator’s sole and absolute discretion, through the forfeiture or cancellation of vested or unvested awards, cash repayment or both. In addition, any award which is subject to recovery under any applicable laws, government regulation or stock exchange listing requirement (or any policy adopted us pursuant to any such applicable law, government regulation or stock exchange listing requirement) will be subject to such deductions and clawback as may be required to be made pursuant to such applicable law, government regulation or stock exchange listing requirement (or any policy adopted by us pursuant to any such applicable law, government regulation or stock exchange listing requirement).

 

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

The following includes a summary of transactions during our years ended December 31, 2022 and 2021 to which we have been a party, including transactions in which the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this prospectus. Except as disclosed herein, we are not otherwise a party to a current related party transaction, and no transaction is currently proposed, in which the amount of the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which a related person had or will have a direct or indirect material interest.

 

During the year ended December 31, 2021, our operations were primarily financed by short term advances from Sahasra Technologies Corp., doing business as STLogics, which is an entity beneficially owned by Priya Prasad, our Chief Financial Officer and Chief Operating Officer, and STLHoldings Corp. Sandeep Allam, our Chairman and President, Feroz Syed and HariKrishna Allam, the husband of Priya Prasad, our Chief Financial Officer and Chief Operating Officer, are principal stockholders of STLHoldings Corp. On various dates from December 30, 2020 through April 4, 2022, Sahasra Technologies Corp. made short term, non-interest bearing advances due upon demand to our Company, of which an aggregate $94,000 and $742,200 was loaned during the years ended December 31, 2022 and 2021, respectively. We repaid an aggregate $288,200 and $551,000 of principal on these advances during the years ended December 31, 2022 and 2021, respectively, all of which has since been repaid.

 

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During the year ended December 31, 2021, we awarded bonuses of $15,000 and $35,000 to the Company’s CEO, Deepika Vuppalanchi, and STLHoldings Corp., respectively. The bonuses were paid on January 6, 2022. Sandeep Allam, our Chairman and President, Feroz Syed and HariKrishna Allam, the husband of Priya Prasad, our Chief Financial Officer and Chief Operating Officer, are principal stockholders of STLHoldings Corp.

 

We lease our current corporate headquarters under a three-year lease from STVentures, LLC (“STVentures”). Sandeep Allam, Feroz Syed and HariKrishna Allam, the husband of Priya Prasad, our Chief Financial Officer and Chief Operating Officer, are members of STVentures. The lease commenced on July 1, 2021, and provided for a base monthly rent of $5,332 over the three-year term of the lease, which was subsequently amended to $10,711, on May 1, 2022. A total of $107,013 and $31,992 of rent expense was incurred for the years ended December 31, 2022 and 2021, respectively, and a total of $5,950 was outstanding at December 31, 2021.

 

We incurred a total of $23,260 and $31,168 of expenses from RADcube, LLC for outsourced IT services for the years ended December 31, 2022 and 2021, respectively, and a total of $3,200 and $29,668 was outstanding at December 31, 2022 and 2021, respectively. An unpaid balance of $3,200 and $29,668 was outstanding at December 31, 2022 and 2021, respectively. Sandeep Allam, our Chairman and President, Feroz Syed and Priya Prasad, our Chief Financial Officer and Chief Operating Officer, are members of RADcube, LLC.

 

We paid a total of $137,494 of recruitment and human resource services from NLogix. No payments to NLogix were made for the year ended December 31, 2021. NLogix is partially owned by Sandeep Allam, our Chairman and President and Feroz Syed.

 

Indemnification Agreements

 

We have entered into indemnification agreements with each of our directors and executive officers and, in connection with the consummation of this offering, will enter into indemnification agreements with each of our director nominees. These indemnification agreements provide the directors and executive officers with contractual rights to indemnification and expense advancement that are, in some cases, broader than the specific indemnification provisions contained under Delaware law.

 

Related Person Transaction Policy

 

Prior to this offering, we have not had a formal policy regarding approval of transactions with related parties. We expect to adopt a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. The policy will become effective immediately upon the execution of the underwriting agreement for this offering. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements, or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director, or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.

 

Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our code of business conduct and ethics, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our board of directors, will take into account the relevant available facts and circumstances including, but not limited to:

 

  ● the risks, costs and benefits to us;

 

  ● the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

 

  ● the availability of other sources for comparable services or products; and

 

  ● the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.

 

The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our board of directors, determines in the good faith exercise of its discretion.

 

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PRINCIPAL STOCKHOLDERS

 

The following table sets forth certain information regarding the beneficial ownership of our Class A common stock as of April 15, 2023 by:

 

  ● each of our named executive officers;

 

  ● each of our directors and director nominees;

 

  ● all of our current and proposed directors and named executive officers as a group; and

 

  ● each stockholder known by us to own beneficially more than five percent of our Class A common stock.

 

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of Class A common stock that may be acquired by an individual or group within 60 days of April 15, 2023, pursuant to the exercise of options or warrants or conversion of Class B common stock, preferred stock or convertible debt, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 4,282,500 and 1,000,000 shares of Class A common stock and Class B common stock issued and outstanding, respectively, as of April 15, 2023 and excludes the conversion of all outstanding convertible notes. Percentage of ownership is based on 6,724,867 and 1,000,000 shares of Class A common stock and Class B common stock, issued and outstanding, respectively, after the completion of this offering, assuming the conversion of all outstanding convertible notes.

 

Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of Class A common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: c/o Syra Health Corp., 1119 Keystone Way N. #201, Carmel, IN 46032.

 

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   Shares of Common Stock
Beneficially Owned Prior to Offering
   % of Total Voting Power   Shares of Common Stock
Beneficially Owned After Offering
   % of Total Voting Power 
Name of  Class A   Class B   Before   Class A   Class B   After 
Beneficial Owner  Shares   %   Shares(1)   %   Offering(2)   Shares   %   Shares(1)   %   Offering(2) 
Directors and Executive Officer:                                                        
Deepika Vuppalanchi   -    -    300,000    30.0%        23.8%   -    -    300,000    30.00%         21.3%
Sandeep Allam   -    -    280,000    28.0%   22.2%   -    -    280,000    28.00%   19.9%
Priya Prasad   -    -    210,000    21.0%   16.7%   -    -    210,000    21.00%   14.9%
Sherron Rogers   -    -    -    -    -    -    -    -    -    - 
Andrew M. Dahlem   -    -    -    -    -    -    -    -    -    - 
Vijayapal R. Reddy   -    -    -    -    -    -    -    -    -    - 
Ketan Paranjape   -    -    -    -    -    -    -    -    -    - 
Avutu Reddy   -    -    -    -    -    -    -    -    -    - 
Directors and Executive Officers as a group (8 persons)   -    -    790,000    79.0%   62.7%   -    -    790,000    79.0%   56.1%
5% or Greater Stockholders:                                                  
AOS Holdings, LLC(3)   1,400,000(4)   32.7%   -    -    6.7%   1,694,277(4)   25.2%   -    -    7.3%
SLS Group LLC (5)   512,500    12.0%   -    -    2.5%   512,500    7.6%   -    -    2.2%
Kerry P. Kennedy (6)   465,000(7)   10.9%   -    -    2.2%   465,000(7)   6.9%   -    -    2.0%
James Amira (8)   225,000    5.3%   -    -    1.1%   225,000    3.3%   -    -    * 
Feroz Syed (9)   -     -   210,000    21.0%   16. 7%   -    -    210,000    21.00%   14.9%
Mike McAleer (10)   350,000(6)   8.2%   -    -    1.7%   350,000(6)   5.2%   -    -    1.5%

 

* Indicates beneficial ownership of less than 1%.

 

(1) Each outstanding share of Class B common stock is convertible into 10 shares of Class A common stock.

 

(2) Percentage of total voting power represents voting power with respect to all of our Class A and Class B common stock, as a single class. Holders of our Class A common stock are entitled to one vote per share, whereas holders of our Class B common stock are entitled to 16.5 votes per share. For more information about the voting rights of our Class A common stock and Class B common stock, see “Description of Capital Stock.”

 

(3) Denis Suggs is the Chief Executive Officer of AOS Holdings, LLC and in such capacity has the right to vote and dispose of the securities held by such entity. The address of AOS Holdings, LLC is 4310 Guion Road Indianapolis, Indiana 46254.

 

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(4) Represents (i) 1,400,000 shares of Class A common stock and (ii) 294,277 shares of Class A common stock issuable upon convertible of outstanding convertible notes.

 

(5) Joe Thomas is the Managing Member of SLS Group LLC and in such capacity has the right to vote and dispose of the securities held by such entity. The address of SLS Group LLC is 6582 South Big Cottonwood Canyon Road, Ste. 200, Salt Lake City, Utah 84121.

 

(6) Kerry P. Kennedy is the Chief Executive Officer of Falcon 999, Inc. and in such capacity has the right to vote and dispose of the securities held by such entity. The address of Falcon 999, Inc. is 4760 Brittany Dr. South, Suite 120, St. Petersburg, FL 33715.

 

(7) Represents (i) 165,000 shares of Class A common stock held by Kerry P. Kennedy and (ii) 300,000 shares of Class A common stock held by Falcon 999, Inc.

 

(8) The address for James Amira is 201 S. Biscayne Blvd., Suite 2864, Miami, FL 33131.

 

(9) The address for Feroz Syed is c/o Syra Health Corp., 1119 Keystone Way, N. Carmel, IN 46032.

 

(10) Represents (i) 150,000 shares of Class A common stock held by Mike McAleer and (ii) 200,000 shares of Class A common stock held by Southport Wealth Management, Inc. Mike E. McAleer is a director of Southport Wealth Management, Inc. and in such capacity has the right to vote and dispose of the securities held by such entity. The address of Southport Wealth Management, Inc. is 2608 Point Grey Road, Vancouver, BC, V6K 1A5, Canada.

 

DESCRIPTION OF CAPITAL STOCK

 

General

 

Upon completion of this offering, our authorized capital stock will consist of 106,000,000 shares, consisting of 100,000,000 shares of Class A common stock, par value $0.001 per share, 5,000,000 shares of Class B common stock, par value $0.001 per share, and 1,000,000 shares of preferred stock, par value $0.001 per share.

 

As of April 15, 2023, there were 4,282,500 shares of Class A common stock, 1,000,000 shares of Class B common stock and no shares of preferred stock issued and outstanding.

 

The following description of our capital stock and provisions of our Certificate of Incorporation and Bylaws to be effective upon the completion of this offering is only a summary. You should also refer to our Certificate of Incorporation and Bylaws to be effective upon the completion of this offering, copies of which are filed as exhibits to the registration statement of which this prospectus is a part.

 

Class A Common Stock and Class B Common Stock

 

We have authorized Class A common stock and Class B common stock.

 

Dividend Rights

 

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Class A common stock and Class B common stock are entitled to share equally, identically, and ratably, on a per share basis, with respect to any dividend or distribution of cash or property paid or distributed by us if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine.

 

Voting Rights

 

Holders of our Class A common stock are entitled to one vote for each share and holders of our Class B common stock are entitled to 16.5 votes per share, on all matters submitted to a vote of stockholders. The holders of our Class A common stock and Class B common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders, unless otherwise required by Delaware law or our Certificate of Incorporation. Delaware law could require either holders of our Class A common stock or Class B common stock to vote separately as a single class if (i) we were to seek to amend our Certificate of Incorporation to increase or decrease the aggregate number of authorized shares of such class or to increase or decrease the par value of a class of our capital stock, then that class would be required to vote separately to approve the proposed amendment; or (ii) we were to seek to amend our Certificate of Incorporation in a manner that alters or changes the powers, preferences or special rights of a class of our capital stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.

 

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Our Certificate of Incorporation does not provide for cumulative voting for the election of directors.

 

See the section titled “Risk Factors— Risks Related to this Offering and Our Class A Common Stock — The dual-class structure of our common stock as contained in our Certificate of Incorporation has the effect of concentrating voting control with those stockholders who held our Class B common stock prior to this offering. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval, and that may adversely affect the trading price of our Class A common stock.

 

Conversion

 

Each outstanding share of Class B common stock will be convertible at any time at the option of the holder into 10 shares of Class A common stock. In addition, each share of Class B common stock will convert automatically into 10 shares of Class A common stock upon death of the holder thereof or any transfer, whether or not for value, except for certain permitted transfers described in our Certificate of Incorporation, including, but not limited to, trusts for the benefit of the stockholder, and partnerships, corporations and other entities owned by the stockholder.

 

Subdivisions and Combinations

 

If we subdivide or combine in any manner outstanding shares of Class A common stock or Class B common stock, the outstanding shares of the other classes will be subdivided or combined in the same manner.

 

No Preemptive or Similar Rights

 

Our Class A common stock and Class B common stock are not entitled to preemptive rights and are not subject to conversion, redemption or sinking fund provisions, except for the conversion provisions with respect to the Class B common stock described above.

 

Right to Receive Liquidation Distributions

 

If we become subject to a liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our Class A common stock and Class B common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

 

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Fully Paid and Non-Assessable

 

All of the outstanding shares of our Class A common stock Class B common stock are, and the shares of our Class A common stock to be issued pursuant to this offering will be, fully paid and non-assessable.

 

Preferred Stock

 

Our board of directors have the authority, without further action by the stockholders, to issue up to 1,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges, and relative participating, optional, or special rights as well as the qualifications, limitations, or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, and liquidation preferences, any or all of which may be greater than the rights of the common stock. Our board of directors, without stockholder approval, will be able to issue convertible preferred stock with voting, conversion, or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change of control or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our Class A common stock and may adversely affect the voting and other rights of the holders of common stock. At present, we have no plans to issue any shares of preferred stock following this offering.

 

Options

 

Our 2022 Plan provides for us to sell or issue shares restricted shares of Class A common stock, or to grant ISOs or nonqualified stock options, stock appreciation rights and restricted stock unit awards for the purchase of shares of Class A common stock, to employees, members of the board of directors and consultants. As of April 15, 2023, options to purchase 22,000 shares of Class A common stock were outstanding. For additional information regarding the terms of the 2022 Plan, see “Executive and Director Compensation - 2022 Omnibus Equity Incentive Plan.”

 

Exclusive Forum

 

Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of our Company to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the General Corporation Law of the State of Delaware or our Certificate of Incorporation or our Bylaws to be effective upon completion of this offering, or (iv) any action asserting a claim against us, our directors, officers, employees or agents governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction; provided, that the foregoing provisions shall not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock are deemed to have notice of and consented to this provision.

 

Corporate Opportunities

 

Under our Certificate of Incorporation, to the fullest extent permitted by law, we will renounce any interest or expectancy in, or right to be offered an opportunity to participate in, any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of any non-employee director or any holder of our preferred stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of our Company or our subsidiaries (“Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of a Covered Person in their capacity as our director.

 

Anti-Takeover Effects of Delaware law and Our Certificate of Incorporation and Bylaws

 

The provisions of Delaware law, our Certificate of Incorporation and our Bylaws to be adopted upon the closing of this offering, described below may have the effect of delaying, deferring or discouraging another party from acquiring control of us.

 

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Section 203 of the Delaware General Corporation Law

 

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:

 

  ● before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
     
  ● upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
     
  ● on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholder, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

 

In general, Section 203 defines business combination to include the following:

 

  ● any merger or consolidation involving the corporation and the interested stockholder;
     
  ● any sale, transfer, pledge, or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
     
  ● subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
     
  ● any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or
     
  ● the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits by or through the corporation.

 

In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.

 

Board of Directors Vacancies

 

Our Certificate of Incorporation and Bylaws authorize only our board of directors to fill vacant directorships. In addition, the number of directors constituting our board of directors may be set only by resolution of the majority of the incumbent directors.

 

Stockholder Action; Special Meeting of Stockholders

 

Our Bylaws provide that our stockholders may not take action by written consent. Our Certificate of Incorporation further provide that special meetings of our stockholders may be called by a majority of the board of directors, the Chief Executive Officer, or the Chairman of the board of directors.

 

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Advance Notice Requirements for Stockholder Proposals and Director Nominations

 

Our Bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholder’s notice must be delivered to the secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which a public announcement of the date of such meeting is first made by us. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.

 

Authorized but Unissued Shares

 

Our authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval and may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise. If we issue such shares without stockholder approval and in violation of limitations imposed by The Nasdaq Capital Market or any stock exchange on which our stock may then be trading, our stock could be delisted.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our common stock is Pacific Stock Transfer, whose address is 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119.

 

Stock Market Listing

 

We have applied to have our shares of Class A common stock listed for trading on The Nasdaq Capital Market under the symbol “SYRA.” No assurance can be given that such listing will be approved.

 

SHARES ELIGIBLE FOR FUTURE SALE

 

Prior to this offering, there has been no public market for our Class A common stock, and a liquid trading market for our Class A common stock may not develop or be sustained after this offering. Future sales of substantial amounts of our Class A common stock in the public market, or the anticipation of these sales, could materially and adversely affect market prices prevailing from time to time, and could impair our ability to raise capital through sales of equity or equity-related securities.

 

Only a limited number of shares of our Class A common stock will be available for sale in the public market for a period of several months after completion of this offering due to contractual and legal restrictions on resale described below. Nevertheless, sales of a substantial number of shares of our Class A common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could materially and adversely affect the prevailing market price of our Class A common stock. Although we have applied to list our Class A common stock on The Nasdaq Capital Market, we cannot assure you that there will be an active market for our Class A common stock.

 

Of the shares to be outstanding immediately after the completion of this offering, we expect that the shares to be sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining shares of our common stock outstanding after this offering will be subject to a six month lock-up period under the lock-up agreements as described below. These restricted securities may be sold in the public market only if registered or pursuant to an exemption from registration, such as Rule 144 or Rule 701 under the Securities Act.

 

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Rule 144

 

Affiliate Resales of Restricted Securities

 

Affiliates of ours must generally comply with Rule 144 if they wish to sell any shares of our common stock in the public market, whether or not those shares are “restricted securities.” “Restricted securities” are any securities acquired from us or one of our affiliates in a transaction not involving a public offering. All shares of our common stock issued prior to the closing of the offering made hereby, are considered to be restricted securities. The shares of our common stock sold in this offering are not considered to be restricted securities.

 

Non-Affiliate Resales of Restricted Securities

 

Any person or entity who is not an affiliate of ours and who has not been an affiliate of ours at any time during the three months preceding a sale is only required to comply with Rule 144 in connection with sales of restricted shares of our Class A common stock. Subject to the lock-up agreements described below, those persons may sell shares of our Class A common stock that they have beneficially owned for at least one year without any restrictions under Rule 144 immediately following the effective date of the registration statement of which this prospectus is a part.

 

Further, beginning 90 days after the effective date of the registration statement of which this prospectus is a part, a person who is not an affiliate of ours at the time such person sells shares of our Class A common stock, and has not been an affiliate of ours at any time during the three months preceding such sale, and who has beneficially owned such shares of our Class A common stock, as applicable, for at least six months but less than a year, is entitled to sell such shares so long as there is adequate current public information, as defined in Rule 144, available about us.

 

Resales of restricted shares of our Class A common stock by non-affiliates are not subject to the manner of sale, volume limitation or notice filing provisions of Rule 144, described above.

 

Rule 701

 

Rule 701 generally allows a stockholder who purchased shares of our Class A common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of ours during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144.

 

Rule 701 also permits affiliates of ours to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701 and until expiration of the six month lock-up period described below.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF OUR CLASS A COMMON STOCK AND WARRANTS

 

The following is a summary of the material U.S. federal income tax consequences of the ownership and disposition of our Class A common stock and Warrants but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Code Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. No ruling on the U.S. federal, state, or local tax considerations relevant to our operations or to the purchase, ownership, or disposition of our shares or Warrants, has been requested from the IRS or other tax authority. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

 

This summary also does not address the tax considerations arising under the laws of any non-U.S., state, or local jurisdiction, under any applicable tax treaty, or under U.S. federal gift and estate tax laws. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

 

  ● banks, insurance companies or other financial institutions, regulated investment companies or real estate investment trusts;

 

  ● persons subject to the alternative minimum tax or Medicare contribution tax on net investment income;

 

  ● tax-exempt organizations or governmental organizations;

 

  ● controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;

 

  ● brokers or dealers in securities or currencies;

 

  ● traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

 

  ● persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);

 

  ● U.S. expatriates and certain former citizens or long-term residents of the U.S.;

 

  ● partnerships or entities classified as partnerships for U.S. federal income tax purposes or other pass-through entities (and investors therein);

 

  ● persons who hold our Class A common stock or Warrants as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction or integrated investment;

 

  ● persons who hold or receive our Class A common stock or Warrants pursuant to the exercise of any employee stock option or otherwise as compensation;

 

  ● persons who do not hold our Class A common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment);

 

  ● U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;

 

  ● “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; or

 

  ● persons deemed to sell our Class A common stock or Warrants under the constructive sale provisions of the Code.

 

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In addition, if a partnership or other pass-through entity (including an entity or arrangement treated as a partnership or other type of pass-through entity for U.S. federal income tax purposes) holds our Class A common stock or Warrants, the U.S. federal income tax treatment of a partner or beneficial owner generally will depend on the status of such partner or beneficial owner, certain determinations made at the partner level and the activities of the partnership or other pass-through entity. Accordingly, partnerships (or other pass-through entities) that hold our Class A common stock or Warrants, and partners or beneficial owners in such partnerships, should consult their tax advisors regarding the U.S. federal income tax consequences to them.

 

You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our Class A common stock or Warrants arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty.

 

Non-U.S. Holder Defined

 

For purposes of this discussion, a U.S. holder is any beneficial owner of our Class A common stock or Warrants that, for U.S. federal income tax purposes, is:

 

  ● an individual citizen or resident of the U.S.;

 

  ● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the U.S. or under the laws of the U.S., any state thereof, or the District of Columbia;

 

  ● an estate whose income is subject to U.S. federal income tax regardless of its source; or

 

  ● a trust (x) whose administration is subject to the primary supervision of a U.S. court, and which has one or more “U.S. persons” (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person.

 

As used herein, the term non-U.S. holder means a beneficial owner, other than an entity treated as a partnership for U.S. federal income tax purposes, of our Class A common stock or Warrants that is for U.S. federal income tax purposes not a U.S. holder.

 

Allocation of Purchase Price Between Share of Class A Common Stock and Accompanying Warrant to Purchase Our Class A Common Stock

 

For U.S. federal income tax purposes, each Unit should be treated as an “investment unit” consisting of one share of our Class A common stock and a Warrant to acquire one share of our Class A common stock. The purchase price for each investment unit will be allocated between these two components in proportion to their relative fair market values at the time the Unit is purchased by the holder. This allocation of the purchase price for each investment unit will establish the holder’s initial tax basis for U.S. federal income tax purposes in the share of the Class A common stock and the Warrant included in each investment unit. The separation of the Class A common stock and the Warrant included in each investment unit should not be a taxable event for U.S. federal income tax purposes. Each holder should consult his, her or its own tax advisor regarding the allocation of the purchase price for an investment unit.

 

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Tax Considerations Applicable to U.S. Holders

 

Distributions

 

As described in “Dividend Policy,” we have never declared or paid cash dividends on our Class A common stock and do not anticipate paying any dividends on our Class A common stock in the foreseeable future. However, if we do make distributions on our Class A common stock, those payments will generally constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a non-taxable return of capital and will first reduce a U.S. holder’s basis in our Class A common stock, but not below zero, and then any additional excess will be treated as gain from the sale of stock as described below under “—Gain or Loss on Disposition of Class A Common Stock.” Dividends received by a corporate U.S. holder may be eligible for a dividends received deduction, subject to applicable limitations. Dividends received by certain non-corporate U.S. holders, including individuals, are generally taxed at the lower applicable capital gains rate provided certain holding period and other requirements are satisfied.

 

Gain or Loss on Disposition of Class A Common Stock

 

Upon the sale, exchange or other taxable disposition of our Class A common stock, a U.S. holder will generally recognize capital gain or loss equal to the difference between the amount of cash and the fair market value of any property received upon the sale, exchange or other taxable disposition and such U.S. holder’s adjusted tax basis in such Class A common stock. This capital gain or loss will be long term capital gain or loss if the U.S. holder’s holding period in such Class A common stock is more than one year at the time of the sale, exchange or other taxable disposition. Long-term capital gains recognized by certain non-corporate U.S. holders, including individuals, generally will be subject to reduced rates of U.S. federal income tax. The deductibility of capital losses is subject to certain limitations.

 

Sale or Other Disposition or Exercise of Warrants

 

Upon the sale, exchange or other disposition of a Warrant (other than by exercise), a U.S. holder will generally recognize capital gain or loss equal to the difference between the amount realized on the sale, exchange or other disposition and the U.S. holder’s tax basis in the Warrant. This capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period in such Warrant is more than one year at the time of the sale, exchange or other disposition. The deductibility of capital losses is subject to certain limitations.

 

In general, a U.S. holder will not be required to recognize income, gain or loss upon exercise of a Warrant for its exercise price. A U.S. holder’s tax basis in Class A common stock received upon exercise of Warrants will be equal to the sum of (i) the U.S. holder’s tax basis in the Warrants exchanged therefor and (ii) the exercise price of such Warrants. A U.S. holder’s holding period in the Class A common stock received upon exercise will commence on the day after such U.S. holder exercises the Warrants. In certain limited circumstances, a U.S. holder may be permitted to undertake a cashless exercise of Warrants into our Class A common stock. The U.S. federal income tax treatment of a cashless exercise of Warrants into our Class A common stock is unclear, and the tax consequences of a cashless exercise could differ from the consequences upon the exercise of a Warrant described above. U.S. holders are urged to consult their tax advisors as to the consequences of an exercise of a Warrant on a cashless basis, including with respect to their holding period and tax basis in the Class A common stock received.

 

Lapse of Warrants

 

If a Warrant expires without being exercised, a U.S. holder will recognize a capital loss in an amount equal to such U.S. holder’s tax basis in the Warrant. Such loss will be long-term capital loss if, at the time of the expiration, the U.S. holder’s holding period in such Warrant is more than one year. The deductibility of capital losses is subject to certain limitations.

 

Certain Adjustments to and Distributions on Warrants

 

Under Section 305 of the Code, an adjustment to the number of Class A common stock that will be issued on the exercise of the Warrants, or an adjustment to the exercise price of the Warrants (or in certain circumstances, there is a failure to make adjustments), may be treated as a constructive distribution to a U.S. holder of the Warrants if, and to the extent that, such adjustment has the effect of increasing such U.S. holder’s proportionate interest in our earnings and profits (as determined under U.S. federal income tax principles) or our assets, depending on the circumstances of such adjustment (for example, if such adjustment is to compensate for a distribution of cash or other property to our shareholders). Such distributions will constitute dividends to the extent deemed paid out of our current or accumulated earnings and profits, as discussed above under “Distributions.” U.S. holders should consult their tax advisors regarding the proper treatment of any adjustments to the number of the Class A common stock that will be issued on the exercise of the Warrants or the exercise price of the Warrants.

 

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In addition, if we were to make a distribution in cash or other property with respect to our Class A common stock after the issuance of the Warrants, then we may, in certain circumstances, make a corresponding distribution to holders of Warrants. The taxation of a distribution received with respect to a Warrant is unclear. It is possible such a distribution would be treated as a distribution (or constructive distribution), although other treatments are possible. U.S. holders should consult their tax advisors regarding the proper treatment of distributions received with respect to Warrants.

 

Backup Withholding and Information Reporting

 

In general, backup withholding and information reporting requirements may apply to payments on our Class A common stock or Warrants and to the receipt of proceeds on the sale, exchange or other taxable disposition of the Class A common stock or Warrants. Backup withholding (currently at a rate of 24%) may apply if a U.S. holder fails to furnish its taxpayer identification number, a U.S. holder fails to certify under penalties of perjury that such taxpayer identification number is correct and that such U.S. holder is not subject to backup withholding (generally on a properly completed and duly executed IRS Form W-9), the applicable withholding agent is notified by the IRS that the holder previously failed to properly report payments of interest or dividends, or such U.S. holder otherwise fails to comply with the applicable requirements of the backup withholding rules.

 

Certain U.S. holders generally are not subject to backup withholding and information reporting requirements, provided that their exemptions from backup withholding and information reporting are properly established. Backup withholding is not an additional tax. Any amounts withheld from a payment to a U.S. holder under the backup withholding rules generally will be allowed as a credit against such U.S. holder’s U.S. federal income tax liability and may entitle such U.S. holder to a refund, provided the required information is furnished to the IRS in a timely manner. U.S. holders should consult their tax advisors regarding the application of backup withholding, the availability of an exemption from backup withholding, and the procedure for obtaining such an exemption, if available.

 

Tax Considerations Applicable to Non-U.S. Holders

 

Distributions

 

As described in “Dividend Policy,” we have never declared or paid cash dividends on our Class A common stock and do not anticipate paying any dividends on our Class A common stock in the foreseeable future. However, if we do make distributions on our Class A common stock, those payments will generally constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a non-taxable return of capital and will first reduce a non-U.S. holder’s basis in our Class A common stock, but not below zero, and then any excess will be treated as gain from the sale of stock as described below under “—Gain or Loss on Disposition of Class A Common Stock and Warrants.”

 

Subject to the discussion below on effectively connected income, backup withholding and foreign accounts, any dividend paid to a non-U.S. holder generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or at such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, a non-U.S. holder must provide us (or the applicable withholding agent) with an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8 certifying under penalties of perjury that the non-U.S. holder is not a United States person and qualifies for the reduced rate. These forms may need to be periodically updated. A non-U.S. holder of shares of our Class A common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

 

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Dividends received by a non-U.S. holder that are effectively connected with a non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S.) are generally taxed in the same manner as dividends received by a U.S. holder (meaning such dividends will generally be exempt from the withholding tax described in the previous paragraph). In order to obtain this exemption, a non-U.S. holder must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, dividends received by a non-U.S. holder that is a corporation that are effectively connected with such non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States) may also be subject to an additional branch profits tax at a rate of 30% or at such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders should consult their own tax advisors regarding other U.S. tax consequences of the acquisition, ownership and disposition of our Class A common stock, including the possible imposition of the branch profits tax.

 

Gain or Loss on Disposition of Class A Common Stock and Warrants

 

Subject to the discussion below regarding backup withholding and foreign accounts, a non-U.S. holder generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our Class A common stock or Warrants unless:

 

  ● the gain is effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S.);

 

  ● the non-U.S. holder is a non-resident alien individual who is present in the U.S. for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and certain other conditions are met; or

 

  ● We are or have been a “United States real property holding corporation,” as defined in the Code, at any time within the five-year period ending on the date of disposition or the non-U.S. holder’s holding period, whichever period is shorter, and the non-U.S. holder is not eligible for an exemption under an applicable income tax treaty.

 

Generally, a corporation is a “U.S. real property holding corporation” (“USRPHC”) if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we were or become a USRPHC, however, a non-U.S. holder would not be subject to U.S. federal income tax on a sale, exchange or other taxable disposition of shares of our Class A common stock or Warrants by reason of our status as a USRPHC so long as (i) our Class A common stock is regularly traded on an established securities market during the calendar year in which such sale, exchange or other tax disposition of shares of our Class A common stock or Warrants occurs and (ii) such non-U.S. holder does not own and is not deemed to own (directly, indirectly or constructively) more than 5% of our Class A common stock at any time during the relevant period. Non-U.S. holders are urged to consult their tax advisors regarding the effect of holding Warrants on the calculation of such 5% threshold. No assurance can be provided that our Class A common stock will be regularly traded on an established securities market for purposes of the rules described above. Prospective investors are encouraged to consult their tax advisors regarding the possible consequences to them if we are, or were to become, a USRPHC.

 

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Non-U.S. holders described in the first bullet above will be required to pay tax on the net gain derived from the sale or other disposition under regular graduated U.S. federal income tax rates generally applicable to a United States person, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holder described in the second bullet above will be required to pay a flat 30% tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale or other disposition, which gain may generally be offset by U.S. source capital losses for the year (provided such non-U.S. holders have timely filed U.S. federal income tax returns with respect to such losses). Non-U.S. holders should consult their own tax advisors with respect to the application of the foregoing rules to their ownership and disposition of our Class A common stock or Warrants.

 

Exercise of Warrants

 

A non-U.S. holder generally will not recognize gain or loss on the exercise of a Warrant and the related receipt of Class A common stock. The U.S. federal income tax treatment of a cashless exercise of Warrants into our Class A common stock is unclear. A non-U.S. holder should consult his, her, or its own tax advisor regarding the U.S. federal income tax consequences of a cashless exercise of Warrants.

 

Lapse of Warrants

 

Expiration of Warrants will be treated as if the non-U.S. holder sold or exchanged the Warrants and recognized a capital loss equal to the non-U.S. holder’s tax basis in the Warrants. However, a non-U.S. holder will not be able to utilize a loss recognized upon expiration of a Warrant against the non-U.S. holder’s U.S. federal income tax liability unless the loss is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if an income tax treaty applies, is attributable to a permanent establishment or fixed base in the United States) or is treated as a U.S.-source loss and the non-U.S. holder is present 183 days or more in the taxable year of disposition and certain other conditions are met.

 

Certain Adjustments to and Distributions on Warrants

 

As discussed above under “-Tax Considerations Applicable to U.S. Holders-Distributions,” certain adjustments to the number of Class A common stock that will be issued on the exercise of the Warrants, or an adjustment to the exercise price of the Warrants (or certain failures to make adjustments), may be deemed to be the payment of a distribution with respect to the Warrants. Such a deemed distribution could be deemed to be the payment of a dividend to a non-U.S. holder to the extent of our earnings and profits, notwithstanding the fact that such holder will not receive a cash payment. In the event of such a deemed dividend, we may be required to withhold tax from subsequent distributions of cash or property to non-U.S. holders. Non-U.S. holders should consult their tax advisors regarding the proper treatment of any adjustments to the Warrants.

 

In addition, as discussed above under “-Tax Considerations Applicable to U.S. Holders- Certain Adjustments to and Distributions on Warrants,” the taxation of a distribution received with respect to a Warrant is unclear. It is possible such a distribution would be treated as a distribution (or constructive distribution), although other treatments are possible. Non-U.S. holders should consult their tax advisors regarding the U.S. withholding tax and other U.S. tax consequences of distributions received with respect to Warrants.

 

Backup Withholding and Information Reporting

 

Generally, we must report annually to the IRS the amount of distributions (including constructive distributions) on our Class A common stock or Warrants paid to non-U.S. holders, their names and addresses and the amount of tax withheld, if any. A similar report will be sent to non-U.S. holders. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in a non-U.S. holder’s country of residence. Unless a non-U.S. holder complies with certification procedures to establish that the non-U.S. holder is not a United States person, information returns may also be filed with the IRS in connection with the proceeds from a sale, exchange or other disposition of our Class A common stock or Warrants to or through the U.S. office (and, in certain cases, the foreign office) of a broker.

 

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Payments of dividends (including constructive dividends) or of proceeds on the disposition of our Class A common stock or Warrants made to non-U.S. holders may be subject to information reporting and backup withholding at a current rate of 24% unless such non-U.S. holders establish an exemption, for example, by properly certifying their non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that a holder is a U.S. person.

 

Backup withholding is not an additional tax. Any amounts withheld from a payment to a non-U.S. holder under the backup withholding rules generally will be allowed as a credit against such non-U.S. holder’s U.S. federal income tax liability and may entitle such non-U.S. holder to a refund, provided the required information is furnished to the IRS in a timely manner. Non-U.S. holders are urged to consult their tax advisors regarding the application of backup withholding and the availability of and procedure for obtaining an exemption from backup withholding in their particular circumstances.

 

Foreign Account Tax Compliance

 

Subject to the following paragraph, the Foreign Account Tax Compliance Act and the rules and regulations promulgated thereunder (collectively “FATCA”) imposes withholding tax at a rate of 30% on dividends (including constructive dividends) on and gross proceeds from the sale or other disposition of our Class A common stock or Warrants paid to “foreign financial institutions” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. Subject to the following paragraph, FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on and gross proceeds from the sale or other disposition of our Class A common stock or Warrants paid to a “non-financial foreign entity” (as specially defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain substantial direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. The withholding tax will apply regardless of whether the payment otherwise would be exempt from U.S. nonresident and backup withholding tax, including under the other exemptions described above. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the U.S. and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our Class A common stock or Warrants.

 

The U.S. Treasury Department has issued proposed Treasury Regulations that, if finalized in their present form, would eliminate withholding under FATCA with respect to payments of gross proceeds from a sale or other disposition of our Class A common stock or Warrants. In the preamble to such proposed Treasury Regulations, the Treasury Secretary stated that taxpayers may generally rely on the proposed Treasury Regulations until final regulations are issued.

 

THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. Each prospective investor should consult its tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our Class A common stock or warrants, including the consequences of any proposed change in applicable laws.

 

76
 

 

UNDERWRITING

 

Under the terms and subject to the conditions of an underwriting agreement, the underwriters named below, for whom Kingswood, a division of Kingswood Capital Partners, LLC (“Kingswood”), is acting as the representative, lead managing underwriter, book-runner and investment banker, have severally agreed to purchase, and we have agreed to sell to them, the number of our Units at the initial public offering price, less the underwriting discounts and commissions, as set forth on the cover page of this prospectus and as indicated below:

 

Underwriters 

Number

of Units

 
Kingswood, a division of Kingswood Capital Partners, LLC    
      
Total     

 

The underwriters are offering the Units subject to their acceptance of the Units from us and subject to prior sale. The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the Units offered by this prospectus are subject to the approval of certain legal matters by their counsel and to other conditions. The underwriters are obligated to take and pay for all of the Units offered by this prospectus if any such Units are taken. However, the underwriters are not required to take or pay for the Units covered by the underwriters’ option to purchase additional shares and/or Warrants described below.

 

We have granted to the underwriters an option, exercisable for 45 days after the closing of the offering, to purchase up to 300,000 additional shares of Class A common stock and/or Warrants to purchase up to 300,000 shares of Class A common stock, in any combinations thereof, at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering contemplated by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of the additional shares and/or Warrants as the number listed next to the underwriter’s name in the preceding table bears to the total number of Units listed next to the names of all underwriters in the preceding table.

 

The underwriters will offer the Units to the public at the initial public offering price set forth on the cover of this prospectus and to selected dealers at the initial public offering price less a selling concession not in excess of $ per Unit. After this offering, the initial public offering price, concession and reallowance to dealers may be reduced by the representative. No change in those terms will change the amount of proceeds to be received by us as set forth on the cover of this prospectus. The securities are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part.

 

Discount, Commissions and Expenses

 

The underwriting discounts and commissions are equal to 7.5% of the initial public offering price set forth on the cover of this prospectus.

 

The following table shows the per Unit and total initial public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to 300,000 shares of our Class A common stock and/or Warrants to purchase up to 300,000 shares of Class A common stock.

 

   Per Unit   Total Without Exercise of Over-allotment Option   Total With Full Exercise of Over-allotment Option 
Public offering price  $   $             $       
Underwriting discounts and commissions (7.5%)  $   $   $  
Proceeds, before expenses, to us  $   $   $ 

 

We will also pay to the representative, by deduction from the net proceeds of the offering contemplated herein, a non-accountable expense allowance equal to 1% of the gross proceeds received by us from the sale of our Units.

 

77
 

 

We paid an advance (the “Advance”) expense deposit of $70,000 to the representative for the representative’s anticipated out-of-pocket expenses. Any expense deposits will be returned to us to the extent the representative’s out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A).

 

We have agreed to reimburse the representative’s accountable expenses of the offering, up to $160,000 (inclusive of the Advance), including, but not limited to: (i) the legal and due diligence fees and expenses incurred by the representative; (ii) the reasonable cost for road show meetings and preparation of the roadshow presentation; and (iii) all reasonable travel and lodging expenses incurred by the representative in connection with the roadshow.

 

We estimate that the total expenses of the offering payable by us, excluding the underwriting discounts and commissions and non-accountable expense allowance, will be approximately $905,000, including a maximum aggregate reimbursement of $160,000 of representative’s accountable expenses.

 

Representative’s Warrants

 

In addition to the foregoing, we have agreed to issue to the representative of the underwriters warrants to purchase such number of shares of our Class A common stock equal to 10% of the total number of Units sold in this offering (including any Units sold pursuant to the exercise of the over-allotment option). Such warrants shall have an exercise price equal to 120% of the offering price of the Units sold in this offering. The representative’s warrants may be exercised in cash or on a cashless basis, will be exercisable for five years from the commencement of sales of this offering and will terminate on the fifth anniversary of the commencement of sales. The representative’s warrants shall not be redeemable. Furthermore, the representative’s warrants and the underlying shares will be deemed compensation by FINRA, and therefore will be subject to FINRA Rule 5110. In accordance with FINRA Rule 5110(e)(1), and except as otherwise permitted by FINRA rules, neither the representative’s warrants nor any of our shares issued upon exercise of the representative’s warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of 180 days immediately following the commencement of sales of this offering. In addition, although the representative’s warrants and the underlying shares of Class A common stock will be registered by the registration statement of which this prospectus forms a part, we have also agreed that the warrants will provide for registration rights in certain cases. These registration rights apply to all of the securities directly and indirectly issuable upon exercise of the representative’s warrants. The unlimited piggyback registration right provided will not be greater than five years from the commencement of sales of this offering in compliance with FINRA Rule 5110(g)(8).

 

We will bear all fees and expenses attendant to registering the shares of Class A common stock issuable upon exercise of the warrants. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, in accordance with FINRA Rule 5110(g)(8).

 

78
 

 

Indemnification

 

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

 

Lock-Up Agreements

 

We, our officers, directors and holders of 5% or more of the outstanding securities have agreed, subject to certain exceptions, to a six month “lock-up” period from the closing date of this offering with respect to the Company’s outstanding shares of common stock (or securities convertible or exercisable into shares of the Company’s common stock) that they beneficially own. This means that, for a period of six months following the closing date of this offering, we and such persons may not offer, issue, sell, contract to sell, encumber pledge or otherwise dispose of such securities without the prior written consent of the representative (excluding the securities underlying currently outstanding options approved by Kingswood, the issuance of securities pursuant to our equity incentive plan, the establishment of and sale pursuant to any plan established in compliance with Rule 10b5-1 of the Exchange Act, and the issuance of any securities in connection with a strategic transaction).

 

Right of First Refusal

 

Upon the commencement of sales of securities in this offering, and for a period of 24 months thereafter, we and our subsidiaries, will grant the representative a right of first refusal to act as lead manager or bookrunner, or lead placement agent with respect to any public or private sale of our equity or debt securities or of our subsidiaries.

 

Pricing of the Offering

 

Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price of the Units has been negotiated between us and the underwriters. Among the factors considered in determining the initial public offering price of the Units, in addition to the prevailing market conditions, are our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

 

Electronic Offer, Sale and Distribution of Securities

 

A prospectus in electronic format may be made available on the websites maintained by the underwriters or selling group members, if any, participating in this offering and the underwriters may distribute prospectuses electronically. The underwriters may agree to allocate a number of Units to selling group members for sale to their online brokerage account holders. The Units to be sold pursuant to Internet distributions will be allocated on the same basis as other allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or the underwriters, and should not be relied upon by investors.

 

79
 

 

Price Stabilization, Short Positions and Penalty Bids

 

In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our Class A common stock. Specifically, the underwriters may sell more Units than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under option to purchase additional shares. The underwriters can close out a covered short sale by exercising the option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the option to purchase additional shares. The underwriters may also sell shares in excess of the option to purchase additional shares, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

 

The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing our Class A common stock in this offering because such underwriter repurchases those shares in stabilizing or short covering transactions.

 

Finally, the underwriters may bid for, and purchase, our Class A common stock in market making transactions, including “passive” market making transactions as described below.

 

These activities may stabilize or maintain the market price of our Class A common stock at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on The Nasdaq Capital Market, in the over-the-counter market, or otherwise.

 

Passive Market Making

 

In connection with this offering, the underwriters may engage in passive market making transactions in our Class A common stock on The Nasdaq Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the shares and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.

 

Potential Conflicts of Interest

 

The underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

 

Other Relationships

 

The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Some of the underwriters and certain of their affiliates may in the future engage in investment banking and other commercial dealings in the ordinary course of business with us and our affiliates, for which they may in the future receive customary fees, commissions and expenses.

 

In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

 

80
 

 

Offer Restrictions Outside the United States

 

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

 

Nasdaq Listing

 

We have applied to have our Class A common stock listed on The Nasdaq Capital Market under the symbol “SYRA.” We cannot guarantee that we will be successful in listing our Class A common stock on The Nasdaq Capital Market; however, we will not complete this offering unless we are so listed.

 

LEGAL MATTERS

 

The validity of the issuance of the Class A common stock offered by us in this offering will be passed upon for us by Sheppard, Mullin, Richter & Hampton LLP, New York, New York. Ellenoff Grossman & Schole LLP, New York, New York has acted as counsel for the underwriters in connection with certain legal matters related to this offering.

 

EXPERTS

 

The financial statements of Syra Health Corp. as of December 31, 2022 and 2021 included in this Registration Statement, of which this prospectus forms a part, have been so included in reliance on the report of M&K CPAS, PLLC, an independent registered public accounting firm (the report on the financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern) appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Units offered by this prospectus. This prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement. For further information pertaining to us and our Units, reference is made to the registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matters involved.

 

Registration statements and certain other filings made with the SEC electronically are publicly available through the SEC’s website at http://www.sec.gov. The registration statement, including all exhibits and amendments to the registration statement, has been filed electronically with the SEC.

 

Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act and, accordingly, will be required to file annual reports containing financial statements audited by an independent public accounting firm, quarterly reports containing unaudited financial data, current reports, proxy statements and other information with the SEC. You will be able to inspect and copy such periodic reports, proxy statements and other information at the SEC’s public reference room, and the website of the SEC referred to above.

 

81
 

 

SYRA HEALTH CORP.

 

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm (PCAOB Firm ID: 2738)   F-2
     
Balance Sheets at December 31, 2022 and 2021   F-3
     
Statements of Operations for the Years Ended December 31, 2022 and 2021   F-4
     
Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2022 and 2021   F-5
     
Statements of Cash Flows for the Years Ended December 31, 2022 and 2021   F-6
     
Notes to the Financial Statements   F-7

 

F-1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and

Stockholders of Syra Health Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Syra Health Corp. (the “Company”) as of December 31, 2022 and 2021 and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2022 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had a cash balance of $3,344, negative working capital of $119,602 and an accumulated deficit of $2,126,612 since inception, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe our audits provide a reasonable basis for our opinion.

 

Critical Audit Matters

 

The critical audit matter communicated below is a matter arising from the current period audits of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

 

Due to the net loss for the year, the Company evaluated the need for a going concern.

 

Auditing management’s evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated.

 

As discussed in Note 2, the Company has a going concern due to its insufficient cash balance, negative working capital, and accumulated net losses during the years ended December 31, 2022 and 2021.

 

To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going concern.

 

/s/ M&K CPAS, PLLC

 

We have served as the Company’s auditor since 2022.

Houston, TX

May 3, 2023

 

F-2
 

 

SYRA HEALTH CORP.

BALANCE SHEETS

 

   December 31,   December 31, 
   2022   2021 
ASSETS          
           
Current assets:          
Cash  $3,344   $100,012 
Accounts receivable, net   1,201,097    260,627 
Other current assets   222,302    21,504 
Total current assets   1,426,743    382,143 
           
Deferred offering costs   596,118    - 
Property and equipment, net   112,493    6,082 
Right-of-use asset   184,288    148,664 
           
Total assets  $2,319,642   $536,889 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
           
Current liabilities:          
Accounts payable  $432,388   $40,112 
Accounts payable, related parties   3,200    85,618 
Accrued expenses   239,117    75,442 
Advances from related party   -    194,200 
Current portion of operating lease liability, related party   121,089    56,920 
Revolving line of credit   750,551    - 
Total current liabilities   1,546,345    452,292 
           
Operating lease liability, related party   63,199    91,744 
           
Total liabilities   1,609,544    544,036 
           
Commitments and contingencies          
           
Stockholders’ equity (deficit):          
Preferred stock, $0.001 par value, 1,000,000 shares authorized, no shares designated, issued and outstanding   -    - 
Class A common stock, $0.001 par value, 100,000,000 shares authorized, 4,282,500 and -0- shares issued and outstanding at December 31, 2022 and 2021, respectively   4,283    - 
Convertible class B common stock, $0.001 par value, 5,000,000 shares authorized, 1,000,000 shares issued and outstanding   1,000    1,000 
Additional paid-in capital   2,831,427    300 
Accumulated deficit   (2,126,612)   (8,447)
Total stockholders’ equity (deficit)   710,098    (7,147)
           
Total liabilities and stockholders’ equity (deficit)  $2,319,642   $536,889 

 

The accompanying notes are an integral part of these financial statements.

 

F-3
 

 

SYRA HEALTH CORP.

STATEMENTS OF OPERATIONS

 

   For the Years Ended 
   December 31, 
   2022   2021 
         
Net revenues:          
Healthcare staffing services  $5,261,870   $1,245,413 
Medical communication services   355,836    164,563 
Net revenues   5,617,706    1,409,976 
Cost of services   4,555,924    979,622 
Gross profit   1,061,782    430,354 
           
Operating expenses:          
Salaries and benefits   1,524,971    235,802 
Professional services   1,035,902    94,964 
Selling, general and administrative expenses   575,755    102,661 
Depreciation   14,849    207 
Total operating expenses   3,151,477    433,634 
           
Operating loss   (2,089,695)   (3,280)
           
Other income (expense):          
Interest income   63    - 
Interest expense   (28,533)   - 
Total other income (expense)   (28,470)   - 
           
Net loss  $(2,118,165)  $(3,280)
           
Weighted average common shares outstanding - basic and diluted   3,649,288    1,000,000 
Net loss per common share - basic and diluted  $(0.58)  $(0.00)

 

The accompanying notes are an integral part of these financial statements.

 

F-4
 

 

SYRA HEALTH CORP.

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

 

       Class A   Convertible Class B   Additional      

Total

Stockholders’

 
   Preferred Stock   Common Stock   Common Stock   Paid-in   Accumulated  

Equity

 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   (Deficit) 
                                     
Balance, December 31, 2020   -   $-    -   $-    1,000,000   $1,000   $-   $(5,167)  $          (4,167)
                                              
Contributed capital   -    -    -    -    -    -    300    -    300 
                                              
Net loss   -    -    -    -    -    -    -    (3,280)   (3,280)
                                              
Balance, December 31, 2021   -   $-    -   $-    1,000,000   $1,000   $300   $(8,447)  $(7,147)
                                              
Class A common stock sold for cash   -    -    3,322,500    3,323    -    -    2,319,177    -    2,322,500 
                                              
Class A common stock issued for services   -    -    960,000    960    -    -    509,040    -    510,000 
                                              
Class A common stock options issued for services   -    -    -    -    -    -    2,910    -    2,910 
                                              
Net loss   -    -    -    -    -    -    -    (2,118,165)   (2,118,165)
                                              
Balance, December 31, 2022   -   $-    4,282,500   $4,283    1,000,000   $1,000   $2,831,427   $(2,126,612)  $710,098 

 

The accompanying notes are an integral part of these financial statements.

 

F-5
 

 

SYRA HEALTH CORP.

STATEMENTS OF CASH FLOWS

 

   For the Years Ended 
   December 31, 
   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(2,118,165)  $(3,280)
Adjustments to reconcile net loss to net cash used in operating activities:          
Non-cash lease expense   95,563    27,259 
Depreciation   14,849    207 
Amortization of debt discounts   14,076    - 
Common stock issued for services   510,000    - 
Stock-based compensation, stock options   2,910    - 
Decrease (increase) in assets:          
Accounts receivable   (940,470)   (260,627)
Other current assets   (200,798)   (21,504)
Increase (decrease) in liabilities:          
Accounts payable   392,276    40,112 
Accounts payable, related parties   (82,418)   85,618 
Accrued expenses   163,675    71,275 
Operating lease liability   (95,563)   (27,259)
Net cash used in operating activities   (2,244,065)   (88,199)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property and equipment   (121,260)   (6,289)
Net cash used in investing activities   (121,260)   (6,289)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Payments on deferred offering costs   (596,118)   - 
Proceeds received on sale of Class A common stock   2,322,500    - 
Proceeds received from line of credit   2,819,275    - 
Repayments on line of credit   (2,082,800)   - 
Advances received from related party   94,000    742,200 
Repayments on advances from related party   (288,200)   (551,000)
Proceeds received from capital contributions   -    300 
Net cash provided by financing activities   2,268,657    191,500 
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   (96,668)   97,012 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   100,012    3,000 
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $3,344   $100,012 
           
SUPPLEMENTAL INFORMATION:          
Interest paid  $11,651   $- 
Income taxes paid  $-   $- 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Initial recognition of right-of-use asset and lease liability  $131,187   $175,923 

 

The accompanying notes are an integral part of these financial statements.

 

F-6
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 1 – Nature of Business and Significant Accounting Policies

 

Nature of Business

 

Syra Health Corp. (“Syra” or the “Company”) was incorporated in the state of Indiana on November 20, 2020 to provide workforce staffing solutions, health education and healthcare research consulting services to mental health hospitals and organizations, including government agencies, integrated health networks, managed care entities and pharmaceutical manufacturers. On March 11, 2022, the Company redomiciled to Delaware. The Company’s corporate office is located in Carmel, Indiana.

 

In 2022, the Company’s board of directors approved a recapitalization of the Company’s equity, effected as of May 3, 2022, pursuant to which the 100,000 outstanding shares of common stock were exchanged for 1,000,000 shares of convertible Class B common stock, as retrospectively applied. Each share of Class B common stock is entitled to 16.5 votes and is convertible at any time into ten shares of Class A common stock.

 

During March of 2022, the Company raised $1 million of capital from the sale of 2,000,000 newly issued shares of Class A common stock at a share price of $0.50 in a private placement. On various dates between June and August of 2022, the Company also raised $1,322,500 of capital from the sale of 1,322,500 shares of Class A Common Stock at a share price of $1.00 in a private placement.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Concentrations of Credit Risk

 

The Company maintains cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 under current regulations. The Company did not have any cash in excess of FDIC insured limits at December 31, 2022 and 2021, and has not experienced any losses in such accounts.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

  - Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
  - Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
  - Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

 

The carrying value of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable and accrued expenses are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company’s advances from related party approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2022 and 2021.

 

F-7
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Cash and Cash Equivalents

 

Cash equivalents include money market accounts which have maturities of three months or less. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There were no cash equivalents on hand at December 31, 2022 and 2021.

 

Accounts Receivable

 

Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance for doubtful accounts of $4,533 at December 31, 2022. No allowance for doubtful accounts was necessary at December 31, 2021.

 

Deferred Offering Costs

 

Deferred offering costs related to the Company’s initial public offering (“IPO”) consist principally of professional fees, legal and accounting, and other costs such as printing, and registration costs incurred in connection with the planned IPO of the Company and the sale of its Class A common stock. During the year ended December 31, 2022, the Company incurred $596,118 of costs, directly attributable to its proposed IPO, which have been deferred and recorded on the Company’s balance sheet. Such costs are deferred until the closing of the IPO, at which time the deferred costs will be offset against the proceeds from the IPO. In the event the IPO is unsuccessful or aborted, the costs will be expensed.

 

Property and Equipment

 

Property and equipment is stated at cost, less accumulated depreciation. The cost of office equipment is depreciated using the straight-line method based on a five-year life expectancy.

 

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated and any resulting gain or loss is reflected in operations.

 

Impairment of Long-Lived Assets

 

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

 

F-8
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Leases

 

The Company accounts for its leases under ASC 842 - Leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s balance sheets.

 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

 

Segment Reporting

 

ASC Topic 280, “Segment Reporting,” requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

 

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

 

The Company has two main forms of revenue – healthcare staffing revenue and medical communication revenue. The Company primarily provides healthcare staffing services to state mental health agencies, and its medical communication revenue is primarily comprised of contracted data analysis and medical writing services to state agencies and universities. Healthcare staffing and medical communication revenue are both accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s performance on an hourly or daily basis. The contracts stipulate bi-weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as the Company has the right to payment in an amount that corresponds directly with the value of performance completed to date. The medical communication contracts also contain certain additional performance obligations that contain single performance obligations that are satisfied when services are rendered. The Company may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. The Company recognizes revenue net of penalties. Revenue during the years ended December 31, 2022 and 2021 was comprised of $5,261,870 and $1,245,413 of healthcare staffing revenue and $355,836 and $164,563 of medical communication revenue, respectively.

 

F-9
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Cost of Services

 

The cost of services includes the wages and the related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service employees, while they work on contract assignments.

 

Significant Concentrations

 

The majority of accounts receivable and revenue contracts are between the Company and different divisions within the Indiana Family and Social Services Administration (“FSSA”). Most contracts require monthly payments as the projects progress. The Company generally does not require collateral or advance payments. For each of the years ended December 31, 2022 and 2021, FSSA accounted for approximately 98% of revenues, which was derived through a combination of divisions within the State of Indiana, including the FSSA - NeuroDiagnostic Institute, representing $5,214,128 and $1,245,413 of the Company’s healthcare staffing services, and the FSSA - Division of Mental Health and Addiction, which commenced on September 3, 2021, representing $306,000 and $132,000 of the Company’s medical communication services revenues for the years ended December 31, 2022 and 2021, respectively. In addition, the combined divisions of the FSSA represented 99% and 92% of accounts receivable at December 31, 2022 and 2021, respectively.

 

Stock-Based Compensation

 

The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

Basic and Diluted Loss Per Share

 

Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Weighted average shares for basic EPS are calculated based on weighted average Class B shares outstanding. Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, conversion of Class B shares and restricted stock. The number of potential common shares outstanding relating to stock options, warrants, conversion of Class B shares and restricted stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

Income Taxes

 

The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) ASC 740 Income Taxes (“ASC 740”), which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

 

F-10
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Uncertain Tax Positions

 

In accordance with ASC 740, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

 

Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

 

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

 

Recently Adopted Accounting Standards

 

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date.

 

In March 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-02, amendments related to Troubled Debt Restructurings (“TDRs”) for all entities after they adopt 2016-13 and amendments related to vintage disclosures that affect public business entities with investments in financing receivables, under Financial Instruments-Credit Losses (Topic 326). The amendments in the accounting guidance for TDRs by creditors eliminates the recognition and measurement guidance for TDRs in Subtopic 310-40. The effective dates for the amendments in this update are the same as the effective dates in update 2016-13. The amendments in this update should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the potential impact on adoption of this ASU on its financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company has elected the early adoption of ASU 2020-06 as of January 1, 2021. The Company does not expect that the adoption of this standard will have a material impact on its financial statements.

 

F-11
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. The amendments contained in ASU 2016-13 were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years for the Company. In November 2019, the FASB issued ASU No. 2019-10, which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined in Rule 12b-2 of the Exchange Act) to fiscal years beginning after December 15, 2022, including interim periods. Early adoption is permitted. The Company meets the definition of a smaller reporting company and is adopting the deferral period for ASU 2016-13. The guidance requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its financial statements but does not expect that the adoption of this standard will have a material impact on its financial statements.

 

There are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows.

 

Note 2 – Going Concern

 

As shown in the accompanying financial statements, as of December 31, 2022, the Company had a cash balance of $3,344, negative working capital of $119,602 and an accumulated deficit of $2,126,612 since inception. The Company is too early in its development stage to project revenue with a necessary level of certainty. Therefore, the Company may not have sufficient funds to sustain its operations for the next twelve months from the issuance date of these financial statements and may need to raise additional cash to fund its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that the Company will be successful in achieving these objectives.

 

The Company continues to pursue sources of additional capital through debt and financing transactions or arrangements, including equity financing or other means. The Company may not be successful in identifying suitable funding transactions in a sufficient time period or at all, and may not obtain the required capital by other means. If the Company does not succeed in raising additional capital, resources may not be sufficient to fund its business. The Company’s ability to scale production and distribution capabilities and further increase the value of its brands, is largely dependent on its success in raising additional capital. From January through April of 2023, the Company raised a total of $1,455,000 of capital from the sale of convertible notes.

 

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F-12
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 3 – Related Party Transactions

 

Advances from Related Party

 

During the year ended December 31, 2021, the Company’s operations were primarily financed by short term advances from Sahasra Technologies Corp., doing business as STLogics, which is an entity beneficially owned by Priya Prasad, the Company’s Chief Financial Officer and Chief Operating Officer, and STLHoldings Corp. which is an entity beneficially owned by the principal owners and management team of Syra. On various dates from December 30, 2020 through April 4, 2022, Sahasra Technologies Corp. made short term, non-interest bearing advances due upon demand to the Company, of which an aggregate $94,000 and $742,200 was loaned during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2021, the Company owed a total of $194,200 to Sahasra Technologies Corp., all of which was repaid in between February 1, 2022 and April 4, 2022.

 

Bonuses Awarded to Related Parties

 

During the year ended December 31, 2021, the Company awarded bonuses of $15,000 and $35,000 to the Company’s CEO and STHolding Corp., an entity owned by the Company’s founders, respectively. The bonuses were paid in 2022 and included in accounts payable, related parties at December 31, 2021.

 

Office Lease

 

The Company leases its current corporate headquarters under a three-year lease from STVentures, LLC (“STVentures”), an entity beneficially owned by the principal owners and the management team of Syra and their affiliates. The lease commenced on July 1, 2021, and provided for a base monthly rent of $5,332 over the three-year term of the lease, which was subsequently amended to $10,711, on May 1, 2022. A total of $107,013 and $31,992 of rent expense was included in selling, general and administrative expenses for the years ended December 31, 2022 and 2021, respectively, and a total of $5,950 was outstanding, as presented within accounts payable, related parties at December 31, 2021.

 

Information Technology (“IT”) Services

 

The Company incurred a total of $23,260 and $31,168 of expenses from RADcube, LLC, which is an entity beneficially owned by the principal owners and the management team of the Company and their affiliates, for outsourced IT services which have been presented within selling, general and administrative expenses in the statement of operations during the years ended December 31, 2022 and 2021, respectively. An unpaid balance of $3,200 and $29,668 was outstanding at December 31, 2022 and 2021, respectively, as presented within accounts payable, related parties.

 

Recruitment and Human Resource Services

 

The Company paid a total of $137,494 of recruitment and human resource services to NLogix, which is an entity beneficially owned by the principal owners and the management team of the Company and their affiliates, which have been presented within cost of sales in the statement of operations during the year ended December 31, 2022. No payments to NLogix were made for the year ended December 31, 2021.

 

Common Stock Issuances

 

The Company issued 100,000 shares of common stock on November 21, 2020 to its founders for services rendered in connection with the formation of the entity. In 2022, the Company’s board of directors approved a recapitalization of the Company’s equity, effected as of May 3, 2022, pursuant to which such shares were subsequently exchanged for 1,000,000 shares of convertible Class B common stock.

 

Capital Contributions

 

The Company received a capital contribution of $300 on September 22, 2021 from the Company’s Chief Executive Officer, Deepika Vuppalanchi.

 

F-13
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 4 – Basic and Diluted Earnings per Share

 

During the year ended December 31, 2022, the Company used the two-class method to compute net loss per common share because it had issued securities, other than a single class of common stock, that contractually entitled the holders to participate in dividends and earnings. These participating securities included the Company’s Class A common stock, which was authorized pursuant to the Company’s amendment to its Certificate of Incorporation on May 2, 2022, and convertible Class B common stock which are entitled to share equally, on a per share basis, in all assets of the Company of whatever kind available for distribution to the holders of common stock. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings.

 

Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses.

 

Diluted net income per common share is computed under the two-class method by using the weighted average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options, warrants, conversion of Class B shares and restricted stock. When net income is recognized, the Company analyzes the potential dilutive effect of any outstanding dilutive securities under the “if-converted” method and treasury-stock method when calculating diluted earnings per share in which it is assumed that the outstanding participating securities convert into common stock at the beginning of the period or date of issuance, if later. The Company reports the more dilutive of the approaches (two-class or “if-converted”) as its diluted net income per share during the period. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

As of December 31, 2021, the Company had only one class of outstanding securities, which required holders’ participation in dividends and earnings. Therefore, the Company was not required to calculate EPS under the two-class method. Basic net loss per share was computed by dividing net income by the weighted-average number of shares of convertible class B common stock outstanding during the period.

 

F-14
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 5 – Other Current Assets

 

Other current assets at December 31, 2022 and 2021 consisted of the following:

 

   December 31,   December 31, 
   2022   2021 
EDGE tax credit receivable (1)  $116,361   $21,504 
Federal and State income tax receivable   28,734    - 
Prepaid insurance   20,040    - 
Prepaid rent   10,711    - 
Prepaid licensing and office fees   16,456    - 
Retainers paid on professional services   30,000    - 
Total property and equipment, net  $222,302   $21,504 

 

(1) A refundable corporate income tax credit from the State of Indiana, called the Economic Development for a Growing Economy (“EDGE”) Tax Credit, which provides an incentive to businesses to support jobs creation, capital investment and to improve the standard of living for Indiana residents.

 

Note 6 – Property and Equipment

 

Property and equipment at December 31, 2022 and 2021 consisted of the following:

 

   December 31,   December 31, 
   2022   2021 
Office equipment  $127,549   $6,289 
Less: Accumulated depreciation   (15,056)   (207)
Total property and equipment, net  $112,493   $6,082 

 

Depreciation of property and equipment was $14,849 and $207 for the years ended December 31, 2022 and 2021, respectively.

 

Note 7 – Accrued Expenses

 

Accrued expenses at December 31, 2022 and 2021 consisted of the following:

 

   December 31,   December 31, 
   2022   2021 
Accrued payroll and taxes  $212,660   $47,442 
Accrued settlement   -    28,000 
Accrued retirement contributions   4,874    - 
Accrued franchise taxes   18,777    - 
Accrued interest   2,806    28,000 
Total accrued expenses  $239,117   $75,442 

 

The Company provides postretirement benefits pursuant to Internal Revenue Code of 1986, as amended, Section 401(k) for employees meeting specified criteria. The Company matches 100% of the employees’ contributions that are not in excess of 4% of the employee’s contributions. These matching contributions are fully vested and paid pursuant to the employees’ bi-weekly or semi-monthly pay periods. The Company does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future. For the year ended December 31, 2022, the Company incurred $28,534 of investment retirement account contribution expenses pursuant to the Company’s matching contributions, including $4,874, as accrued at December 31, 2022.

 

F-15
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 8 – Advances from Related Party

 

Advances from related party consists of the following at December 31, 2022 and 2021, respectively:

 

   December 31,   December 31, 
   2022   2021 
         
On various dates from December 30, 2020 through December 15, 2021, Sahasra Technologies Corp., doing business as STLogics, which is an entity beneficially owned by the principal owners and management team of Syra, made short term, non-interest bearing advances due upon demand to the Company, of which an aggregate $94,000 and $742,200 was loaned during the years ended December 31, 2022 and 2021, respectively. The Company repaid an aggregate $288,200 and $551,000 of principal on these advances during the years ended December 31, 2022 and 2021, respectively.  $-   $194,200 
Less: current portion   -    194,200 
Advances from related party, less current portion  $-   $- 

 

Note 9 – Line of Credit

 

On February 7, 2022, the Company entered into a business loan agreement (as amended, the “loan agreement”) with Citizens State Bank of New Castle pursuant to which it originally received a revolving line of credit of up to $1,500,000 which was subsequently amended to $800,000 (as amended, the “Revolving Line of Credit”). Pursuant to the terms of the Revolving Line of Credit, the outstanding balance shall not exceed 75% of the Company’s outstanding accounts receivable due from the State of Indiana aged more than 90 days together with all other accounts receivable aged less than 90 days. The Revolving Line of Credit was to terminate on December 31, 2022, unless extended pursuant to the terms thereof; however, the Company received extensions on the Revolving Line of Credit such that it will now terminate on August 3, 2023. In the event of a default, all commitments and obligations pursuant to the Revolving Line of Credit will terminate immediately and, at Citizens State Bank of New Castle’s request, all Indebtedness (as defined in the loan agreement) shall become immediately due and payable. Advances on the Revolving Line of Credit are pursuant to a promissory note dated February 7, 2022 which accrues interest at a variable rate of 1.5% above the national prime interest rate as quoted in the Wall Street Journal, not to be less than 4.75% per annum or more than 21% per annum or the maximum rate allowed by law. Interest shall increase by an 2.0% in the event of a default. Pursuant to the promissory note, the Company has been required to pay monthly payments of unpaid interest since March 7, 2022. The Company may prepay all or a portion of the amount due prior to the date upon which it is due without any penalty. In connection with the Revolving Line of Credit, the Company entered into a commercial security agreement with Citizens State Bank of New Castle dated February 7, 2022, pursuant to which it granted Citizens State Bank of New Castle a security interest in the Collateral (as defined in the commercial security agreement) to secure the Indebtedness (as defined in the commercial security agreement). During the year ended December 31, 2022, the Company received total advances of $2,819,275, and repaid advances of $2,068,724. In addition, the Company paid an underwriting fee of $14,076, which was amortized over the original life of the line of credit using the straight-line method, which approximated the effective interest method. The balance of the line of credit was $750,551 at December 31, 2022.

 

The Company recognized interest expense for the years ended December 31, 2022 and 2021, as follows:

 

   December 31,   December 31, 
   2022   2021 
         
Interest on line of credit  $14,397   $- 
Amortization of underwriting fee on line of credit   14,076    - 
Interest on credit card debt   60    - 
Total interest expense  $28,533   $- 

 

F-16
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 10 – Lease

 

The Company leases its current corporate headquarters under a three-year lease from STVentures, a related party. The lease, as amended on May 1, 2022 to expand the office space from 2,976 square feet to 5,978 square feet, commenced on July 1, 2021, and provides for a base monthly rent of $10,711, as increased from $5,332 per month, over the three-year term of the lease. The Company is occupying the space for executive and administrative offices. Rent expense was $107,013 and $31,992 for the years ended December 31, 2022 and 2021 respectively, which is included in other general and administrative expenses within the statements of operations.

 

The components of lease expense were as follows:

 

   For the Year Ended 
   December 31, 
   2022   2021 
Operating lease cost:          
Amortization of ROU asset  $95,564   $27,259 
Interest on lease liability   11,449    4,733 
Total operating lease cost  $107,013   $31,992 

 

Supplemental balance sheet information related to leases was as follows:

 

   December 31,   December 31, 
   2022   2021 
Operating lease:          
Operating lease assets  $184,288   $148,664 
           
Current portion of operating lease liability, related party  $121,089    56,920 
Noncurrent operating lease liability, related party   63,199    91,744 
Total operating lease liability  $184,288   $148,664 
           
Weighted average remaining lease term:          
Operating leases   1.5 years    2.5 years 
           
Weighted average discount rate:          
Operating lease   5.75%   5.75%

 

Supplemental cash flow and other information related to operating leases was as follows:

 

   For the Year Ended 
   December 31, 
   2022   2021 
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows used for operating leases  $107,013   $31,992 
           
Leased assets obtained in exchange for lease liabilities:          
Total operating lease liabilities  $131,187   $175,923 

 

Future minimum annual lease payments required under the operating lease and the present value of the net minimum lease payments are as follows at December 31, 2022:

 

For the Year  Minimum Lease 
Ended December 31:  Commitments 
2023  $128,527 
2024   64,263 
    192,790 
Amount representing interest  $(8,502)
Present value of net future minimum lease payments   184,288 
Less current portion   (121,089)
Operating lease liability, related party, long term  $63,199 

 

F-17
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 11 – Commitments and Contingencies

 

IPO Commitments

 

On July 18, 2022, the Company entered into an agreement with the representative of the underwriters with respect to the IPO providing for the payment of up to $160,000 of accountable expenses. In addition, the representative of the underwriters shall be entitled to cash commission equal to 7.5% of the gross proceeds of the IPO, a non-accountable expense equal to 1% of the gross proceeds of the IPO and warrants to purchase up to 10% of the securities sold in the IPO, contingent upon closing of the Company’s IPO.

 

Legal Contingencies

 

On June 28, 2022, the Company entered into a settlement agreement with a former employee pursuant to a wrongful termination lawsuit filed in the U.S. District Court, Southern District of Indiana in the amount of $28,000. The Company accrued the full amount of the settlement as of December 31, 2021, and the settlement was paid in July of 2022.

 

Note 12 – Stockholders’ Equity (Deficit)

 

Class A Common Stock

 

The Company has 100,000,000 authorized shares of $0.001 par value Class A common stock, and 4,282,500 shares were issued and outstanding as of December 31, 2022. No shares were issued and outstanding as of December 31, 2021.

 

Class A Common Stock Sales

 

In June and August 2022, the Company raised a total of $1,322,500 of capital from the sale of an aggregate of 1,322,500 shares of Class A common stock to a total of 23 accredited investors at a share price of $1.00 in a private placement.

 

During March 2022, the Company raised an aggregate of $1 million of capital from the sale of 2,000,000 shares of Class A common stock to a total of 22 accredited investors at a share price of $0.50 in a private placement.

 

Class A Common Stock Issued for Services

 

From February through May 2022, the Company awarded a total of 960,000 shares to six consultants for services provided. The shares were subsequently issued on August 3, 2022. The aggregate fair value of the shares was $510,000, based on recent sales of the Company’s Class A common stock to third parties.

 

Convertible Class B Common Stock

 

The Company has 5,000,000 authorized shares of $0.001 par value convertible Class B common stock, and had 1,000,000 shares issued and outstanding as of December 31, 2022 and 2021, as retrospectively applied, pursuant to the Company’s subsequent recapitalization in 2022 and effected as of May 3, 2022, whereby the founders exchanged their 100,000 founders shares for 1,000,000 shares of convertible Class B common stock.

 

Convertible Class B Common Stock Issuances

 

On November 21, 2020, the Company issued 100,000 shares of common stock to its founders for services rendered in connection with the formation of the entity. The aggregate fair value of the common stock was $100 based on par value of the Company’s common stock, as there was no immediate intrinsic value in the Company upon inception. In 2022, the Company’s board of directors approved a recapitalization of the Company’s equity, effected as of May 3, 2022, pursuant to which the equity was recapitalized with the exchange of the 100,000 shares of common stock for 1,000,000 shares of convertible Class B common stock, as retrospectively applied. Each share of convertible Class B common stock was convertible into 16.5 shares of Class A common stock, which was subsequently amended to be convertible into ten shares on of Class A common stock on October 4, 2022.

 

Amendment to Articles of Incorporation

 

On May 2, 2022, the Company filed an Amended and Restated Certificate of Incorporation to authorize the following:

 

  ● 100,000,000 shares of Class A common stock with a par value of $0.001 per share;
  ● 5,000,000 shares of convertible Class B common stock with a par value of $0.001 per share; and
  ● 1,000,000 shares of “blank check” preferred stock with a par value of $0.001 per share.

 

F-18
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

Liquidation rights: In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, the holders of Class A common stock and the holders of convertible Class B common stock shall be entitled to share equally, on a per share basis, in all assets of the Company of whatever kind available for distribution to the holders of common stock.

 

Voting: The holders of the Class A common stock and the holders of the convertible Class B common stock shall at all times vote together as one class on all matters, including the election of directors, submitted to a vote or for the consent of the stockholders of the Company. Each holder of shares of convertible Class B common stock shall be entitled to 16.5 votes for each share of convertible Class B common stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company. Each holder of shares of Class A common stock shall be entitled to one vote for each share of Class A common stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company.

 

Each share of convertible Class B common Stock was also convertible into 16.5 fully paid and nonassessable shares of Class A common stock. On October 6, 2022, the Company’s Amended and Restated Certificate of Incorporation was amended to change the conversion ratio from 16.5 shares to 10 shares of Class A common stock. The voting rights remain unchanged.

 

The voting powers, conversion features, if any, designations, preferences, limitations, restrictions and other rights of each series of preferred stock shall be prescribed by resolution of the Board of Directors at the time a specific series of preferred stock is designated. None of the preferred shares have been designated or issued to date.

 

Capital Contributions

 

On September 22, 2021, the Company received a capital contribution of $300 from the Company’s Chief Executive Officer, Deepika Vuppalanchi.

 

Note 13 – Common Stock Options

 

Omnibus Equity Incentive Plan

 

On April 11, 2022, the Company’s board of directors adopted, and the Company’s stockholders approved, the Syra Health Corp. 2022 Omnibus Equity Incentive Plan (“2022 Plan”). No more than 1,250,000 shares of the Company’s Class A common stock shall be issued pursuant to the exercise of incentive stock options and other securities under the 2022 Plan.

 

Class A Common Stock Option Awards

 

On various dates between July 1, 2022 and September 1, 2022, the Company granted options to purchase an aggregate 39,000 shares of the Company’s Class A common stock at an exercise price of $1.00 per share under the 2022 Plan, which represented the recent sales price of securities to third parties. These options will vest 25% on each anniversary until fully vested. The options had no intrinsic value. The aggregate estimated value using the Black-Scholes Pricing Model, based on an expected term of 6.25 years, a weighted average volatility rate of 93%, a weighted average risk-free interest rate of 3.03%, and a weighted average call option value of $0.7773, was $30,317. The options are being expensed over the vesting period, resulting in $2,910 of stock-based compensation expense during the year ended December 31, 2022. During the fourth quarter of 2022, a total of 11,000 options at a strike price of $1.00 per share were cancelled. As of December 31, 2022, a total of $19,613 of unamortized expenses are expected to be expensed over the vesting period. December 31, 2022.

 

F-19
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

The following is a summary of information about the Stock Options outstanding at December 31, 2022.

 

    Shares Underlying
Shares Underlying Options Outstanding   Options Exercisable
        Weighted            
    Shares   Average   Weighted   Shares  Weighted 
    Underlying   Remaining   Average   Underlying  Average 
Range of   Options   Contractual   Exercise   Options  Exercise 
Exercise Prices   Outstanding   Life   Price   Exercisable  Price 
$1.00    28,000    9.6 years   $1.00   None   N/A 

 

The following is a summary of activity of outstanding stock options:

 

       Weighted 
       Average 
   Number   Exercise 
   of Shares   Prices 
Balance, December 31, 2020   -   $- 
Options granted   -    - 
Balance, December 31, 2021   -    - 
Options granted   39,000    1.00 
Options cancelled   (11,000)   (1.00)
Balance, December 31, 2022   28,000   $1.00 
           
Exercisable, December 31, 2022   -   $- 

 

Note 14 - Income Taxes

 

For the period from November 20, 2020 (inception) through December 31, 2022, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2022, the Company had approximately $1,731,000 of federal net operating losses. Under the Tax Cuts and Jobs Act of 2017, the net operating loss carry forwards can be carried forward indefinitely, however the deductions are limited to 80% of taxable income.

 

The effective income tax rate for the years ended December 31, 2022 and 2021 consisted of the following:

 

   December 31,   December 31, 
   2022   2021 
Federal statutory income tax rate   21%   21%
State income taxes   3%   3%
Change in valuation allowance   (24)%   (24)%
Net effective income tax rate   -    - 

 

F-20
 

 

SYRA HEALTH CORP.

NOTES TO FINANCIAL STATEMENTS

 

The components of the Company’s deferred tax asset are as follows:

 

   December 31, 
   2022   2021 
Deferred tax assets:          
Net deferred tax assets before valuation allowance  $332,400   $6,400 
Less: Valuation allowance   (332,400)   (6,400)
Net deferred tax assets  $-   $- 

 

Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2022 and 2021, respectively.

 

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

 

Note 15 – Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued.

 

On various dates from January through April 2023, the Company entered into subscription agreements with accredited investors pursuant to which it issued convertible promissory notes in the aggregate principal amount of $1,455,000. The notes mature on various dates between July 10, 2024 and October 7, 2024, accrue interest at 2% per annum and may be prepaid by the Company at any time without any penalties. The holders may convert the principal amount of the notes together with accrued interest thereon at any time prior to the earlier of the maturity date and the effectiveness of the registration statement relating to the Company’s initial public offering at a conversion price of $5.00 per share. Upon the closing of the Next Equity Financing (as defined herein), the principal amount of the notes together with accrued interest thereon shall automatically convert into such number of shares of the Company’s Class A common stock determined by dividing (x) the outstanding principal balance and unpaid accrued interest of the notes on the date of conversion by (y) the price per share equal to the product of the price per Equity Security (as defined in the notes) sold in the Next Equity Financing multiplied by 80%. “Next Equity Financing” means an initial public offering by the Company of its Equity Securities pursuant to which such Equity Securities are listed on a national securities exchange. In addition, if prior to the maturity date of the notes, the notes remains outstanding, then in the event of a Corporate Transaction (as defined in the notes), the holder of each note may elect to convert the outstanding principal balance and unpaid accrued interest of each note, subject to the terms and conditions contained in the note, into Conversion Shares (as defined in the notes) immediately prior to the closing of such Corporate Transaction based upon a conversion price equal to the lesser of (i) the Corporate Transaction Price (as defined in the notes) or (ii) the quotient resulting from dividing (x) the Valuation Cap (as defined in the notes) by (y) the fully diluted capitalization immediately prior to the closing of the Corporate Transaction.

 

F-21
 

 

Shares

 

2,000,000 Units

 

Shares of Class A Common Stock and Warrants

 

Syra Health Corp.

 

Prospectus

 

KINGSWOOD

a division of Kingswood Capital Partners, LLC

 

 

, 2023

 

Until                         , 2023 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

 

 
 

 

PART II—INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13. Other Expenses of Issuance and Distribution

 

The following table sets forth all expenses, other than the underwriting discounts and commissions, payable by the registrant in connection with the sale of the securities being registered. All the amounts shown are estimates except the SEC registration fee and the FINRA filing fee.

 

   Amount to be paid 
SEC registration fee  $2,820 
FINRA filing fee   1,924 
The Nasdaq Capital Market initial listing fee   55,000 
Transfer agent and registrar fees   16,500 
Accounting fees and expenses   250,000 
Legal fees and expenses   400,000 
Printing and engraving expenses   5,000 
Miscellaneous   13,756 
Total  $745,000 

 

Item 14. Indemnification of Directors and Officers

 

Section 102 of the General Corporation Law of the State of Delaware (the “DGCL”) permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our Certificate of Incorporation provides that no director of the Company shall be personally liable to it or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.

 

Section 145 of the DGCL provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

 

II-1
 

 

Upon consummation of this offering, our Certificate of Incorporation and Bylaws will provide indemnification for our directors and officers to the fullest extent permitted by the DGCL. We will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Our Certificate of Incorporation and Bylaws will provide that we will indemnify any Indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.

 

We have entered into separate indemnification agreements with each of our current directors and executive officers. Each indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and our Certificate of Incorporation and Bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and for the reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our Certificate of Incorporation and Bylaws.

 

In addition, upon consummation of this offering, we intend to obtain a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

 

In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning of the Securities Act against certain liabilities.

 

Item 15. Recent Sales of Unregistered Securities

 

2023

 

From January to April 2023, the Company issued accredited investors convertible promissory notes in the aggregate principal amount of $1,455,000.

 

2022

 

In 2022, the Company’s board of directors approved a recapitalization of the Company’s equity, effected as of May 3, 2022, pursuant to which the Company issued an aggregate of 1,000,000 shares of its Class B common stock in exchange for 100,000 shares of common stock pursuant to the recapitalization of the Company’s equity.

 

In May 2022, the Company issued an aggregate of 2,000,000 shares of its Class A common stock at a price of $0.50 per share for aggregate gross proceeds of $1,000,000.

 

II-2
 

 

From July 2022 to September 2022, the Company issued options to purchase up to an aggregate of 39,000 shares of the Company’s Class A common stock at an exercise price of $1.00 per share.

 

In August 2022, the Company issued an aggregate of 1,322,500 shares of its Class A common stock at a price of $1.00 per share for aggregate gross proceeds of $1,322,500.

 

In May 2022, the Company issued an aggregate of 960,000 shares of Class A common stock for services.

 

2020

 

On November 21, 2020, the Company issued an aggregate of 100,000 shares of common stock for services.

 

The foregoing offers, sales and issuances were exempt from registration under Rule 701 and Section 3(a)(9) and 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.

 

Item 16. Exhibits and Financial Statement Schedules

 

EXHIBIT INDEX

 

Exhibit No.   Description
1.1**   Form of Underwriting Agreement
3.1*   Amended and Restated Certificate of Incorporation, currently in effect
3.2*   Amendment to Certificate of Incorporation dated October 6, 2022
3.3*   Bylaws, currently in effect
3.4*   Amended and Restated Bylaws, to be effective immediately after the closing of this offering
4.1*   Specimen Stock Certificate evidencing the shares of Class A common stock
4.2**   Form of Representative’s Warrant
4.3**  

Form of Warrant Agent Agreement by and between the Company and Pacific Stock Transfer Company (including the terms of the Warrant)

5.1**   Opinion of Sheppard, Mullin, Richter & Hampton, LLP
10.1*   Professional Services Contract dated as of May 4, 2021 by and between the Company and Indiana Family and Social Services Administration, NeuroDiagnostic Institute
10.2*   Amendment No. 1 to Professional Services Contract by and between the Company and Indiana Family and Social Services Administration, NeuroDiagnostic Institute
10.3*   Amendment No. 2 to Professional Services Contract by and between the Company and Indiana Family and Social Services Administration, NeuroDiagnostic Institute
10.4*   Form of Indemnification Agreement for Officers and Directors
10.5+*   Syra Health Corp. 2022 Omnibus Equity Incentive Plan
10.6+*   Employment Agreement by and between the Company and Deepika Vuppalanchi dated April 15, 2021
10.7+*   Amendment No. 1 to Employment Agreement by and between the Company and Deepika Vuppalanchi dated September 1, 2021
10.8+*   Amendment No. 2 to Employment Agreement by and between the Company and Deepika Vuppalanchi dated March 1, 2022
10.9+*   Amendment No. 3 to Employment Agreement by and between the Company and Deepika Vuppalanchi dated October 18, 2022
10.10*   Business Loan Agreement by and between the Company and Citizens State Bank of New Castle dated February 7, 2022
10.11*   Commercial Security Agreement by and between the Company and Citizens State Bank of New Castle dated February 7, 2022
10.12*   Promissory Note by and between the Company and Citizens State Bank of New Castle dated February 7, 2022
10.13*   Professional Services Contract dated as of September 3, 2021 by and between the Company and Indiana Family and Social Services Administration, Division of Mental Health and Addiction
10.14*   STVentures Lease Agreement dated July 1, 2021 by and between the Company and STVentures LLC
10.15*   Commercial Lease Addendum dated May 1, 2022 by and between the Company and STVentures LLC
10.16*†   Form of Subscription Agreement
10.17*   Form of Convertible Note
10.18*   Modification of Loan Agreement by and between the Company and Citizens State Bank of New Castle dated December 16, 2022
10.19*   Modification of Loan Agreement by and between the Company and Citizens State Bank of New Castle dated March 8, 2023
10.20+*   Employment Agreement by and between the Company and Sandeep Allam dated February 29, 2022
10.21+*   Amendment No. 1 to Employment Agreement by and between the Company and Sandeep Allam dated October 18, 2022
10.22+*   Employment Agreement by and between the Company and Priya Prasad dated February 29, 2022
10.23+*   Amendment No. 1 to Employment Agreement by and between the Company and Priya Prasad dated May 27, 2022
10.24+*   Amendment No. 2 to Employment Agreement by and between the Company and Priya Prasad dated October 18, 2022
10.25*   Amendment No. 1 to Professional Services Contract dated as of April 25, 2023 by and between the Company and Indiana Family and Social Services Administration, Division of Mental Health and Addiction
10.26**   Modification of Loan Agreement by and between the Company and Citizens State Bank of New Castle dated May 3, 2023
99.1*   Consent of Sherron Rogers, Director Nominee
99.2*   Consent of Andrew M. Dahlem, Director Nominee
99.3*   Consent of Vijayapal R. Reddy, Director Nominee
99.4*   Consent of Ketan Paranjape, Director Nominee
99.5*   Consent of Avutu Reddy, Director Nominee
23.1*   Consent of M&K CPAS, PLLC, independent registered public accounting firm
23.2**   Consent of Sheppard, Mullin, Richter & Hampton, LLP (included in Exhibit 5.1)
24.1   Power of Attorney (included on the signature page to this registration statement)
107*   Filing fee table

 

* Filed herewith.
** To be filed by amendment.
+ Indicates a management contract or any compensatory plan, contract or arrangement.
† Certain of the schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(10). The Company hereby undertakes to furnish supplementally a copy of all omitted schedules to the SEC upon its request.

 

II-3
 

 

Financial Statement Schedules

 

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

 

Item 17. Undertakings

 

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

 

b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Syra Health Corp. pursuant to the foregoing provisions, or otherwise, Syra Health Corp. has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Syra Health Corp. of expenses incurred or paid by a director, officer or controlling person of Syra Health Corp. in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Syra Health Corp. will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction, the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

(c) The undersigned hereby further undertakes that:

 

(1) For purposes of determining any liability under the Securities Act the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Syra Health Corp. pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

(2) For the purpose of determining any liability under the Securities Act each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-4
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Carmel, State of Indiana, on the 3rd day of May 2023.

 

  SYRA HEALTH CORP.
   
  By: /s/ Deepika Vuppalanchi
    Deepika Vuppalanchi
    Chief Executive Officer and Director

 

POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Deepika Vuppalanchi his/her true and lawful attorney-in-fact and agent with full power of substitution and re-substitution, for him/her and in his/her name, place and stead, in any and all capacities to sign any or all amendments (including, without limitation, post-effective amendments) to this Registration Statement, any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and any or all pre- or post-effective amendments thereto, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that said attorney-in-fact and agent, or any substitute or substitutes for her, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated below.

 

Signature   Title   Date
         
/s/ Deepika Vuppalanchi   Chief Executive Officer and Director   May 3, 2023
Deepika Vuppalanchi   (Principal Executive Officer)    
         
/s/ Sandeep Allam   President and Chairman   May 3, 2023
Sandeep Allam        
         
/s/ Priya Prasad        
Priya Prasad   Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer)   May 3, 2023

 

II-5

 

 

 

 

 

 

 

Exhibit 3.1

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 

 

 

 

 
 

 

 

 

 

 

Exhibit 3.2

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 

 

 

Exhibit 3.3

 

BYLAWS

of

SYRA HEALTH CORP.

 

As Adopted April 11, 2022

 

ARTICLE I - CORPORATE OFFICES

 

1.1 REGISTERED OFFICE.

 

The registered office of Syra Health Corp. (the “Corporation”), shall be fixed in the Corporation’s certificate of incorporation, as the same may be amended from time to time (the “certificate of incorporation”).

 

1.2 OTHER OFFICES.

 

The Corporation’s board of directors (the “Board”) may at any time establish other offices at any place or places where the Corporation is qualified to do business.

 

ARTICLE II - MEETINGS OF STOCKHOLDERS

 

2.1 PLACE OF MEETINGS.

 

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

 

2.2 ANNUAL MEETING.

 

The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 may be transacted.

 

2.3 SPECIAL MEETING.

 

A special meeting of the stockholders may be called at any time by a majority of the entire Board, the Chief Executive Officer, or the Chairman of the Board, but such special meetings may not be called by any other person or persons.

 

No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

 

 

 

 

2.4 ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING.

 

(i) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in a notice of meeting given by or at the direction of the Board, (b) if not specified in a notice of meeting, otherwise brought before the meeting by or at the direction of the Board or the chairperson of the Board, or (c) otherwise properly brought before the meeting by a stockholder present in person who (A)(1) was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 in all applicable respects, or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person calling the meeting pursuant to Section 2.3 of these bylaws, and stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be, if such proposing stockholder is (x) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these bylaws, and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5 of these bylaws.

 

(ii) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (a) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (b) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered, not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which a public announcement of the date of such meeting is first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.

 

(iii) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:

 

(a) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

 

 

 

 

(b) As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule l3d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule l3d-1(b)(1) under the Exchange Act solely by reason of Rule l3d-1(b)(1) (ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C)(x) if such Proposing Person is (i) a general or limited partnership, syndicate or other group, the identity of each general partner and each person who functions as a general partner of the general or limited partnership, each member of the syndicate or group and each person controlling the general partner or member, (ii) a corporation or a limited liability company, the identity of each officer and each person who functions as an officer of the corporation or limited liability company, each person controlling the corporation or limited liability company and each officer, director, general partner and person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (iii) a trust, any trustee of such trust (each such person or persons set forth in the preceding clauses (i), (ii) and (iii), a “Responsible Person”), any fiduciary duties owed by such Responsible Person to the equity holders or other beneficiaries of such Proposing Person and any material interests or relationships of such Responsible Person that are not shared generally by other record or beneficial holders of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, and (y) if such Proposing Person is a natural person, any material interests or relationships of such natural person that are not shared generally by other record or beneficial holders of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, (D) any material shares or any Synthetic Equity Position in any principal competitor of the Corporation in any principal industry of the Corporation held by such Proposing Persons, (E) a summary of any material discussions regarding the business proposed to be brought before the meeting (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder of the shares of any class or series of the Corporation (including their names), (F) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (G) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand, (H) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement) and (I) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (I) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and

 

(c) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment), (C) a reasonably detailed description of all agreements, arrangements and understandings between or among any of the Proposing Persons or between or among any Proposing Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this Section 2.4(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.

 

(iv) For purposes of this Section 2.4, the term “Proposing Person” shall mean (a) the stockholder providing the notice of business proposed to be brought before an annual meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made and (c) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation or associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner.

 

 

 

 

(v) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

 

(vi) Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

 

(vii) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders, other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule l4a-8 under the Exchange Act.

 

(viii) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

 

2.5 ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS.

 

(i) Nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (a) by or at the direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (b) by a stockholder present in person (A) who was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with this Section 2.5 as to such notice and nomination. The foregoing clause (b) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting or special meeting. For purposes of this Section 2.5, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such stockholder, appear at such meeting. A “qualified representative” of such proposing stockholder shall be, if such proposing stockholder is (x) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust.

 

 

 

 

(ii) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (a) provide Timely Notice (as defined in Section 2.4(ii) of these bylaws) thereof in writing and in proper form to the Secretary of the Corporation, (b) provide the information with respect to such stockholder and its proposed nominee as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (a) provide timely notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (b) provide the information with respect to such stockholder and its proposed nominee as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the 90th day prior to such special meeting or, if later, the 10th day following the day on which public disclosure (as defined in Section 2.4(viii) of these bylaws) of the date of such special meeting was first made. In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

 

(iii) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:

 

(a) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a) of these bylaws) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(a);

 

(b) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(iii)(b) shall be made with respect to the election of directors at the meeting);

 

(c) As to each person whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such proposed nominee were a Nominating Person, (B) all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each proposed nominee or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant, and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(vi); and

 

(d) The Corporation may require any proposed nominee to furnish such other information (A) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation in accordance with the Corporation’s Corporate Governance Guidelines or (B) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed nominee.

 

(iv) For purposes of this Section 2.5, the term “Nominating Person” shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made and (c) any associate of such stockholder or beneficial owner or any other participant in such solicitation.

 

(v) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as often (10) business days prior to the meeting or any adjournment or postponement thereof).

 

 

 

 

(vi) To be eligible to be a nominee for election as a director of the Corporation at an annual or special meeting, the proposed nominee must be nominated in the manner prescribed in Section 2.5 and must deliver (in accordance with the time period prescribed for delivery in a notice to such proposed nominee given by or on behalf of the Board), to the Secretary at the principal executive offices of the Corporation, (a) a completed written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (b) a written representation and agreement (in form provided by the Corporation) that such proposed nominee (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director and (C) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person’s term in office as a director (and, if requested by any proposed nominee, the Secretary of the Corporation shall provide to such proposed nominee all such policies and guidelines then in effect).

 

(vii) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

 

(viii) No proposed nominee shall be eligible for nomination as a director of the Corporation unless such proposed nominee and the Nominating Person seeking to place such proposed nominee’s name in nomination have complied with this Section 2.5, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the proposed nominee in question (but in the case of any form of ballot listing other qualified nominees, only the ballots case for the nominee in question) shall be void and of no force or effect.

 

2.6 NOTICE OF STOCKHOLDERS’ MEETINGS.

 

Unless otherwise provided by law, the certificate of incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with either Section 2.7 or Section 8.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

 

2.7 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

 

Notice of any meeting of stockholders shall be deemed given:

 

(i) if mailed, when deposited in the U.S. mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records; or

 

(ii) if electronically transmitted as provided in Section 8.1 of these bylaws.

 

 

 

 

An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

2.8 QUORUM.

 

Unless otherwise provided by law, the certificate of incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

 

2.9 ADJOURNED MEETING; NOTICE.

 

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

2.10 CONDUCT OF BUSINESS.

 

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.

 

2.11 VOTING.

 

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.13 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

 

Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.

 

At all duly called or convened meetings of stockholders, at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the certificate of incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, all other elections and questions presented to the stockholders at a duly called or convened meeting, at which a quorum is present, shall be decided by the majority of the votes cast affirmatively or negatively (excluding abstentions and broker non-votes) and shall be valid and binding upon the Corporation.

 

2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

 

Subject to the rights of the holders of the shares of any series of preferred stock or any other class of stock or series thereof having a preference over the common stock as to dividends or upon liquidation, unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of stockholders of the Corporation may be effected by a consent in writing by such stockholders.

 

 

 

 

2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.

 

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other such action.

 

If the Board does not so fix a record date:

 

(i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

 

(ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

 

2.14 PROXIES.

 

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of a telegram, cablegram or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram or other means of electronic transmission was authorized by the stockholder.

 

2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE.

 

The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

 

 

 

 

2.16 INSPECTORS OF ELECTION.

 

Before any meeting of stockholders, the Board shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

 

Such inspectors shall:

 

(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

 

(ii) receive votes or ballots;

 

(iii) hear and determine all challenges and questions in any way arising in connection with the right to vote;

 

(iv) count and tabulate all votes;

 

(v) determine when the polls shall close;

 

(vi) determine the result; and

 

(vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

 

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

 

ARTICLE III - DIRECTORS

 

3.1 POWERS.

 

Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.

 

3.2 NUMBER OF DIRECTORS.

 

The authorized number of directors shall be determined from time to time by resolution of the majority of incumbent directors, provided the Board shall consist of at least one (1) member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

 

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

 

Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.

 

3.4 RESIGNATION AND VACANCIES.

 

Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

 

 

 

 

Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors shall, unless the Board determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the Board shall be deemed to exist under these bylaws in the case of the death, removal or resignation of any director.

 

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

 

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.

 

3.6 REGULAR MEETINGS.

 

Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.

 

3.7 SPECIAL MEETINGS; NOTICE.

 

Special meetings of the Board for any purpose or purposes may be called at any time by a majority of the entire Board, the Chief Executive Officer, or the Chairman of the Board. Notice of the time and place of special meetings shall be:

 

(i) delivered personally by hand, by courier or by telephone;

 

(ii) sent by United States first-class mail, postage prepaid;

 

(iii) sent by facsimile; or

 

(iv) sent by electronic mail,

 

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.

 

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

 

3.8 QUORUM.

 

At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

 

 

 

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

 

3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

3.10 FEES AND COMPENSATION OF DIRECTORS.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.

 

3.11 REMOVAL OF DIRECTORS.

 

Except as otherwise provided by the DGCL, the Board of Directors or any individual director may be removed from office only for cause at a meeting of stockholders called for that purpose, by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors, voting together as a single class.

 

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

 

ARTICLE IV - COMMITTEES

 

4.1 COMMITTEES OF DIRECTORS.

 

The Board may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.

 

4.2 COMMITTEE MINUTES.

 

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

 

4.3 MEETINGS AND ACTION OF COMMITTEES.

 

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

 

(i) Section 3.5 (place of meetings; meetings by telephone);

 

 

 

 

(ii) Section 3.6 (regular meetings);

 

(iii) Section 3.7 (special meetings; notice);

 

(iv) Section 3.8 (quorum);

 

(v) Section 3.9 (board action by written consent without a meeting); and

 

(vi) Section 7.12 (waiver of notice),

 

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:

 

(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

 

(ii) special meetings of committees may also be called by resolution of the Board; and

 

(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

 

ARTICLE V - OFFICERS

 

5.1 OFFICERS.

 

The officers of the Corporation shall be a president and a secretary. The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief executive officer, a chief financial officer or treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

 

5.2 APPOINTMENT OF OFFICERS.

 

The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

 

5.3 SUBORDINATE OFFICERS.

 

The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

 

5.4 REMOVAL AND RESIGNATION OF OFFICERS.

 

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

 

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

 

 

 

 

5.5 VACANCIES IN OFFICES.

 

Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.2.

 

5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

 

The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of the Corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

 

5.7 AUTHORITY AND DUTIES OF OFFICERS.

 

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

 

ARTICLE VI - RECORDS AND REPORTS

 

6.1 MAINTENANCE AND INSPECTION OF RECORDS.

 

The Corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records.

 

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal executive office.

 

6.2 INSPECTION BY DIRECTORS.

 

Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

 

ARTICLE VII - GENERAL MATTERS

 

7.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

 

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

 

 

 

7.2 STOCK CERTIFICATES; PARTLY PAID SHARES.

 

The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the certificate of incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairperson or vice-chairperson of the Board, or the president or vice-president, or the Chief Executive Officer and by the treasurer or an assistant treasurer, or the Chief Financial Officer or the secretary or an assistant secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

 

7.3 SPECIAL DESIGNATION ON CERTIFICATES.

 

If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

7.4 LOST CERTIFICATES.

 

Except as provided in this Section 7.4, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

7.5 CONSTRUCTION; DEFINITIONS.

 

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

 

7.6 DIVIDENDS.

 

The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

 

 

 

 

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

 

7.7 FISCAL YEAR

 

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

 

7.8 SEAL.

 

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

7.9 TRANSFER OF STOCK.

 

Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.

 

7.10 STOCK TRANSFER AGREEMENTS.

 

The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

 

7.11 REGISTERED STOCKHOLDERS.

 

The Corporation:

 

(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

 

(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

 

(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

 

7.12 WAIVER OF NOTICE.

 

Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

 

 

 

 

ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION

 

8.1 NOTICE BY ELECTRONIC TRANSMISSION.

 

Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if:

 

(i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and

 

(ii) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.

 

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

Any notice given pursuant to the preceding paragraph shall be deemed given:

 

(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

 

(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

 

(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

 

(iv) if by any other form of electronic transmission, when directed to the stockholder.

 

An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

8.2 DEFINITION OF ELECTRONIC TRANSMISSION.

 

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

ARTICLE IX - INDEMNIFICATION

 

9.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the proceeding was authorized in the specific case by the Board.

 

 

 

 

The Corporation shall indemnify any Indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.

 

9.2 INDEMNIFICATION OF OTHERS.

 

The Corporation shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such proceeding. The Board shall have discretion to indemnify our other officers and employees when determined appropriate by the Board.

 

9.3 PREPAYMENT OF EXPENSES.

 

The Corporation shall, to the fullest extent not prohibited by applicable law, pay the expenses (including attorneys’ fees) incurred by any officer or director of the Corporation, and shall pay the expenses incurred by any employee or agent of the Corporation, in defending any proceeding in advance of its final disposition; provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.

 

9.4 DETERMINATION; CLAIM.

 

If a claim for indemnification (following the final disposition of such proceeding) or advancement of expenses under this Article IX is not paid in full within sixty (60) days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

 

 

 

 

9.5 NON-EXCLUSIVITY OF RIGHTS.

 

The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

9.6 INSURANCE.

 

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.

 

9.7 OTHER INDEMNIFICATION.

 

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

 

9.8 CONTINUATION OF INDEMNIFICATION.

 

The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

 

9.9 AMENDMENT OR REPEAL.

 

The provisions of this Article IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.

 

ARTICLE X - AMENDMENTS

 

Subject to the limitations set forth in Section 9.9 of these bylaws or the provisions of the certificate of incorporation, the Board is expressly authorized to adopt, amend or repeal the bylaws of the Corporation. Any adoption, amendment or repeal of the bylaws of the Corporation by the Board shall require the approval of a majority of the authorized number of directors. The stockholders also shall have power to alter or repeal any bylaws of the Corporation, whether adopted by them or otherwise, at any annual or special meeting of stockholders, provided that notice of such proposed adoption, amendment or repeal is given in the notice of such meeting of stockholders.

 

 

 

 

 

Exhibit 3.4

 

AMENDED AND RESTATED

BYLAWS

of

SYRA HEALTH CORP.

 

As Adopted [         ]

 

ARTICLE I - CORPORATE OFFICES

 

1.1 REGISTERED OFFICE.

 

The registered office of Syra Health Corp. (the “Corporation”), shall be fixed in the Corporation’s certificate of incorporation, as the same may be amended from time to time (the “certificate of incorporation”).

 

1.2 OTHER OFFICES.

 

The Corporation’s board of directors (the “Board”) may at any time establish other offices at any place or places where the Corporation is qualified to do business.

 

ARTICLE II - MEETINGS OF STOCKHOLDERS

 

2.1 PLACE OF MEETINGS.

 

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

 

2.2 ANNUAL MEETING.

 

The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 may be transacted.

 

2.3 SPECIAL MEETING.

 

A special meeting of the stockholders may be called at any time by a majority of the entire Board, the Chief Executive Officer, or the Chairman of the Board, but such special meetings may not be called by any other person or persons.

 

No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

 

 

 

 

2.4 ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING.

 

(i) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in a notice of meeting given by or at the direction of the Board, (b) if not specified in a notice of meeting, otherwise brought before the meeting by or at the direction of the Board or the chairperson of the Board, or (c) otherwise properly brought before the meeting by a stockholder present in person who (A)(1) was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 in all applicable respects, or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person calling the meeting pursuant to Section 2.3 of these bylaws, and stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be, if such proposing stockholder is (x) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these bylaws, and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5 of these bylaws.

 

(ii) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (a) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (b) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered, not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which a public announcement of the date of such meeting is first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.

 

(iii) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:

 

(a) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

 

 

 

 

(b) As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule l3d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule l3d-1(b)(1) under the Exchange Act solely by reason of Rule l3d-1(b)(1) (ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C)(x) if such Proposing Person is (i) a general or limited partnership, syndicate or other group, the identity of each general partner and each person who functions as a general partner of the general or limited partnership, each member of the syndicate or group and each person controlling the general partner or member, (ii) a corporation or a limited liability company, the identity of each officer and each person who functions as an officer of the corporation or limited liability company, each person controlling the corporation or limited liability company and each officer, director, general partner and person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (iii) a trust, any trustee of such trust (each such person or persons set forth in the preceding clauses (i), (ii) and (iii), a “Responsible Person”), any fiduciary duties owed by such Responsible Person to the equity holders or other beneficiaries of such Proposing Person and any material interests or relationships of such Responsible Person that are not shared generally by other record or beneficial holders of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, and (y) if such Proposing Person is a natural person, any material interests or relationships of such natural person that are not shared generally by other record or beneficial holders of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, (D) any material shares or any Synthetic Equity Position in any principal competitor of the Corporation in any principal industry of the Corporation held by such Proposing Persons, (E) a summary of any material discussions regarding the business proposed to be brought before the meeting (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder of the shares of any class or series of the Corporation (including their names), (F) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (G) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand, (H) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement) and (I) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (I) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and

 

(c) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment), (C) a reasonably detailed description of all agreements, arrangements and understandings between or among any of the Proposing Persons or between or among any Proposing Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this Section 2.4(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.

 

 

 

 

(iv) For purposes of this Section 2.4, the term “Proposing Person” shall mean (a) the stockholder providing the notice of business proposed to be brought before an annual meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made and (c) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation or associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner.

 

(v) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

 

(vi) Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

 

(vii) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders, other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule l4a-8 under the Exchange Act.

 

(viii) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

 

2.5 ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS.

 

(i) Nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (a) by or at the direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (b) by a stockholder present in person (A) who was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with this Section 2.5 as to such notice and nomination. The foregoing clause (b) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting or special meeting. For purposes of this Section 2.5, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such stockholder, appear at such meeting. A “qualified representative” of such proposing stockholder shall be, if such proposing stockholder is (x) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust.

 

 

 

 

(ii) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (a) provide Timely Notice (as defined in Section 2.4(ii) of these bylaws) thereof in writing and in proper form to the Secretary of the Corporation, (b) provide the information with respect to such stockholder and its proposed nominee as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (a) provide timely notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (b) provide the information with respect to such stockholder and its proposed nominee as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the 90th day prior to such special meeting or, if later, the 10th day following the day on which public disclosure (as defined in Section 2.4(viii) of these bylaws) of the date of such special meeting was first made. In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

 

(iii) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:

 

(a) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a) of these bylaws) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(a);

 

(b) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(iii)(b) shall be made with respect to the election of directors at the meeting);

 

(c) As to each person whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such proposed nominee were a Nominating Person, (B) all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each proposed nominee or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant, and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(vi); and

 

(d) The Corporation may require any proposed nominee to furnish such other information (A) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation in accordance with the Corporation’s Corporate Governance Guidelines or (B) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed nominee.

 

(iv) For purposes of this Section 2.5, the term “Nominating Person” shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made and (c) any associate of such stockholder or beneficial owner or any other participant in such solicitation.

 

(v) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as often (10) business days prior to the meeting or any adjournment or postponement thereof).

 

 

 

 

(vi) To be eligible to be a nominee for election as a director of the Corporation at an annual or special meeting, the proposed nominee must be nominated in the manner prescribed in Section 2.5 and must deliver (in accordance with the time period prescribed for delivery in a notice to such proposed nominee given by or on behalf of the Board), to the Secretary at the principal executive offices of the Corporation, (a) a completed written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (b) a written representation and agreement (in form provided by the Corporation) that such proposed nominee (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director and (C) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person’s term in office as a director (and, if requested by any proposed nominee, the Secretary of the Corporation shall provide to such proposed nominee all such policies and guidelines then in effect).

 

(vii) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

 

(viii) No proposed nominee shall be eligible for nomination as a director of the Corporation unless such proposed nominee and the Nominating Person seeking to place such proposed nominee’s name in nomination have complied with this Section 2.5, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the proposed nominee in question (but in the case of any form of ballot listing other qualified nominees, only the ballots case for the nominee in question) shall be void and of no force or effect.

 

2.6 NOTICE OF STOCKHOLDERS’ MEETINGS.

 

Unless otherwise provided by law, the certificate of incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with either Section 2.7 or Section 8.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

 

2.7 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

 

Notice of any meeting of stockholders shall be deemed given:

 

(i) if mailed, when deposited in the U.S. mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records; or

 

(ii) if electronically transmitted as provided in Section 8.1 of these bylaws.

 

An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

 

 

 

2.8 QUORUM.

 

Unless otherwise provided by law, the certificate of incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

 

2.9 ADJOURNED MEETING; NOTICE.

 

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

2.10 CONDUCT OF BUSINESS.

 

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.

 

2.11 VOTING.

 

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.13 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

 

Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.

 

At all duly called or convened meetings of stockholders, at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the certificate of incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, all other elections and questions presented to the stockholders at a duly called or convened meeting, at which a quorum is present, shall be decided by the majority of the votes cast affirmatively or negatively (excluding abstentions and broker non-votes) and shall be valid and binding upon the Corporation.

 

2.12 STOCKHOLDER ACTION.

 

Subject to the rights of the holders of the shares of any series of preferred stock or any other class of stock or series thereof having a preference over the common stock as to dividends or upon liquidation, unless otherwise restricted by the certificate of incorporation or these bylaws, at any such time that the Corporation has outstanding shares of Class B Common Stock, any action required or permitted to be taken at any meeting of stockholders of the Corporation may be effected by a consent in writing by such stockholders. Notwithstanding the foregoing, if the Corporation does not have any shares of Class B Common Stock outstanding, unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

 

 

 

 

2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.

 

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other such action.

 

If the Board does not so fix a record date:

 

(i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

 

(ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

 

2.14 PROXIES.

 

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of a telegram, cablegram or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram or other means of electronic transmission was authorized by the stockholder.

 

2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE.

 

The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

 

 

 

 

2.16 INSPECTORS OF ELECTION.

 

Before any meeting of stockholders, the Board shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

 

Such inspectors shall:

 

(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

 

(ii) receive votes or ballots;

 

(iii) hear and determine all challenges and questions in any way arising in connection with the right to vote;

 

(iv) count and tabulate all votes;

 

(v) determine when the polls shall close;

 

(vi) determine the result; and

 

(vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

 

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

 

ARTICLE III - DIRECTORS

 

3.1 POWERS.

 

Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.

 

3.2 NUMBER OF DIRECTORS.

 

The authorized number of directors shall be determined from time to time by resolution of the majority of incumbent directors, provided the Board shall consist of at least one (1) member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

 

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

 

Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.

 

 

 

 

3.4 RESIGNATION AND VACANCIES.

 

Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

 

Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors shall, unless the Board determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the Board shall be deemed to exist under these bylaws in the case of the death, removal or resignation of any director.

 

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

 

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.

 

3.6 REGULAR MEETINGS.

 

Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.

 

3.7 SPECIAL MEETINGS; NOTICE.

 

Special meetings of the Board for any purpose or purposes may be called at any time by a majority of the entire Board, the Chief Executive Officer, or the Chairman of the Board. Notice of the time and place of special meetings shall be:

 

(i) delivered personally by hand, by courier or by telephone;

 

(ii) sent by United States first-class mail, postage prepaid;

 

(iii) sent by facsimile; or

 

(iv) sent by electronic mail,

 

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.

 

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

 

 

 

 

3.8 QUORUM.

 

At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

 

3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

3.10 FEES AND COMPENSATION OF DIRECTORS.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.

 

3.11 REMOVAL OF DIRECTORS.

 

Except as otherwise provided by the DGCL, the Board of Directors or any individual director may be removed from office only for cause at a meeting of stockholders called for that purpose, by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors, voting together as a single class.

 

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

 

ARTICLE IV - COMMITTEES

 

4.1 COMMITTEES OF DIRECTORS.

 

The Board may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.

 

4.2 COMMITTEE MINUTES.

 

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

 

 

 

 

4.3 MEETINGS AND ACTION OF COMMITTEES.

 

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

 

(i) Section 3.5 (place of meetings; meetings by telephone);

 

(ii) Section 3.6 (regular meetings);

 

(iii) Section 3.7 (special meetings; notice);

 

(iv) Section 3.8 (quorum);

 

(v) Section 3.9 (board action by written consent without a meeting); and

 

(vi) Section 7.12 (waiver of notice),

 

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:

 

(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

 

(ii) special meetings of committees may also be called by resolution of the Board; and

 

(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

 

ARTICLE V - OFFICERS

 

5.1 OFFICERS.

 

The officers of the Corporation shall be a president and a secretary. The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief executive officer, a chief financial officer or treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

 

5.2 APPOINTMENT OF OFFICERS.

 

The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.

 

5.3 SUBORDINATE OFFICERS.

 

The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

 

5.4 REMOVAL AND RESIGNATION OF OFFICERS.

 

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

 

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

 

 

 

 

5.5 VACANCIES IN OFFICES.

 

Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.2.

 

5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

 

The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of the Corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

 

5.7 AUTHORITY AND DUTIES OF OFFICERS.

 

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

 

ARTICLE VI - RECORDS AND REPORTS

 

6.1 MAINTENANCE AND INSPECTION OF RECORDS.

 

The Corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records.

 

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal executive office.

 

6.2 INSPECTION BY DIRECTORS.

 

Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

 

 

 

 

ARTICLE VII - GENERAL MATTERS

 

7.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

 

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

7.2 STOCK CERTIFICATES; PARTLY PAID SHARES.

 

The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the certificate of incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairperson or vice-chairperson of the Board, or the president or vice-president, or the Chief Executive Officer and by the treasurer or an assistant treasurer, or the Chief Financial Officer or the secretary or an assistant secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

 

7.3 SPECIAL DESIGNATION ON CERTIFICATES.

 

If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

7.4 LOST CERTIFICATES.

 

Except as provided in this Section 7.4, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

7.5 CONSTRUCTION; DEFINITIONS.

 

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

 

 

 

 

7.6 DIVIDENDS.

 

The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

 

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

 

7.7 FISCAL YEAR

 

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

 

7.8 SEAL.

 

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

7.9 TRANSFER OF STOCK.

 

Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.

 

7.10 STOCK TRANSFER AGREEMENTS.

 

The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

 

7.11 REGISTERED STOCKHOLDERS.

 

The Corporation:

 

(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

 

(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

 

(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

 

 

 

 

7.12 WAIVER OF NOTICE.

 

Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

 

ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION

 

8.1 NOTICE BY ELECTRONIC TRANSMISSION.

 

Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if:

 

(i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and

 

(ii) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.

 

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

Any notice given pursuant to the preceding paragraph shall be deemed given:

 

(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

 

(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

 

(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

 

(iv) if by any other form of electronic transmission, when directed to the stockholder.

 

An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

8.2 DEFINITION OF ELECTRONIC TRANSMISSION.

 

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

 

 

 

ARTICLE IX - INDEMNIFICATION

 

9.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the proceeding was authorized in the specific case by the Board.

 

The Corporation shall indemnify any Indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.

 

9.2 INDEMNIFICATION OF OTHERS.

 

The Corporation shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such proceeding. The Board shall have discretion to indemnify our other officers and employees when determined appropriate by the Board.

 

9.3 PREPAYMENT OF EXPENSES.

 

The Corporation shall, to the fullest extent not prohibited by applicable law, pay the expenses (including attorneys’ fees) incurred by any officer or director of the Corporation, and shall pay the expenses incurred by any employee or agent of the Corporation, in defending any proceeding in advance of its final disposition; provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.

 

9.4 DETERMINATION; CLAIM.

 

If a claim for indemnification (following the final disposition of such proceeding) or advancement of expenses under this Article IX is not paid in full within sixty (60) days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

 

 

 

 

9.5 NON-EXCLUSIVITY OF RIGHTS.

 

The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

 

9.6 INSURANCE.

 

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.

 

9.7 OTHER INDEMNIFICATION.

 

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

 

9.8 CONTINUATION OF INDEMNIFICATION.

 

The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

 

9.9 AMENDMENT OR REPEAL.

 

The provisions of this Article IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.

 

ARTICLE X - AMENDMENTS

 

Subject to the limitations set forth in Section 9.9 of these bylaws or the provisions of the certificate of incorporation, the Board is expressly authorized to adopt, amend or repeal the bylaws of the Corporation. Any adoption, amendment or repeal of the bylaws of the Corporation by the Board shall require the approval of a majority of the authorized number of directors. The stockholders also shall have power to alter or repeal any bylaws of the Corporation, whether adopted by them or otherwise, at any annual or special meeting of stockholders, provided that notice of such proposed adoption, amendment or repeal is given in the notice of such meeting of stockholders.

 

 

 

 

Exhibit 4.1

 

 

 
 

 

 

 

 

 

 

Exhibit 10.1

 

PROFESSIONAL SERVICES CONTRACT
Contract #0000000000000000000055827

 

This Contract (“Contract”), entered into by and between Indiana Family and Social Services Administration, NeuroDiagnostic Institute (the “State”) and SYRA HEALTH CORP (the “Contractor”), is executed pursuant to the terms and conditions set forth herein. In consideration of those mutual undertakings and covenants, the parties agree as follows:

 

1.Duties of Contractor.

 

The Contractor shall provide medical staffing services to the NeuroDiagnostic Institute. A detailed list of duties is set forth in Exhibit 1, attached hereto and incorporated herein.

 

2.Consideration.

 

The Contractor will be paid at the rates described on Exhibit 1, which is attached hereto and incorporated herein, for performing the duties set forth above. Total remuneration under this Contract shall not exceed $14,667,934.89.

 

3.Term.

 

This Contract shall be effective for a period of 3 years, 8 months, and 29 days. It shall commence on May 03, 2021 and shall remain in effect through January 31, 2025.

 

4.Access to Records.

 

The Contractor and its subcontractors, if any, shall maintain all books, documents, papers, accounting records, and other evidence pertaining to all costs incurred under this Contract. They shall make such materials available at their respective offices at all reasonable times during this Contract, and for three (3) years from the date of final payment under this Contract, for inspection by the State or its authorized designees. Copies shall be furnished at no cost to the State if requested.

 

5.Assignment; Successors.

 

A.The Contractor binds its successors and assignees to all the terms and conditions of this Contract. The Contractor may assign its right to receive payments to such third parties as the Contractor may desire without the prior written consent of the State, provided that the Contractor gives written notice (including evidence of such assignment) to the State thirty (30) days in advance of any payment so assigned. The assignment shall cover all unpaid amounts under this Contract and shall not be made to more than one party.

 

B.The Contractor shall not assign or subcontract the whole or any part of this Contract without the State’s prior written consent. Additionally, the Contractor shall provide prompt written notice to the State of any change in the Contractor’s legal name or legal status so that the changes may be documented and payments to the successor entity may be made.

 

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6.Assignment of Antitrust Claims.

 

As part of the consideration for the award of this Contract, the Contractor assigns to the State all right, title and interest in and to any claims the Contractor now has, or may acquire, under state or federal antitrust laws relating to the products or services which are the subject of this Contract.

 

7.Audits.

 

The Contractor acknowledges that it may be required to submit to an audit of funds paid through this Contract. Any such audit shall be conducted in accordance with IC § 5-11-1, et seq., and audit guidelines specified by the State.

 

The State considers the Contractor to be a “Contractor” under 2 C.F.R. 200.330 for purposes of this Contract. However, if it is determined that the Contractor is a “subrecipient” and if required by applicable provisions of 2 C.F.R. 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements), Contractor shall arrange for a financial and compliance audit, which complies with 2 C.F.R. 200.500 et seq.

 

8.Authority to Bind Contractor.

 

The signatory for the Contractor represents that he/she has been duly authorized to execute this Contract on behalf of the Contractor and has obtained all necessary or applicable approvals to make this Contract fully binding upon the Contractor when his/her signature is affixed, and accepted by the State.

 

9.Changes in Work.

 

The Contractor shall not commence any additional work or change the scope of the work until authorized in writing by the State. The Contractor shall make no claim for additional compensation in the absence of a prior written approval and amendment executed by all signatories hereto. This Contract may only be amended, supplemented or modified by a written document executed in the same manner as this Contract.

 

10.Compliance with Laws.

 

A.The Contractor shall comply with all applicable federal, state, and local laws, rules, regulations, and ordinances, and all provisions required thereby to be included herein are hereby incorporated by reference. The enactment or modification of any applicable state or federal statute or the promulgation of rules or regulations thereunder after execution of this Contract shall be reviewed by the State and the Contractor to determine whether the provisions of this Contract require formal modification.

 

B.The Contractor and its agents shall abide by all ethical requirements that apply to persons who have a business relationship with the State as set forth in IC § 4-2-6, et seq., IC § 4-2-7,et seq. and the regulations promulgated thereunder. If the Contractor has knowledge, or would have acquired knowledge with reasonable inquiry, that a state officer, employee, or special state appointee, as those terms are defined in IC § 4-2-6-1, has a financial interest in the Contract, the Contractor shall ensure compliance with the disclosure requirements in IC § 4-2-6-10.5 prior to the execution of this Contract. If the Contractor is not familiar with these ethical requirements, the Contractor should refer any questions to the Indiana State Ethics Commission, or visit the Inspector General’s website at http://www.in.gov/ig/. If the Contractor or its agents violate any applicable ethical standards, the State may, in its sole discretion, terminate this Contract immediately upon notice to the Contractor. In addition, the Contractor may be subject to penalties under IC §§ 4-2-6, 4-2-7, 35-44.1-1-4, and under any other applicable laws.

 

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C.The Contractor certifies by entering into this Contract that neither it nor its principal(s) is presently in arrears in payment of taxes, permit fees or other statutory, regulatory or judicially required payments to the State of Indiana. The Contractor agrees that any payments currently due to the State of Indiana may be withheld from payments due to the Contractor. Additionally, further work or payments may be withheld, delayed, or denied and/or this Contract suspended until the Contractor is current in its payments and has submitted proof of such payment to the State.

 

D.The Contractor warrants that it has no current, pending or outstanding criminal, civil, or enforcement actions initiated by the State, and agrees that it will immediately notify the State of any such actions. During the term of such actions, the Contractor agrees that the State may delay, withhold, or deny work under any supplement, amendment, change order or other contractual device issued pursuant to this Contract.

 

E.If a valid dispute exists as to the Contractor’s liability or guilt in any action initiated by the State or its agencies, and the State decides to delay, withhold, or deny work to the Contractor, the Contractor may request that it be allowed to continue, or receive work, without delay. The Contractor must submit, in writing, a request for review to the Indiana Department of Administration (IDOA) following the procedures for disputes outlined herein. A determination by IDOA shall be binding on the parties. Any payments that the State may delay, withhold, deny, or apply under this section shall not be subject to penalty or interest, except as permitted by IC § 5-17-5.

 

F.The Contractor warrants that the Contractor and its subcontractors, if any, shall obtain and maintain all required permits, licenses, registrations, and approvals, and shall comply with all health, safety, and environmental statutes, rules, or regulations in the performance of work activities for the State. Failure to do so may be deemed a material breach of this Contract and grounds for immediate termination and denial of further work with the State.

 

G.The Contractor affirms that, if it is an entity described in IC Title 23, it is properly registered and owes no outstanding reports to the Indiana Secretary of State.

 

H.As required by IC § 5-22-3-7:

 

(1)The Contractor and any principals of the Contractor certify that:

 

(A)the Contractor, except for de minimis and nonsystematic violations, has not violated the terms of:

 

(i)IC §24-4.7 [Telephone Solicitation Of Consumers];
(ii)IC §24-5-12 [Telephone Solicitations]; or
(iii)IC §24-5-14 [Regulation of Automatic Dialing Machines];

 

in the previous three hundred sixty-five (365) days, even if IC § 24-4.7 is preempted by federal law; and

 

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(B)the Contractor will not violate the terms of IC § 24-4.7 for the duration of the Contract, even if IC §24-4.7 is preempted by federal law.

 

(2)The Contractor and any principals of the Contractor certify that an affiliate or principal of the Contractor and any agent acting on behalf of the Contractor or on behalf of an affiliate or principal of the Contractor, except for de minimis and nonsystematic violations,

 

(A)has not violated the terms of IC § 24-4.7 in the previous three hundred sixty-five (365) days, even if IC §24-4.7 is preempted by federal law; and
(B)(will not violate the terms of IC § 24-4.7 for the duration of the Contract, even if IC §24-4.7 is preempted by federal law.

 

11.Condition of Payment.

 

All services provided by the Contractor under this Contract must be performed to the State’s reasonable satisfaction, as determined at the discretion of the undersigned State representative and in accordance with all applicable federal, state, local laws, ordinances, rules and regulations. The State shall not be required to pay for work found to be unsatisfactory, inconsistent with this Contract or performed in violation of any federal, state or local statute, ordinance, rule or regulation.

 

12.Confidentiality, Security and Privacy of Personal Information.

 

Terms used, but otherwise not defined in this Contract shall have the same meaning as those found in 45 CFR Parts 160, 162, and 164.

 

A.“HIPAA” means the Health Insurance Portability and Accountability Act of 1996 (sections 1171 through 1179 of the Social Security Act), including any subsequent amendments to such Act.

 

B.“HIPAA Rules” mean the rules adopted by and promulgated by the US Department of Health and Human Services (“HHS”) under HIPAA and other relevant federal laws currently in force or subsequently made, such as the Health Information Technology for Economic and Clinical Heath Act (“HITECH”), as enumerated under 45 CFR Parts 160, 162, and 164, including without limitation any and all additional or modified regulations thereof. Subsets of the HIPAA Rules include:

 

1)“HIPAA Enforcement Rule” as defined in 45 CFR Part 160;
2)“HIPAA Security Rule” as defined in 45 CFR Part 164, Subparts A and C;
3)“HIPAA Breach Rule” as defined in 45 CFR Part 164, Subparts A and D; and
4)“HIPAA Privacy Rule” as defined in 45 CFR Part 164, Subparts A and E.

 

C.If Contractor is deemed a Business Associate to the State, Contractor is hereby authorized by the State to create, receive, maintain, and/or transmit Protected Health Information (“PHI”) and other Personally Identifiable Information (meaning personal information as collectively defined in IC 4-1-6-1 and IC 4-1-11-3, “PII”) on the State’s behalf pursuant to and consistent with the Services performed by Contractor under this Contract.

 

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D.Contractor agrees that as a Business Associate to the State it is obligated to comply with the HIPAA Rules, as such Rules apply to Business Associates, throughout the term of this Contract and thereafter as may be required by federal law and such compliance will be at Contractor’s sole expense. Further:

 

1)Contractor will not use or further disclose PHI or PII except as expressly permitted by this Contract or as required by law. Contractor understands that this prohibition expressly applies to any information provided by the Social Security Administration, directly or through the State. It is further provided that nothing in this Contract shall be construed to permit Contractor use or disclose PHI in a manner that would violate the provisions of the HIPAA Privacy Rule as such Rule applies to the State with regard to the Services performed by Contractor under this Contract or otherwise cause the State to be noncompliant with the HIPAA Privacy Rule.

 

2)Contractor understands it must fully comply with the HIPAA Security Rule and will employ appropriate and compliant safeguards to reasonably prevent the use or disclosure of PHI and PII other than as permitted by this Contract or required by the HIPAA Privacy Rule. Such safeguards will be designed, implemented, operated, and managed by Contractor at Contractor’s sole expense and following the Contractor’s best professional judgment regarding such safeguards. Upon the State’s reasonable request, Contractor will review such safeguards with the State. Contractor will implement the following HIPAA requirements for any forms of PHI or PII that the Contractor receives, maintains, or transmits on behalf of the State:

 

a)Administrative safeguards under 45 CFR 164.308;
b)Physical safeguards under 45 CFR 164.310;
c)Technical safeguards under 45 CFR 164.312; and
d)Policies and procedures and documentation requirements under 45 CFR 164.316.

 

3)Contractor understands that it is subject to the HIPAA Enforcement Rule under which Contractor may be subject to criminal and civil penalties for violations of and noncompliance with the HIPAA Rules.

 

E.Improper Disclosure, Security Incident, and Breach Notification.

 

1)Contractor understands that it is subject to the HIPAA Breach Rule.

 

2)For the purposes of this Contract, the term Breach has the same meaning as defined in the HIPAA Breach Rule. The term “Security Incident” shall mean an action or event that has resulted in the improper use or disclosure of PHI or PII in Contractor’s safekeeping (in violation of this Contract and/or in violation of the HIPAA Privacy Rule), the reasonable possibility or suspected possibility that an improper use or disclosure of PHI or PII may have occurred, or circumstances in which PHI or PII has been exposed to an opportunity for improper use or disclosure.

 

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3)If a Security Incident occurs or if Contractor suspects that a Security Incident may have occurred with respect to PHI and/or PII in Contractor’s safekeeping:

 

a)Contractor shall notify the State of the Security Incident within one (1) business day of when Contractor discovered the Security Incident; such notification shall be made to the FSSA Privacy & Security Office in a manner reasonably prescribed by the FSSA Privacy & Security Officer and shall include as much detail as the Contractor reasonably may be able to acquire within the one (1) business day.

 

b)For the purposes of such Security Incidents, “discovered” and “discovery” shall mean the first day on which such Security Incident is known to the Contractor or, by exercising reasonable diligence, would have been known to the Contractor. Regardless of whether the Contractor failed to exercise reasonable diligence, improperly delaying the notification of discovery beyond the one day requirement, the Contractor will notify the FSSA Privacy & Security Office within one day of gaining actual knowledge of a breach.

 

c)In collaboration with the FSSA Privacy & Security Office, Contractor shall undertake all commercially reasonable efforts necessary to thoroughly investigate the Security Incident and to provide all results of such investigation to the FSSA Privacy & Security Office, including but not limited to Contractor personnel involved, source and cause of the Security Incident, specific information disclosed, disclosure victims (those whose PHI/PII was disclosed), disclosure recipients, supporting materials, actions taken to mitigate or stop the Security Incident, and similar details.

 

d)Contractor’s investigation must be undertaken expeditiously and completed to the extent that a determination of whether a Breach has occurred can be reasonably made, including the identification of the victims or likely victims, within a reasonable timeframe as mutually agreed upon with the FSSA Privacy & Security Office, from the date of discovery of the Security Incident. Contractor shall provide details of its investigation to the FSSA Privacy & Security Office on an ongoing basis until the investigation is complete.

 

e)Contractor and the FSSA Privacy & Security Office will collaborate on the results of Contractor’s investigation; the determination as to whether a Breach has occurred rests solely with the FSSA Privacy & Security Office.

 

f)If it is determined by the FSSA Privacy & Security Office that a Breach has occurred:

 

(i)Contractor agrees that it shall be responsible for, including all costs with respect to, fulfilling the State’s and/or Contractor’s obligations for notice to all of the known and suspected victims of the Breach. Such notice shall comply with the HIPAA Breach Rule notification requirements and/or applicable notification requirements under State law.

 

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(ii)Contractor further agrees that such notification will be made under its name, unless otherwise specified by the FSSA Privacy & Security Office. Contractor will coordinate its Breach notification efforts with the FSSA Privacy & Security Office; the FSSA Privacy & Security Office will approve Contractor’s Breach notification procedures and plans, including the format and content of the notice(s) prior to such notification being made.

 

(iii)Contractor accepts full responsibility for the Breach and any resulting losses or damages incurred by the State or any victim of the Breach.

 

(iv)Contractor will undertake all commercially reasonable efforts necessary to mitigate any deleterious effects of the Breach for the known and suspected victims of the Breach.

 

(v)The State, through the FSSA Privacy & Security Office, will make the appropriate notifications to HHS and/or the applicable State agencies with respect to the Breach, unless the Contractor is directed to do so by the FSSA Privacy & Security Office.

 

g)Contractor will undertake commercially reasonable corrective actions to eliminate or minimize to the greatest degree possible the opportunity for an identified Security Incident to reoccur and provide the FSSA Privacy & Security Office with its plans, status updates, and written certification of completion regarding such corrective actions.

 

F.Subcontractors. Contractor agrees that in accordance with the HIPAA Privacy Rule any subcontractors engaged by Contractor (in compliance with this Contract) that will create, receive, maintain, or transmit State PHI/PII on Contractor’s behalf will contractually agree to the same restrictions, conditions, and requirements that apply to Contractor with respect to such PHI/PII.

 

G.Access by Individuals to their PHI. Contractor acknowledges that in accordance with the HIPAA Privacy Rule individuals for whom Contractor has direct possession of their PHI on the State’s behalf have the right to inspect and amend their PHI, and have the right for an accounting of uses and disclosures of such PHI, except as otherwise provided therein. Contractor shall provide such right of inspection, amendment, and accounting of disclosures to such individuals upon reasonable request by the State (or by such individuals if the State directly refers such individuals to Contractor). In situations in which Contractor does not have direct possession of such PHI, then the State shall be responsible for such inspection, amendment, and accounting of disclosures rights by individuals.

 

H.Access to Records. Contractor shall make available to HHS and/or the State, Contractor’s internal practices, books, and records relating to the use and disclosure of PHI and PII provided to Contractor by the State or created, received, maintained, or transmitted by Contractor on the State’s behalf. Contractor shall promptly inform the State by giving notice to the FSSA Privacy & Security Office of any request by HHS (or its designee) for such internal practices, books, and/or records and shall provide the State with copies of any materials or other information made available to HHS.

 

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I.Return of Protected Health Information. Upon request by the State or upon termination of this Contract, Contractor will, at the State’s sole option, either return or destroy all copies of any PHI or PII provided to Contractor by the State, including PHI or PII created, received, maintained, or transmitted by Contractor on the State’s behalf and Contractor shall warrant in writing that it has returned or destroyed such PHI and/or PII. Further, upon termination of this agreement Contractor will not retain any copies of any such PHI and PII and shall warrant same in writing.

 

J.At the sole discretion of the State, the State may terminate this Contract for Contractor’s material breach of this Section 12.

 

K.Contractor agrees to participate in a disaster recovery plan, as appropriate to the Contractor’s Services, as determined by the State to be necessary to uphold integral business functions in the event of an unforeseen disaster.

 

L.Drug and Alcohol Records. In the performance of the Services under this Contract, Contractor may have access to confidential information regarding alcohol and drug abuse patient records. Contractor agrees that such information is confidential and protected information and promises and assures that any such information, regardless of form, disclosed to Contractor for the purposes of this Contract will not be disclosed or discussed with others without the prior written consent of the State. The Contractor and the State will comply with the applicable requirements of 42 CFR Part 2 and any other applicable federal or state law or regulatory requirement concerning such information. The Contractor will report any unauthorized disclosures of such information in compliance with Section 12.F.

 

M.Confidentiality of State Information. The Contractor understands and agrees that data, materials, and information disclosed to the Contractor may contain confidential and protected information. The Contractor covenants that data, material and information gathered, based upon or disclosed to the Contractor for the purpose of this Contract, will not be disclosed to or discussed with third parties without the prior written consent of the State.

 

The parties acknowledge that the services to be performed by Contractor for the State under this contract may require or allow access to data, materials, and information containing Social Security numbers maintained by the State in its computer system or other records. In addition to the covenant made above in this section and pursuant to 10 IAC 5-3-1(4), the Contractor and the State agree to comply with the provisions of IC 4-1-10 and IC 4-1-11. If any Social Security number(s) is/are disclosed by Contractor, Contractor agrees to pay the cost of the notice of disclosure of a breach of the security of the system in addition to any other claims and expenses for which it is liable under the terms of this contract. The Contractor shall report any unauthorized disclosures of Social Security numbers to the FSSA Privacy & Security Office within one (1) business day of the date of discovery.

 

N.Contractor will indemnify and hold the State harmless from any loss, damage, costs, expense, judgment, sanction or liability, including, but not limited to, attorneys’ fees and costs, that the State incurs or is subject to, as a result of a breach of this Section by the Contractor or any subcontractor, agent or person under Contractor’s control. In the event a claim is made against the State for any such claim, cause of action, liability, damage, cost or expense, State may, at its sole option: (i) tender the defense to Contractor, who shall provide qualified and competent counsel to represent the State interest at Contractor’s expense; or (ii) undertake its own defense, utilizing such professionals as it deems reasonably necessary, holding Contractor responsible for all reasonable costs thereof. In any event, State shall have the sole right to control and approve any settlement or other compromise of any claim brought against it that is covered by this Section.

 

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O.Contractor shall adhere to all relevant FSSA Application Security policies located at http://in.gov/fssa/4979.htm for any related activities provided to FSSA under this contract. Contractor is responsible for validating that any subcontractors they engage will also comply with these policies. Any exceptions to these policies require written approval from the FSSA Privacy & Security Office.

 

13.Continuity of Services.

 

A.The Contractor recognizes that the service(s) to be performed under this Contract are vital to the State and must be continued without interruption and that, upon Contract expiration, a successor, either the State or another contractor, may continue them. The Contractor agrees to:

 

1)Furnish phase-in training; and
2)Exercise its best efforts and cooperation to effect an orderly and efficient transition to a successor.

 

B.The Contractor shall, upon the State’s written notice:

 

1)Furnish phase-in, phase-out services for up to sixty (60) days after this Contract expires;
2)Negotiate in good faith a plan with a successor to determine the nature and extent of phase-in, phase-out services required. The plan shall specify a training program and a date for transferring responsibilities for each division of work described in the plan, and shall be subject to the State’s approval. The Contractor shall provide sufficient experienced personnel during the phase-in, phase-out period to ensure that the services called for by this Contract are maintained at the required level of proficiency.

 

C.The Contractor shall allow as many personnel as practicable to remain on the job to help the successor maintain the continuity and consistency of the services required by this Contract. The Contractor also shall disclose necessary personnel records and allow the successor to conduct on-site interviews with these employees. If selected employees are agreeable to the change, the Contractor shall release them at a mutually agreeable date and negotiate transfer of their earned fringe benefits to the successor.

 

D.The Contractor shall be reimbursed for all reasonable phase-in, phase-out costs (i.e., costs incurred within the agreed period after contract expiration that result from phase-in, phase-out operations).

 

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14.Debarment and Suspension.

 

A.The Contractor certifies by entering into this Contract that neither it nor its principals nor any of its subcontractors are presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from entering into this Contract by any federal agency or by any department, agency or political subdivision of the State of Indiana. The term “principal” for purposes of this Contract means an officer, director, owner, partner, key employee or other person with primary management or supervisory responsibilities, or a person who has a critical influence on or substantive control over the operations of the Contractor.

 

B.The Contractor certifies that it has verified the state and federal suspension and debarment status for all subcontractors receiving funds under this Contract and shall be solely responsible for any recoupment, penalties or costs that might arise from use of a suspended or debarred subcontractor. The Contractor shall immediately notify the State if any subcontractor becomes debarred or suspended, and shall, at the State’s request, take all of 29 steps required by the State to terminate its contractual relationship with the subcontractor for work to be performed under this Contract.

 

15.Default by State.

 

If the State, sixty (60) days after receipt of written notice, fails to correct or cure any material breach of this Contract, the Contractor may cancel and terminate this Contract and institute measures to collect monies due up to and including the date of termination.

 

16.Disputes.

 

A.Should any disputes arise with respect to this Contract, the Contractor and the State agree to act immediately to resolve such disputes. Time is of the essence in the resolution of disputes.

 

B.The Contractor agrees that, the existence of a dispute notwithstanding, it will continue without delay to carry out all of its responsibilities under this Contract that are not affected by the dispute. Should the Contractor fail to continue to perform its responsibilities regarding all nondisputed work, without delay, any additional costs incurred by the State or the Contractor as a result of such failure to proceed shall be borne by the Contractor, and the Contractor shall make no claim against the State for such costs.

 

C.If the parties are unable to resolve a contract dispute between them after good faith attempts to do so, a dissatisfied party shall submit the dispute to the Commissioner of the Indiana Department of Administration for resolution. The dissatisfied party shall give written notice to the Commissioner and the other party. The notice shall include: (1) a description of the disputed issues, (2) the efforts made to resolve the dispute, and (3) a proposed resolution. The Commissioner shall promptly issue a Notice setting out documents and materials to be submitted to the Commissioner in order to resolve the dispute; the Notice may also afford the parties the opportunity to make presentations and enter into further negotiations. Within thirty (30) business days of the conclusion of the final presentations, the Commissioner shall issue a written decision and furnish it to both parties. The Commissioner’s decision shall be the final and conclusive administrative decision unless either party serves on the Commissioner and the other party, within ten (10) business days after receipt of the Commissioner’s decision, a written request for reconsideration and modification of the written decision. If the Commissioner does not modify the written decision within thirty (30) business days, either party may take such other action helpful to resolving the dispute, including submitting the dispute to an Indiana court of competent jurisdiction. If the parties accept the Commissioner’s decision, it may be memorialized as a written Amendment to this Contract if appropriate.

 

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D.The State may withhold payments on disputed items pending resolution of the dispute. The unintentional nonpayment by the State to the Contractor of one or more invoices not in dispute in accordance with the terms of this Contract will not be cause for the Contractor to terminate this Contract, and the Contractor may bring suit to collect these amounts without following the disputes procedure contained herein.

 

E.With the written approval of the Commissioner of the Indiana Department of Administration, the parties may agree to forego the process described in subdivision C. relating to submission of the dispute to the Commissioner.

 

F.This paragraph shall not be construed to abrogate provisions of IC § 4-6-2-11 in situations where dispute resolution efforts lead to a compromise of claims in favor of the State as described in that statute. In particular, releases or settlement agreements involving releases of legal claims or potential legal claims of the state should be processed consistent with IC § 4-6-2-11, which requires approval of the Governor and Attorney General.

 

17.Drug-Free Workplace Certification.

 

As required by Executive Order No. 90-5 dated April 12, 1990, issued by the Governor of Indiana, the Contractor hereby covenants and agrees to make a good faith effort to provide and maintain a drug-free workplace. The Contractor will give written notice to the State within ten (10) days after receiving actual notice that the Contractor, or an employee of the Contractor in the State of Indiana, has been convicted of a criminal drug violation occurring in the workplace. False certification or violation of this certification may result in sanctions including, but not limited to, suspension of contract payments, termination of this Contract and/or debarment of contracting opportunities with the State for up to three (3) years.

 

In addition to the provisions of the above paragraph, if the total amount set forth in this Contract is in excess of $25,000.00, the Contractor certifies and agrees that it will provide a drug-free workplace by:

 

A.Publishing and providing to all of its employees a statement notifying them that the unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited in the Contractor’s workplace, and specifying the actions that will be taken against employees for violations of such prohibition;

 

B.Establishing a drug-free awareness program to inform its employees of: (1) the dangers of drug abuse in the workplace; (2) the Contractor’s policy of maintaining a drug-free workplace; (3) any available drug counseling, rehabilitation and employee assistance programs; and (4) the penalties that may be imposed upon an employee for drug abuse violations occurring in the workplace;

 

C.Notifying all employees in the statement required by subparagraph (A) above that as a condition of continued employment, the employee will: (1) abide by the terms of the statement; and (2) notify the Contractor of any criminal drug statute conviction for a violation occurring in the workplace no later than five (5) days after such conviction;

 

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D.Notifying the State in writing within ten (10) days after receiving notice from an employee under subdivision (C)(2) above, or otherwise receiving actual notice of such conviction;

 

E.Within thirty (30) days after receiving notice under subdivision (C)(2) above of a conviction, imposing the following sanctions or remedial measures on any employee who is convicted of drug abuse violations occurring in the workplace: (1) taking appropriate personnel action against the employee, up to and including termination; or (2) requiring such employee to satisfactorily participate in a drug abuse assistance or rehabilitation program approved for such purposes by a federal, state or local health, law enforcement, or other appropriate agency; and

 

F.Making a good faith effort to maintain a drug-free workplace through the implementation of subparagraphs (A) through (E) above.

 

18.Employment Eligibility Verification.

 

As required by IC § 22-5-1.7, the Contractor swears or affirms under the penalties of perjury that the Contractor does not knowingly employ an unauthorized alien. The Contractor further agrees that:

 

A.The Contractor shall enroll in and verify the work eligibility status of all his/her/its newly hired employees through the E-Verify program as defined in IC § 22-5-1.7-3. The Contractor is not required to participate should the E-Verify program cease to exist. Additionally, the Contractor is not required to participate if the Contractor is self-employed and does not employ any employees.

 

B.The Contractor shall not knowingly employ or contract with an unauthorized alien. The Contractor shall not retain an employee or contract with a person that the Contractor subsequently learns is an unauthorized alien.

 

C.The Contractor shall require his/her/its subcontractors, who perform work under this Contract, to certify to the Contractor that the subcontractor does not knowingly employ or contract with an unauthorized alien and that the subcontractor has enrolled and is participating in the EVerify program. The Contractor agrees to maintain this certification throughout the duration of the term of a contract with a subcontractor.

 

The State may terminate for default if the Contractor fails to cure a breach of this provision no later than thirty (30) days after being notified by the State.

 

19.Employment Option.

 

If the State determines that it would be in the State’s best interest to hire an employee of the Contractor, the Contractor will release the selected employee from any non-competition agreements that may be in effect. This release will be at no cost to the State or the employee.

 

20.Force Majeure.

 

In the event that either party is unable to perform any of its obligations under this Contract or to enjoy any of its benefits because of natural disaster or decrees of governmental bodies not the fault of the affected party (hereinafter referred to as a “Force Majeure Event”), the party who has been so affected shall immediately or as soon as is reasonably possible under the circumstances give notice to the other party and shall do everything possible to resume performance. Upon receipt of such notice, all obligations under this Contract shall be immediately suspended. If the period of nonperformance exceeds thirty (30) days from the receipt of notice of the Force Majeure Event, the party whose ability to perform has not been so affected may, by giving written notice, terminate this Contract.

 

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21.Funding Cancellation.

 

As required by Financial Management Circular 2007-1 and IC § 5-22-17-5, when the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of performance of this Contract, this Contract shall be canceled. A determination by the Director of State Budget Agency that funds are not appropriated or otherwise available to support continuation of performance shall be final and conclusive.

 

22.Governing Law.

 

This Contract shall be governed, construed, and enforced in accordance with the laws of the State of Indiana, without regard to its conflict of laws rules. Suit, if any, must be brought in the State of Indiana.

 

23.HIPAA Compliance.

 

This information has been incorporated into Clause 12.

 

24.Indemnification.

 

The Contractor agrees to indemnify, defend, and hold harmless the State, its agents, officials, and employees from all third party claims and suits including court costs, attorney’s fees, and other expenses caused by any act or omission of the Contractor and/or its subcontractors, if any, in the performance of this Contract. The State will not provide indemnification to the Contractor.

 

25.Independent Contractor; Workers’ Compensation Insurance.

 

The Contractor is performing as an independent entity under this Contract. No part of this Contract shall be construed to represent the creation of an employment, agency, partnership or joint venture agreement between the parties. Neither party will assume liability for any injury (including death) to any persons, or damage to any property, arising out of the acts or omissions of the agents, employees or subcontractors of the other party. The Contractor shall provide all necessary unemployment and workers’ compensation insurance for the Contractor’s employees, and shall provide the State with a Certificate of Insurance evidencing such coverage prior to starting work under this Contract.

 

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26.Indiana Veteran Owned Small Business Enterprise Compliance

 

Award of this Contract was based, in part, on the Indiana Veteran Owned Small Business Enterprise (“IVOSB”) participation plan, as detailed in the IVOSB Subcontractor Commitment Form, commonly referred to as “Attachment A-1” in the procurement documentation and incorporated by reference herein. Therefore, any changes to this information during the Contract term must be approved by IDOA’s Division of Supplier Diversity and may require an amendment. It is the State’s expectation that the Contractor will meet the subcontractor commitments during the Contract term. The following certified IVOSB subcontractor(s) will be participating in this Contract:

 

IVB   PHONE  

COMPANY

NAME

 

SCOPE OF

PRODUCTS

and/or SERVICES

  UTILIZATION DATE   PERCENT
Veteran   317-541-0200
– Ext 201
  Professional Management Enterprises, Inc   Medical Staffing services   5/3/2021   5%

 

A copy of each subcontractor agreement must be submitted to the Division of Supplier Diversity within thirty (30) days of the effective date of this Contract. The subcontractor agreements may be uploaded into Pay Audit (Indiana’s subcontractor payment auditing system), emailed to IndianaVeteransPreference@idoa.IN.gov, or mailed to IDOA, 402 W. Washington Street, Room W-462, Indianapolis, IN 46204. Failure to provide a copy of any subcontractor agreement may be deemed a violation of the rules governing IVOSB procurement and may result in sanctions allowable under 25 IAC 9-5-2. Requests for changes must be submitted to IndianaVeteransPreference@idoa.IN.gov for review and approval before changing the participation plan submitted in connection with this Contract.

 

The Contractor shall report payments made to certified IVOSB subcontractors under this Contract on a monthly basis using Pay Audit. The Contractor shall notify subcontractors that they must confirm payments received from the Contractor in Pay Audit. The Pay Audit system can be accessed on the IDOA webpage at: www.in.gov/idoa/mwbe/payaudit.htm. The Contractor may also be required to report IVOSB certified subcontractor payments directly to the Division of Supplier Diversity, as reasonably requested and in the format required by the Division of Supplier Diversity.

 

The Contractor’s failure to comply with the provisions in this clause may be considered a material breach of the Contract.

 

27.Information Technology Enterprise Architecture Requirements.

 

If this Contract involves information technology-related products or services, the Contractor agrees that all such products or services are compatible with any of the technology standards found at https://www.in.gov/iot/2394.htm that are applicable, including the assistive technology standard. The State may terminate this Contract for default if the terms of this paragraph are breached.

 

28.Insurance.

 

A.The Contractor and its subcontractors (if any) shall secure and keep in force during the term of this Contract the following insurance coverages (if applicable) covering the Contractor for any and all claims of any nature which may in any manner arise out of or result from Contractor’s performance under this Contract:

 

1)Commercial general liability, including contractual coverage, and products or completed operations coverage (if applicable), with minimum liability limits not less than $700,000 per person and $5,000,000 per occurrence unless additional coverage is required by the State. The State is to be named as an additional insured on a primary, non-contributory basis for any liability arising directly or indirectly under or in connection with this Contract.

 

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2)Automobile liability for owned, non-owned and hired autos with minimum liability limits not less than $700,000 per person and $5,000,000 per occurrence. The State is to be named as an additional insured on a primary, non-contributory basis.

 

3)Errors and Omissions liability with minimum liability limits of $1,000,000 per claim and in the aggregate. Coverage for the benefit of the State shall continue for a period of two (2) years after the date of service provided under this Contract.

 

4)Fiduciary liability if the Contractor is responsible for the management and oversight of various employee benefit plans and programs such as pensions, profit-sharing and savings, among others with limits no less than $700,000 per cause of action and $5,000,000 in the aggregate.

 

5)Valuable Papers coverage, if applicable, with an Inland Marine Policy Insurance with limits sufficient to pay for the re-creation and reconstruction of such records.

 

6)Surety or Fidelity Bond(s) if required by statute or by the agency.

 

7)Cyber Liability if requested by the State addressing risks associated with electronic transmissions, the internet, networks and informational assets, and having limits of no less than $700,000 per occurrence and $5,000,000 in the aggregate.

 

The Contractor shall provide proof of such insurance coverage by tendering to the undersigned State representative a certificate of insurance prior to the commencement of this Contract and proof of workers’ compensation coverage meeting all statutory requirements of IC § 22-3-2. In addition, proof of an “all states endorsement” covering claims occurring outside the State is required if any of the services provided under this Contract involve work outside of Indiana. All insurance documents are to be sent electronically to insurancedocuments.fssa@fssa.in.gov.

 

B.The Contractor’s insurance coverage must meet the following additional requirements:

 

1)The insurer must have a certificate of authority or other appropriate authorization to operate in the state in which the policy was issued.

 

2)Any deductible or self-insured retention amount or other similar obligation under the insurance policies shall be the sole obligation of the Contractor.

 

3)The State will be defended, indemnified and held harmless to the full extent of any coverage actually secured by the Contractor in excess of the minimum requirements set forth above. The duty to indemnify the State under this Contract shall not be limited by the insurance required in this Contract.

 

4)The insurance required in this Contract, through a policy or endorsement(s), shall include a provision that the policy and endorsements may not be canceled or modified without thirty (30) days’ prior written notice to the undersigned State agency.

 

5)The Contractor waives and agrees to require their insurer to waive their rights of subrogation against the State of Indiana.

 

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C.Failure to provide insurance as required in this Contract may be deemed a material breach of contract entitling the State to immediately terminate this Contract. The Contractor shall furnish a certificate of insurance and all endorsements to the State before the commencement of this Contract.

 

29.Key Person(s).

 

A.If both parties have designated that certain individual(s) are essential to the services offered, the parties agree that should such individual(s) leave their employment during the term of this Contract for whatever reason, the State shall have the right to terminate this Contract upon thirty (30) days’ prior written notice.

 

B.In the event that the Contractor is an individual, that individual shall be considered a key person and, as such, essential to this Contract. Substitution of another for the Contractor shall not be permitted without express written consent of the State.

 

Nothing in sections A and B, above shall be construed to prevent the Contractor from using the services of others to perform tasks ancillary to those tasks which directly require the expertise of the key person. Examples of such ancillary tasks include secretarial, clerical, and common labor duties. The Contractor shall, at all times, remain responsible for the performance of all necessary tasks, whether performed by a key person or others.

 

Key person(s) to this Contract is/are none.

 

30.Licensing Standards.

 

The Contractor, its employees and subcontractors shall comply with all applicable licensing standards, certification standards, accrediting standards and any other laws, rules, or regulations governing services to be provided by the Contractor pursuant to this Contract. The State will not pay the Contractor for any services performed when the Contractor, its employees or subcontractors are not in compliance with such applicable standards, laws, rules, or regulations. If any license, certification or accreditation expires or is revoked, or any disciplinary action is taken against an applicable license, certification, or accreditation, the Contractor shall notify the State immediately and the State, at its option, may immediately terminate this Contract.

 

31.Merger & Modification.

 

This Contract constitutes the entire agreement between the parties. No understandings, agreements, or representations, oral or written, not specified within this Contract will be valid provisions of this Contract. This Contract may not be modified, supplemented, or amended, except by written agreement signed by all necessary parties.

 

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32.Minority and Women’s Business Enterprises Compliance.

 

Award of this Contract was based, in part, on the Minority and/or Women’s Business Enterprise (“MBE” and/or “WBE”) participation plan as detailed in the Minority and Women’s Business Enterprises Subcontractor Commitment Form, commonly referred to as “Attachment A” in the procurement documentation and incorporated by reference herein. Therefore, any changes to this information during the Contract term must be approved by the Division of Supplier Diversity and may require an amendment. It is the State’s expectation that the Contractor will meet the subcontractor commitments during the Contract term.

 

The following Division of Supplier Diversity certified MBE and/or WBE subcontractors will be participating in this Contract:

 

MBE/WBE   PHONE  

COMPANY

 

NAME

 

SCOPE OF

PRODUCTS

and/or SERVICES

  UTILIZATION DATE   PERCENT
Minority   317-388-0800   Access Therapies Inc.   Medical Staffing services   5/3/2021   5%

 

A copy of each subcontractor agreement must be submitted to the Division of Supplier Diversity within thirty (30) days of the effective date of this Contract. The subcontractor agreements may be uploaded into Pay Audit (Indiana’s subcontractor payment auditing system), emailed to MWBECompliance@idoa.IN.gov, or mailed to the Division of Supplier Diversity, 402 W. Washington Street, Room W-462, Indianapolis IN 46204. Failure to provide a copy of any subcontractor agreement may be deemed a violation of the rules governing MBE/WBE procurement and may result in sanctions allowable under 25 IAC 5-7-8. Requests for changes must be submitted to MWBECompliance@idoa.IN.gov for review and approval before changing the participation plan submitted in connection with this Contract.

 

The Contractor shall report payments made to Division of Supplier Diversity certified subcontractors under this Contract on a monthly basis using Pay Audit. The Contractor shall notify subcontractors that they must confirm payments received from the Contractor in Pay Audit. The Pay Audit system can be accessed on the IDOA webpage at: www.in.gov/idoa/mwbe/payaudit.htm. The Contractor may also be required to report Division of Supplier Diversity certified subcontractor payments directly to the Division, as reasonably requested and in the format required by the Division of Supplier Diversity.

 

The Contractor’s failure to comply with the provisions in this clause may be considered a material breach of the Contract.

 

33.Nondiscrimination.

 

Pursuant to the Indiana Civil Rights Law, specifically IC § 22-9-1-10, and in keeping with the purposes of the federal Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, the Contractor covenants that it shall not discriminate against any employee or applicant for employment relating to this Contract with respect to the hi re, tenure, terms, conditions or privileges of employment or any matter directly or indirectly related to employment, because of the employee’s or applicant’s race, color, national origin, religion, sex, age, disability, ancestry, status as a veteran, or any other characteristic protected by federal, state, or local law (“Protected Characteristics”). The Contractor certifies compliance with applicable federal laws, regulations, and executive orders prohibiting discrimination based on the Protected Characteristics in the provision of services. Breach of this paragraph may be regarded as a material breach of this Contract, but nothing in this paragraph shall be construed to imply or establish an employment relationship between the State and any applicant or employee of the Contractor or any subcontractor.

 

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The State is a recipient of federal funds, and therefore, where applicable, the Contractor and any subcontractors shall comply with requisite affirmative action requirements, including reporting, pursuant to 41 CFR Chapter 60, as amended, and Section 202 of Executive Order 11246 as amended by Executive Order 13672.

 

34.Notice to Parties.

 

Whenever any notice, statement or other communication is required under this Contract, it will be sent by E-mail or first class U.S. mail service to the following addresses, unless otherwise specifically advised.

 

A.Notices to the State shall be sent to:

 

Jay Chaudhary, Director
Division of Mental Health and Addiction
402 W. Washington St., W-353
Indianapolis, IN 46204
E-mail:

 

B.Notices to the Contractor shall be sent to:

 

Deepika Vuppalanchi
Syra Health Corp
1119 Keystone Way, Suite 101
Carmel, IN 46032
E-mail: DeepikaV@syrahealth.com

 

As required by IC § 4-13-2-14.8, payments to the Contractor shall be made via electronic funds transfer in accordance with instructions filed by the Contractor with the Indiana Auditor of State.

 

35.Order of Precedence; Incorporation by Reference.

 

Any inconsistency or ambiguity in this Contract shall be resolved by giving precedence in the following order: (1) this Contract, (2) attachments prepared by the State, (3) RFP #19-026, (4) Contractor’s response to RFP #19-026, and (5) attachments prepared by the Contractor. All attachments, and all documents referred to in this paragraph, are hereby incorporated fully by reference.

 

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36.Ownership of Documents and Materials.

 

A.All documents, records, programs, applications, data, algorithms, film, tape, articles, memoranda, and other materials (the “Materials”) not developed or licensed by the Contractor prior to execution of this Contract, but specifically developed under this Contract shall be considered “work for hire” and the Contractor hereby transfers and assigns any ownership claims to the State so that all Materials will be the property of the State. If ownership interest in the Materials cannot be assigned to the State, the Contractor grants the State a non-exclusive, non-cancelable, perpetual, worldwide royalty-free license to use the Materials and to use, modify, copy and create derivative works of the Materials.

 

B.Use of the Materials, other than related to contract performance by the Contractor, without the prior written consent of the State, is prohibited. During the performance of this Contract, the Contractor shall be responsible for any loss of or damage to the Materials developed for or supplied by the State and used to develop or assist in the services provided while the Materials are in the possession of the Contractor. Any loss or damage thereto shall be restored at the Contractor’s expense. The Contractor shall provide the State full, immediate, and unrestricted access to the Materials and to Contractor’s work product during the term of this Contract.

 

37.Payments.

 

A.All payments shall be made 35 days in arrears in conformance with State fiscal policies and procedures and, as required by IC §4-13-2-14.8, the direct deposit by electronic funds transfer to the financial institution designated by the Contractor in writing unless a specific waiver has been obtained from the Indiana Auditor of State. No payments will be made in advance of receipt of the goods or services that are the subject of this Contract except as permitted by IC §4-13-2-20.

 

B.Claims shall be submitted for reimbursement in accordance with the specified Component Descriptions and Unit Descriptions defined on the State-generated FSSA Contract Claim Reimbursement Form. Costs are incurred on the date goods, services, and/or deliverables are satisfactorily provided in full and/or after a reimbursable expense has been paid. Reimbursement shall be based on actual goods, services and/or deliverables provided and/or actual reimbursable expenses previously paid. Claims shall be submitted to the State within sixty (60) calendar days following the end of the month in which goods, services or deliverable were provided and/or expenses were paid. The State has the discretion, and reserves the right, to not pay any claims submitted later than sixty (60) calendar days after a specific Contract Claim Reimbursement Form Item Description expiration date or termination of this agreement. Payment for claims submitted after that time may, at the discretion of the State, be denied.

 

C.At the time that the final claim is submitted, all reconciliation issues must be resolved including the return of any incorrectly reimbursed monies or credits received for expenses previously reimbursed. Incorrectly reimbursed funds or credits received for expenses reimbursed will be returned immediately upon discovery as a direct payment, not credit, to the “State of Indiana.” Each return of funds will be accompanied with a completed FSSA Contract Claim Reimbursement Form identifying specific Components to be credited (negative) and each associated month reported on the original reimbursement request. Payments and FSSA Contract Claim Reimbursement Forms will be submitted to FSSA Administrative Services using the address provided on the reimbursement form.

 

D.Claims must be submitted with accompanying supportive documentation, as designated by the State. Incomplete claims submitted or claims submitted without supportive documentation will be returned to the Contractor and/or Grantee and not processed for payment. Failure to successfully perform or execute the policies and/or provisions made in this contract may result in the denial and/or partial payment of claims submitted for reimbursement.

 

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E.If the Contractor is being paid in advance for the maintenance of equipment, software or a service as a subscription, then pursuant to IC § 4-13-2-20(b)(14), the Contractor agrees that if it fails to fully provide or perform under this Contract, upon receipt of written notice from the State, it shall promptly refund the consideration paid, pro-rated through the date of nonperformance.

 

38.Penalties/Interest/Attorney’s Fees.

 

The State will in good faith perform its required obligations hereunder and does not agree to pay any penalties, liquidated damages, interest or attorney’s fees, except as permitted by Indiana law, in part, IC § 5-17-5, IC § 34-54-8, IC § 34-13-1 and IC § 34-52-2.

 

Notwithstanding the provisions contained in IC § 5-17-5, any liability resulting from the State’s failure to make prompt payment shall be based solely on the amount of funding originating from the State and shall not be based on funding from federal or other sources.

 

39.Progress Reports.

 

The Contractor shall submit progress reports to the State upon request. The report shall be oral, unless the State, upon receipt of the oral report, should deem it necessary to have it in written form. The progress reports shall serve the purpose of assuring the State that work is progressing in line with the schedule, and that completion can be reasonably assured on the scheduled date.

 

40.Public Record.

 

The Contractor acknowledges that the State will not treat this Contract as containing confidential information, and will post this Contract on the transparency portal as required by Executive Order 05-07 and IC § 5-14-3.5-2. Use by the public of the information contained in this Contract shall not be considered an act of the State.

 

41.Renewal Option.

 

This Contract may be renewed under the same terms and conditions, subject to the approval of the Commissioner of the Department of Administration and the State Budget Director in compliance with IC § 5-22-17-4. The term of the renewed contract may not be longer than the term of the original Contract.

 

42.Severability.

 

The invalidity of any section, subsection, clause or provision of this Contract shall not affect the validity of the remaining sections, subsections, clauses or provisions of this Contract.

 

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43.Substantial Performance.

 

This Contract shall be deemed to be substantially performed only when fully performed according to its terms and conditions and any written amendments or supplements.

 

44.Taxes.

 

The State is exempt from most state and local taxes and many federal taxes. The State will not be responsible for any taxes levied on the Contractor as a result of this Contract.

 

45.Termination for Convenience.

 

This Contract may be terminated, in whole or in part, by the State, which shall include and is not limited to IDOA and the State Budget Agency whenever, for any reason, the State determines that such termination is in its best interest. Termination of services shall be effected by delivery to the Contractor of a Termination Notice at least thirty (30) days prior to the termination effective date, specifying the extent to which performance of services under such termination becomes effective. The Contractor shall be compensated for services properly rendered prior to the effective date of termination. The State will not be liable for services performed after the effective date of termination. The Contractor shall be compensated for services herein provided but in no case shall total payment made to the Contractor exceed the original contract price or shall any price increase be allowed on individual line items if canceled only in part prior to the original termination date. For the purposes of this paragraph, the parties stipulate and agree that IDOA shall be deemed to be a party to this Contract with authority to terminate the same for convenience when such termination is determined by the Commissioner of IDOA to be in the best interests of the State.

 

46.Termination for Default.

 

A.With the provision of thirty (30) days’ notice to the Contractor, the State may terminate this Contract in whole or in part if the Contractor fails to:

 

1)Correct or cure any breach of this Contract; the time to correct or cure the breach may be extended beyond thirty (30) days if the State determines progress is being made and the extension is agreed to by the parties;

 

2)Deliver the supplies or perform the services within the time specified in this Contract or any extension;

 

3)Make progress so as to endanger performance of this Contract; or

 

4)Perform any of the other provisions of this Contract.

 

B.If the State terminates this Contract in whole or in part, it may acquire, under the terms and in the manner the State considers appropriate, supplies or services similar to those terminated, and the Contractor will be liable to the State for any excess costs for those supplies or services. However, the Contractor shall continue the work not terminated.

 

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C.The State shall pay the contract price for completed supplies delivered and services accepted. The Contractor and the State shall agree on the amount of payment for manufacturing materials delivered and accepted and for the protection and preservation of the property. Failure to agree will be a dispute under the Disputes clause. The State may withhold from these amounts any sum the State determines to be necessary to protect the State against loss because of outstanding liens or claims of former lien holders.

 

D.The rights and remedies of the State in this clause are in addition to any other rights and remedies provided by law or equity or under this Contract.

 

47.Travel.

 

No expenses for travel will be reimbursed unless specifically authorized by this Contract. Permitted expenses will be reimbursed at the rate paid by the State and in accordance with the Budget Agency’s Financial Management Circular — Travel Policies and Procedures in effect at the time the expenditure is made. Out-of-state travel requests must be reviewed by the State for availability of funds and for conformance with Circular guidelines.

 

48.Waiver of Rights.

 

No right conferred on either party under this Contract shall be deemed waived, and no breach of this Contract excused, unless such waiver is in writing and signed by the party claimed to have waived such right. Neither the State’s review, approval or acceptance of, nor payment for, the services required under this Contract shall be construed to operate as a waiver of any rights under this Contract or of any cause of action arising out of the performance of this Contract, and the Contractor shall be and remain liable to the State in accordance with applicable law for all damages to the State caused by the Contractor’s negligent performance of any of the services furnished under this Contract.

 

49.Work Standards.

 

The Contractor shall execute its responsibilities by following and applying at all times the highest professional and technical guidelines and standards. If the State becomes dissatisfied with the work product of or the working relationship with those individuals assigned to work on this Contract, the State may request in writing the replacement of any or all such individuals, and the Contractor shall grant such request.

 

50.Verification of Flu Shot.

 

As a condition of employment, verification of an annual flu vaccination is required for all healthcare/contracted personnel that have job duties or physical presence inside any Indiana State Psychiatric Hospital in the course of conducting their work.

 

51.State Boilerplate Affirmation Clause.

 

I swear or affirm under the penalties of perjury that I have not altered, modified, changed or deleted the State’s standard contract clauses (as contained in the 2021 OAG/ IDOA Professional Services Contract Manual or the 2021 SCM Template) in any way except as follows:

 

12. Confidentiality, Security and Privacy of Personal Information. Modified.
   
23. HIPAA Compliance. Incorporated into Clause 12.
   
37. Payments. Modified.
   
50. Verification of Flu Shot. Added.

 

THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.

 

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Non-Collusion and Acceptance

 

The undersigned attests, subject to the penalties for perjury, that the undersigned is the Contractor, or that the undersigned is the properly authorized representative, agent, member or officer of the Contractor. Further, to the undersigned’s knowledge, neither the undersigned nor any other member, employee, representative, agent or officer of the Contractor, directly or indirectly, has entered into or been offered any sum of money or other consideration for the execution of this Contract other than that which appears upon the face hereof. Furthermore, if the undersigned has knowledge that a state officer, employee, or special state appointee, as those terms are defined in IC § 4-2-6-1, has a financial interest in the Contract, the Contractor attests to compliance with the disclosure requirements in IC § 4-2-6-10.5.

 

Agreement to Use Electronic Signatures

 

I agree, and it is my intent, to sign this Contract by accessing State of Indiana Supplier Portal using the secure password assigned to me and by electronically submitting this Contract to the State of Indiana. I understand that my signing and submitting this Contract in this fashion is the legal equivalent of having placed my handwritten signature on the submitted Contract and this affirmation. I understand and agree that by electronically signing and submitting this Contract in this fashion I am affirming to the truth of the information contained therein. I understand that this Contract will not become binding on the State until it has been approved by the Department of Administration, the State Budget Agency, and the Office of the Attorney General, which approvals will be posted on the Active Contracts Database: https://fs.gmis.in.gov/psp/guest/SUPPLIER/ERP/c/SOI_CUSTOM_APPS.SOI_PUBLIC_CNTRCTS.GBL.

 

In Witness Whereof, the Contractor and the State have, through their duly authorized representatives, entered into this Contract. The parties, having read and understood the foregoing terms of this Contract, do by their respective signatures dated below agree to the terms thereof.

 

SYRA HEALTH CORP

 

Indiana Family and Social Services Administration, NeuroDiagnostic Institute

         
By: /s/ Deepika Vuppalanchi   By: /s/ Jay Chaudhary
         
Title: Chief Executive Officer   Title: Director
         
Date: 7/27/2021 | 13:13 PDT   Date: 7/27/2021 | 13:17 PDT

 

Electronically Approved by:

   
Department of Administration      
         
By: (for)      
Lesley A. Crane, Commissioner      
         

Electronically Approved by:

 

Electronically Approved as to Form and Legality by:

State Budget Agency   Office of the Attorney General
         
By: (for)   By: (for)
Zachary Q. Jackson, Director   Theodore E. Rokita, Attorney General

 

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Exhibit 1
Scope of Work

 

NEURODIAGNOSTIC INSTITUTE (NDI) STAFFING

 

1.0 Overview

 

The Contractor shall provide staffing services for all the NDI exclusively to (NDI) in Unit 2E and Unit 2W. The Contractor may also be requested to provide supplemental staffing to other units of the NDI. The Contractor will manage the daily and shift assignments for staffing services. Staffing will be expected to be full-time staff on a consistent basis on each unit assigned to the contractor. (Exhibit 6 – Total number FTEs need to staff 24/7)

 

The following Scope of Work (SoW) provides an overview of the staffing services required for the NDI a detailed description of the services required from the Contractor and lists conditions that shall be met by the Contractor.

 

2.0 General Contract Duties and Responsibilities

 

The Contractor shall satisfy each of the required duties and responsibilities listed below.

 

2.0.1.The Contractor shall provide staffing services to the NDI mentioned above through the assignment of qualified or certified staff, as indicated in Section 3.2 – Detailed Staffing Responsibilities of this SoW and all state hospital policies and procedures, including but not limited to the Staffing Rules Violation Notice as may be amended from time to time, while complying with the requirements outlined in the Contract and this SoW. The Contractor shall specialize in providing healthcare/mental health staffing.

 

Total staffing services to the State through assignment of Contractor staff or Contractor’s subcontractor(s) shall not exceed the budgeted FTE hours of 1950 hours per FTE.

 

The activities of Contractor or subcontractor assigned staff shall be limited to the performance of services required under this Contract, while on the premises of a state-operated facility. The State reserves the right to remove any Contractor assigned staff or subcontractor from the premises of the NDI and have them replaced either by the Contractor or in some other fashion in the event of inappropriate activity. The State also reserves all rights of legal action against such individuals. The Contractor, however, remains responsible for any costs, time or other damages incurred by the State for any inappropriate activity. The Contractor agrees and shall allow the State to offset against Contractor claims or to recoup amounts paid to the Contractor or owing the State as the case may warrant. Inappropriate activities would include outside practice, enrollment in any residency program, provision of medical care in any capacity that would impact the proper, appropriate or necessary performance of required services under this Contract.

 

2.0.2.The Contractor is responsible for securing and providing proof of professional liability insurance as appropriate and customary for the services required under this Contract at the prevailing State standard under law.

 

2.0.3.The Contractor agrees to provide and shall provide for the State’s awareness and knowledge a copy of any agreement between the Contractor and any and all Contractor staff or subcontractor assigned by the Contractor to perform services under this Contract. Receipt by the State of a copy of any such agreement shall not relieve the Contractor in any way from complying with the terms of this Contract and does not act in any way as a waiver with regard to any right of the State.

 

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2.0.4.The provision of specific services by Contractor staff or subcontractors shall be subject to the following terms:

 

A.NDI, at any time, may decide not to request part or all of the services required of the Contractor under this Contract.

 

B.NDI may at any time, with twenty-four (24) hours written notice, require the Contractor to remove and replace an assigned Contractor staff person or subcontractor from the provision of services under this Contract. The Contractor shall meet or exceed the Performance Standards detailed in section 4.3.1.B – Contractor/State-Initiated Employee Termination.

 

C.The State also reserves the right, with thirty (30) days written notice, to require the Contractor to end specific services being provided by any Contractor staff or subcontractors. The Contractor shall meet or exceed the Performance Standards detailed in section 4.3.1.B – Contractor/State-Initiated Employee Termination.

 

D.The State may rescind a request for services under this Contract at any time prior to the Contractor making an assignment of Contractor staff or subcontractor in response to the request.

 

E.The State is not required under this Contract to make a request for any or all of the services listed herein and any request for such services is at the sole discretion of the State.

 

2.0.5.In any instance, any provider of services under this Contract shall have the credentials, and meet background check and insurance requirements stated in this Contract. All providers of services under this Contract shall comply with relevant state-operated facility medical bylaws, policies, rules, regulations, other state-operated facility policies and procedures, and the state and federal law as appropriate with respect to the services the Contractor staff or subcontractor renders.

 

2.0.6.Contractor shall ensure that any and all Contractor staff meet all requirements in the job description, competencies, related to background checks, behavioral and performance standards, and all training and certification/licensure requirements as it relates to performing services under this Contract. The Contractor shall remove any individual determined to not meet these requirements and the individual shall be replaced by another individual who does meet these criteria. Any individual who was previously employed by the State and is determined to not have left the State in good standing will require FSSA to provide consent before being assigned to this Contract to perform services.

 

2.0.7.The Contractor shall provide requested and required services twenty-four (24) hours a day, seven (7) days a week, including during all State-recognized holidays. At the NDI, budgeted FTE hours for staff services are defined as 1950 hours annually. The Contract assigned staff shall work three shifts a week, at 12.5 hours per shift, for a total of 37.5 hours per week, as described in Section 3.2 – Detailed Staffing Requirements. The option to increase or decrease FTE’s and FTE hours shall be based on daily facility needs and patient acuity. The terms of any adjustment shall be the same as all other conditions of the Contract.

 

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All staffing services positions shall comply with the NDI medical staff by -laws, policies, rules and regulations and other appropriate hospital-wide policies as well as regulatory agencies. The Contractor shall be responsible for providing the following for all positions as applicable:

 

●Primary source verification of education and training (nursing degree, residency, etc.)

 

1.Not Required for CNA/BHRAs

 

●Verification of Indiana license.

 

●Verification of medical practice experience.

 

●Criminal background check and drug testing.

 

●Proof of TB test and flu vaccine.

 

All Contractor staff must participate and complete a two (2) week orientation hosted and paid for by the State before the Contractor staff can provide services for the State.

 

2.0.8.The Contractor shall follow all established FSSA policy, procedures, and business rules and meet all contractual obligations.

 

2.0.9.The Contractor shall work with IDOA to obtain and complete proper documentation in partnership to ensure the M/W/IVOSB participation percentage commitments in the contract are met;

 

2.0.10.The Contractor shall maintain adequate accounting practices to ensure appropriate utilization of Contract funds including an independent audit which meets federal guidelines;

 

2.0.11.The Contractor shall maintain accurate timekeeping methodologies that can be validate, reviewed, and authorized by the State;

 

2.0.12.The Contractor shall understand and agree that the failure to meet contractual obligations in the management of the program may result in the State exercising its rights to seek remediation or relief. Failure to meet Performance Standards and Measures may lead to Corrective Actions and Performance Withholds as described in Section 4.1 – General Description of Performance Standards, Measures, and Reporting.

 

2.1 Business Duties and Responsibilities

 

Contractor Administrative personnel shall be accessible to program stakeholders Monday through Friday from 8:00 am to 5:00 pm, Eastern Time, excluding State holidays.

 

The Contractor shall provide the state with an account manager that shall serve as a point of contact to discuss any additional support that is needed. The State may require a meeting with the account manager with two (2) business days’ notice to discuss issues or needs and a plan of action to address these.

 

The account manager shall complete the reporting requirements detailed in Section 4.2 –Reporting Requirements.

 

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The Contractor shall also attend quarterly meetings with the NDI Director of Nursing and Clinical Director. The account manager must be present at these meetings and will update the State on performance standards, performance measures, and anything else deemed necessary.

 

The Contractor shall assure that funds provided through this Contract shall only be used to implement and support the administration of NDI staffing and not other programs.

 

The Contractor shall staff a Clinical On-Site Manager to NDI for the flat rate of Two-Thousand Two Hundred and Fifty ($2,250) dollars per week or the equivalent of Sixty ($60.00) dollars per hour x Thirty-Seven and one-half (37.5) hours of state defined full-time equivalent.

 

The Contractor shall provide an independent auditor to conduct all necessary audits. The Contractor shall assume responsibility for all costs of the audit and make all audit reports available to the State in a timely fashion. The State reserves the right to amend or terminate the Contract based on the audit findings.

 

3.0 Detailed Contract Duties and Responsibilities

 

3.1 Staffing

 

The Contractor shall notify the State when it discovers any Staffing personnel are scheduled to depart the organization within one (1) business day of discovering the departure as detailed in Performance Standard Section 4.3.1 – Turnover Rate.

 

3.2 Detailed Staffing Responsibilities

 

All providers of services under this Contract shall adhere to all appropriate and relevant standards of medical practice. The Contract assigned staff shall also follow specific nursing service rules regarding performance and behavior.

 

Staffing services include the positions listed below:

 

Staffing Positions:

 

●Behavioral Health Recovery Attendants (BHRA 4)
●Charge Nurses (Charge Nurse 3) – Night Shift
●Registered Nurses (Nurse 4) – Day Shift
●Clinical Nurse Manager

 

The Contractor must also establish one (1) staff member on each shift to act as the liaison between the State and the Contractor. This will not be an additional staff member, but will be an additional role to a staff member assigned during the shift. The liaison will manage the Contractor staff, make any adjustments to staffing needs for the current and upcoming shifts, and coordinate with NDI staff management.

 

All Contractor staff must also participate and complete a two (2) week orientation hosted and paid for by the State before the Contractor staff can provide services for the State. The Contractor must staff all contracted positions at all times with qualified staff that have completed the orientation. Therefore, the Contractor is expected to have contingency plans to ensure 0% vacancy in the event that individual staff members become temporarily unavailable.

 

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The Contractor shall staff the positions consistent with the NDI State staff shifts. The Contractor shall be able to staff shifts according to two 12.5 hour shifts. In a 12.5 hour shift situation, the morning shift is from 6:30am to 7:30pm with a thirty (30) minutes break. The evening shift is from 6:30pm to 7:30am with a thirty (30) minute break. In order to be considered a full-time employee, each staff shall work three (3) shifts for a total of 37.5 hours per week.

 

3.3 Employment Option

 

The Contractor and subcontractors shall release identified employees from any non-compete or other restrictive clauses that might prevent their employment by the State or a State contractor who provides staffing solutions to the State. Employees shall be allowed to accept employment with the State, either directly through the State or through another contractor, at any time during the Contract, and at any time after the expiration of the Contract at no additional cost to any party.

 

3.4 Records Continuity

 

The Contractor shall maintain data continuity from the previous contract period by ensuring maintenance of all records associated with the previous contract.

 

3.5 Transfer of Records

 

At least 90 days before Contract expiration, Contractor shall develop and submit a plan to transfer data to any newly awarded Contractor(s). The Transfer of Records Plan must be approved by FSSA.

 

3.6 Additional Duties and Responsibilities

 

The Contractor shall investigate new techniques that would enhance the Contractor’s operation and improve service delivery, advising the State of such developments, the possible implementation, and any additional cost of such services or technology.

 

3.7 PRN Staffing

 

The Contractor may provide and maintain a staffing list of PRN professionals to NDI prior to orientation. PRN personnel will work a minimum of thirty-seven and one-half (37.5) hours per month once they have completed and passed orientation. The Contractor will provide monthly reports of staff and hours worked. Contractor has the ability to assist NDI with any other unit in the facility presuming staffing ratios have been met within assigned units 2E and 2W. PRN Staff will be requested to work a minimum of 75.0 hours for NDI PRN for a period of 6 months minimum.

 

3.8 Equipment Liability

 

The Contactor shall be responsible for the maintenance and repair of any equipment issued to it for use of its staff or that of its subcontractors. Upon completion of the project the Contractor shall be liable for the return of the equipment in the condition it was provided to Contractor subject to normal wear and tear.

 

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4.0 Mandatory Performance Standards, Measures, and Reporting

 

4.1 General Description of Performance Standards, Measures, and Reporting

 

It is the State’s primary goal to ensure that the Contractor is delivering services as defined and agreed to in the Contract. The State holds the Contractor accountable for being in compliance with all Contract terms. Failure to meet performance standards and measures as specified may result in withholds described below. Reports provided by the Contractor shall provide sufficient data to enable verification of the performance criteria specified below, and shall provide sufficient detail to allow the state to further investigate the activity being reported.

 

It is the intent of FSSA to remedy any non-performance through specific remedies and a payment withholding protocol. FSSA may apply performance remedies, as described below. In the event that the Contractor fails to meet performance requirements, reporting standards, and other requirements set forth in the Contract, the State will provide the Contractor with a written notice of non-compliance and may require any of the corrective actions or remedies discussed below. The State will provide written notice of non-compliance to the Contractor within fourteen (14) calendar days of the State’s discovery of such non-compliance.

 

1. Corrective Actions: If the same performance deficiency occurs for two (2) consecutive months, or upon written request by the State for any reason, the Contractor shall submit, within ten (10) business days of the second occurrence or State request, a Corrective Action Plan (CAP). The nature of the corrective action(s) will depend upon the nature, severity and duration of the deficiency, and repeated nature of the non-compliance. Note: Severity shall be determined by the State, in its sole discretion.

 

At a minimum, the CAP shall address the causes of the deficiency, the impacts, and the measures being taken and/or recommended to remedy the deficiency, and indicate whether the solution is permanent or temporary. It must also include a schedule showing when the deficiency will be remedied, and for when the permanent solution will be implemented, if appropriate.

 

2. Payment Withholds: Beginning the month in which a CAP is required per Section 4.1.1, the State may withhold 10% of the following month and all subsequent billing until the measures and remedies in the CAP are implemented in a timely manner to the State’s satisfaction.

 

When the Contractor’s obligations associated with the CAP are completed, the State shall issue a written release and all monies withheld shall be returned to the Contractor within 30 days. Should the CAP not be submitted as required, or should the remedy not be implemented within the timeframe specified by the CAP, the withheld monies may be forfeited.

 

The Contractor and the State shall schedule quarterly meetings to discuss Contractor’s performance on the Performance Standards and Measures in Sections 4.3 and 4.4 below. The Performance Standards contain quantitative metrics that the Contractor is required to meet in order to remain compliant with the Contract. The Performance Measures are items the State will monitor and bring up for discussion during the quarterly Review Meetings to assess performance and determine resolution plans. Scheduling of Review Meetings shall be agreed upon mutually between Contractor and the State, but shall occur within two weeks of receipt of completed Reporting Templates described below.

 

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4.2 Reporting Requirements

 

In addition to the list provided, the Contractor shall complete Excel reporting templates agreed upon with the State. The Excel reporting template shall be completed for each calendar quarter and shall be completed and submitted to the State by the 15th of the month following the end of the calendar quarter (i.e. 1st quarter reports are due by April 15th). The Excel reporting template will be reviewed periodically and may be amended at any time during the Contract with mutual agreement by the Contractor and State.

 

These reports include, but are not limited to:

 

1. Staff Roster Report

2. Vacancy Report

3. Employee Turnover Report

4. Attendance Report

 

4.3 Performance Standards

 

Contractor is required to report on these Performance Standards and meet or exceed these quantitatively defined Standards.

 

1. Turnover Rate. The Contractor shall keep a record of all positions vacated by Contractor employees. Turnover is defined as any instance in which the originally-staffed individual permanently leaves the position.

 

In the case of turnover, the Contractor shall meet the following Performance Standards:

 

A. Employee-Initiated Termination:

 


The Contractor shall notify the NDI’s Medical Director and the DMHA Operations Manager of the employee’s last day within 1 business day of receiving an employee resignation or notice of employee intent to vacate a position.

 

B. Contractor/State-Initiated Employee Termination:

 


Upon Contractor/State-initiated employee termination, the Contractor shall notify the NDI’s Medical Director and the DMHA Operations Manager of the employee’s last day within 1 business day of receiving the Contractor or State’s request for employee termination.

 

The Contractor shall have a Turnover Rate that does not exceed 5% for nurses or 10% for BHRAs, calculated quarterly. The Turnover Rate is calculated as such:

 

(Number of unique Turnover events in a given quarter)
(Total number of unique contracted staff positions)

 

Failure to meet this performance standard will result in a reimbursement to the State equal to 50% of the calculated expense of orientation for each turnover event in excess of the standard in the past quarter (see Section 4.3.4. for the reimbursement amount per position).

 

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2. Vacancies. The Contractor must ensure that 100% of contracted positions are staffed as scheduled. The Contractor is responsible for filling vacancies immediately. A vacancy is defined as any instance in which the permanently or shift assigned staffed individual is unable to provide services as defined in this Scope of Work.

 

Notwithstanding the foregoing, the Contractor shall be allowed to have vacancies for no more than 5% of the positions for the first six (6) months that services are performed by Contractor on a unit. However, the Contractor shall not have more than one vacancy per unit at any given time.

 

Failure to meet this performance standard will result in a reimbursement to the State of an amount equaling 10% of the vacant position’s pay rate for each hour the position is assigned a shift and is vacant.

 

The Contractor must ensure that at least one or more nurses and appropriate number of BHRAs be staffed per shift based on census in each of the units assigned to contractor. In order to mitigate risk and assist with meeting performance standards, the State shall allow the Contractor to use State sourced nurses and BHRAs up to 75 hours per month respectively to cover same-day vacancies at a charge to the Contractor of $85.00 per hour for RNs and $45.00 per hour for BHRA. ANY use of state resources must be approved by state nursing supervisor prior to state staff being deployed for coverage. In the event the use of state staff exceeds the allowance above, the charges will double to $170.00 per hour for RNs and $90.00 per hour for BHRA. All charges will be invoiced to the Contractor monthly. Contractor will have first right to ensure that a backfill of Contractor or subcontractor staff has been sought first, as long as the need is not immediate and putting patients at risk. Minimum staffing on each unit per shift is determined by contractor with the following variables taken in consideration: census number, acuity, appointments, and any other patient variable.

 

If necessary, the Contractor will remit payment within thirty (30) days to the State of Indiana/FSSA in a check format based upon invoices provided by the State of Indiana as a result of services provided from RN/BHRA State of Indiana staff working on a Contractor assigned unit.

 

3. Attendance Rate. The Contractor is expected to satisfy the State’s need for staffing such that there is a continuity of staff. The Contractor assigned staff shall maintain an Attendance Rate of 85% during their tenure with the State, calculated quarterly. The Attendance Rate is calculated as such:

 

(Number of hours absent for each individual Contractor assigned staff in a given quarter)
(Number of Hours required for a full-time staff in a quarter, or 487.5 hours)

 

For each Contractor assigned staff that fails to meet this performance standard, the Contractor will reassess the ability of the individual to meet the State’s needs and provide a written report, justifying why the State should continue to employ the individual. The State will decide if the individual can meet the needs of the State. In the event that the individual needs to be replaced, the Contractor will find a suitable replacement within 24 hours.

 

4. Minimum Tenure. The Contractor assigned staff who attend the orientation, as described in Section 3.2., must continue to provide services for the State for at least six (6) months following the orientation. If the Contractor assigned staff fails to meet this requirement, the Contractor will reimburse the State its calculated expense of orientation, which will be the hourly rate of the position multiplied by 75.0 hours for each staff member that fails to meet the requirement.

 

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4.4 Performance Measures

 

Contractor is required to report on these Performance Measures and meet quarterly with the State to discuss performance.

 

1. Actual Hourly Rates. The Contractor shall keep a log of all employees with the actual rates that are billed to the State.

 

2. Employee Turnover. The Contractor shall keep a record of Employee Turnover. This record shall contain a list of each position that experienced turnover in addition to a reason for the employee turnover. The Contractor shall also calculate a quarterly Turnover Rate, as defined in Section 4.3 – Performance Standard, and report the figures to the State on a quarterly basis.

 

3. Cessation/Termination of Employment. The Contractor shall keep a log of all employees that cease employment on this Contract with the State. This log shall record all instances in which an employee ceases to work on this Contract for the State. The Contractor shall log the number of days in notice the employee provided before stopping employment and the reason for their cessation/termination.

 

4. Vacancies. The Contractor shall keep a log of all vacancies, including the number of hours the position was left vacant. The Contractor shall report any failure to fill vacancies to the State on a quarterly basis.

 

5. Attendance Rate. The Contractor shall keep a log of the attendance for all employees. The Contractor shall calculate quarterly Attendance Rates, as defined in Section 4.3 –Performance Standard, for all employees and report the figures to the State on a quarterly basis.

 

6. Staffing rule violations will be handled consistent with our current agency staffing process, except for the attendance policy. Syra is welcome to utilize their own policy to address employee attendance concerns. (Exhibit 5)

 

Page 32 of 32

 

Exhibit 10.2

 

AMENDMENT #1

CONTRACT #0000000000000000000055827

 

This is an Amendment to the Contract (the “Contract”) entered into by and between the Indiana Family and Social Services Administration, NeuroDiagnostic Institute (the “State”) and SYRA HEALTH CORP (the “Contractor”) approved by the last State signatory on August 09, 2021.

 

In consideration of the mutual undertakings and covenants hereinafter set forth, the parties agree as follows:

 

1.The contract to provide staffing services for all the NDI exclusively to (NDI) in Unit 2E and Unit 2W is hereby amended to update the scope of work and add funds.

 

2.The Contract remains the same. It shall terminate on January 31, 2025.

 

3.The consideration during this extension period is $2,422,000.76. Total remuneration under the Contract is not to exceed $17,089,935.65. Exhibit 2 is attached and incorporated herein. Exhibit 2 is meant to supplement Exhibit 1 and not replace it.

 

All matters set forth in the original Contract and not affected by this Amendment shall remain in full force and effect.

 

Page 1 of 3

 

 

Non-Collusion and Acceptance

 

The undersigned attests, subject to the penalties for perjury, that the undersigned is the Contractor, or that the undersigned is the properly authorized representative, agent, member or officer of the Contractor. Further, to the undersigned’s knowledge, neither the undersigned nor any other member, employee, representative, agent or officer of the Contractor, directly or indirectly, has entered into or been offered any sum of money or other consideration for the execution of this Contract other than that which appears upon the face hereof. Furthermore, if the undersigned has knowledge that a state officer, employee, or special state appointee, as those terms are defined in IC § 4-2-6-1, has a financial interest in the Contract, the Contractor attests to compliance with the disclosure requirements in IC § 4-2-6-10.5.

 

Agreement to Use Electronic Signatures

 

I agree, and it is my intent, to sign this Contract by accessing State of Indiana Supplier Portal using the secure password assigned to me and by electronically submitting this Contract to the State of Indiana. I understand that my signing and submitting this Contract in this fashion is the legal equivalent of having placed my handwritten signature on the submitted Contract and this affirmation. I understand and agree that by electronically signing and submitting this Contract in this fashion I am affirming to the truth of the information contained therein. I understand that this Contract will not become binding on the State until it has been approved by the Department of Administration, the State Budget Agency, and the Office of the Attorney General, which approvals will be posted on the Active Contracts Database: https://secure.in.gov/apps/idoa/contractsearch/

 

In Witness Whereof, the Contractor and the State have, through their duly authorized representatives, entered into this Contract. The parties, having read and understood the foregoing terms of this Contract, do by their respective signatures dated below agree to the terms thereof.

 

SYRA HEALTH CORP.  Indiana Family and Social Services Administration, NeuroDiagnostic Institute
    
By: /s/ Deepika Vuppalanchi  By: /s/ Matthew Foster
Title: Chief Executive Officer  Title: CEO & Superintendent
Date: 3/18/2022 | 12:14 PDT  Date: 4/6/2022 | 12:39 EDT

 

Electronically Approved by:   
Department of Administration   
  
By: (for)   
Rebecca Holwerda, Commissioner   
    
Electronically Approved by:  Electronically Approved as to Form and Legality by:
State Budget Agency  Office of the Attorney General
    
By: (for)  By: (for)
Zachary Q. Jackson, Director  Theodore E Rokita, Attorney General

 

Page 2 of 3

 

 

EXHIBIT 2

NEURODIAGNOSTIC INSTITUTE (NDI) STAFFING

YEARLY RATES AND FTES FOR UNITS AND FINANCIAL SUMMARY

37.5 HOURS WEEKLY/1950 HOURS ANNUALLY

 

Hourly Rates:

 

Position  *Year 1 Hourly
Rate
   Year 2 Hourly
Rate
   Year 3 Hourly
Rate
   Year 4 Hourly
rate
 
Special Attendant  $32.00   $32.64   $33.29   $33.96 
Charge Nurse  $70.00   $71.40   $72.83   $74.28 
Nurse 4  $65.00   $66.30   $67.63   $68.98 

Clinical Nurse

Manager

  $65.00   $66.30   $67.63   $68.98 

Special Attendant

Supervisor

  $36.00   $36.72   $37.45   $38.20 

 

*** Effective 02.01.2022 applied hourly rate increase***

 

Unit 2E – Psych – Med Unit  

 

Position  Position PT   Position FT   Total FTE 
Special Attendant  0   20   20 
Charge Nurse  0   4   4 
Nurse 4  0   4   4 
   0   28   28 

 

Unit 2NW – Neur-Cognitive Unit

 

Position  Position PT   Position FT   Total FTE 
Special Attendant  0   16   16 
Charge Nurse  0   4   4 
Nurse 4  0   4   4 
   0   24   24 

 

Page 3 of 3

 

 

Exhibit 10.3

 

AMENDMENT #2

 

CONTRACT #0000000000000000000055827

 

This is an Amendment to the Contract (the “Contract”) entered into by and between the Indiana Family and Social Services Administration. NeuroDiagnostic Institute (the “State”) and SYRA HEALTH CORP (the “Contractor”) approved by the last State signatory on April 29, 2022.

 

In consideration of the mutual undertakings and covenants hereinafter set forth, the parties agree as follows:

 

This Contract for staffing services is hereby amended to update the cost schedule and add funds.

 

The Contract term does not change. It shall terminate on January 31, 2025.

 

The consideration for this amendment is $265,265.85. Total remuneration under the Contract is not to exceed $17,355,201.50.

 

The cost schedule is amended to include additional funding and update project details. The cost schedule is outlined in Exhibit 2A, which supersedes Exhibit 2 and is attached hereto and incorporated herein.

 

All matters set forth in the original Contract and not affected by this Amendment shall remain in full force and effect.

 

Page 1 of 3

 

 

Non-Collusion and Acceptance

 

The undersigned attests, subject to the penalties for perjury, that the undersigned is the Contractor, or that the undersigned is the properly authorized representative, agent, member or officer of the Contractor. Further, to the undersigned’s knowledge, neither the undersigned nor any other member, employee, representative, agent or officer of the Contractor, directly or indirectly, has entered into or been offered any sum of money or other consideration for the execution of this Contract other than that which appears upon the face hereof. Furthermore, if the undersigned has knowledge that a state officer, employee, or special state appointee, as those terms are defined in 1C § 4-2-6-1, has a financial interest in the Contract, the Contractor attests to compliance with the disclosure requirements in IC § 4-2-6-10.5.

 

Agreement to Use Electronic Signatures

 

I agree, and it is my intent, to sign this Contract by accessing State of Indiana Supplier Portal using the secure password assigned to me and by electronically submitting this Contract to the State of Indiana. I understand that my signing and submitting this Contract in this fashion is the legal equivalent of having placed my handwritten signature on the submitted Contract and this affirmation. I understand and agree that by electronically signing and submitting this Contract in this fashion I am affirming to the truth of the information contained therein. I understand that this Contract will not become binding on the State until it has been approved by the Department of Administration, the State Budget Agency, and the Office of the Attorney General, which approvals will be posted on the Active Contracts Database: https://secure.in.aov/apps/idoa/contractsearch/

 

In Witness Whereof, the Contractor and the State have, through their duly authorized representatives, entered into this Contract. The parties, having read and understood the foregoing terms of this Contract, do by their respective signatures dated below agree to the terms thereof.

 

SYRA HEALTH CORP  Indiana Family and Social Services Administration, NeuroDiagnostic Institute
    
By: /s/ Deepika Vuppalanchi  By: /s/ Matthew Foster
Title: Chief Executive Officer  Title: CEO & Superintendent
Date: 6/27/2022 | 06:34 PDT  Date: 6/29/2022 | 08:56 EDT

 

Electronically Approved by:   
Department of Administration   
    
By: (for)   
Rebecca Holwerda, Commissioner     
    
Electronically Approved by:  Electronically Approved as to Form and Legality by:
State Budget Agency  Office of the Attorney General
    
By: (for)  By: (for)
Zachary Q. Jackson, Director  Theodore E Rokita, Attorney General

 

Page 2 of 3

 

 

Exhibit 2A

 

NEURODIAGNOSTIC INSTITUTE (NDI) STAFFING

YEARLY RATES AND FTES FOR UNITS AND FINANCIAL SUMMARY

37.5 HOURS WEEKLY/1950 HOURS ANNUALLY

 

Hourly Rates:

 

Position  *Year 1 Hourly
Rate
   Year 2 Hourly
Rate
   Year 3 Hourly
Rate
   Year 4 Hourly
Rate
 
Special Attendant  $32.00   $32.64   $33.29   $33.96 
Charge Nurse  $70.00   $71.40   $72.83   $74.28 
Nurse 4  $65.00   $66.30   $67.63   $68.98 

Clinical Nurse

Manager

  $65.00   $66.30   $67.63   $68.98 

Special Attendant

Supervisor

  $36.00   $36.72   $37.45   $38.20 
LPN  $45.00   $45.90   $46.81   $47.74 

 

*** Effective 02.01.2022 applied hourly rate increase***

***LPN Rate effective May 1, 2022*****

 

Unit 2E - Psych – Med Unit  

 

Position  Position PT   Position FT   Total FTE 
Special Attendant  0   20   20 
Charge Nurse  0   4   4 
Nurse 4  0   4   4 
LPN  0   2   2 
   0   30   30 

 

Unit 2NW - Neuro-Cognitive Unit  

 

Position  Position PT   Position FT   Total FTE 
Special Attendant  0   16   16 
Charge Nurse  0   4   4 
Nurse 4  0   4   4 
LPN  0   2   2 
   0   26   26 

 

Page 3 of 3

 

 

Exhibit 10.4

 

SYRA HEALTH CORP.

 

INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT (“Agreement”) is made as of [   ], 202[ ] by and between Syra Health Corp., a Delaware corporation (the “Company”), and [ ] (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering the subject matter of this Agreement.

 

RECITALS

 

WHEREAS, highly competent persons have become more reluctant to serve publicly held corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company from certain liabilities. The Amended and Restated By-Laws (the “By-Laws”) of the Company and the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”). The By-Laws and the Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification;

 

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

WHEREAS, this Agreement is a supplement to and in furtherance of the By-Laws and the Certificate of Incorporation and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

 

WHEREAS, Indemnitee does not regard the protection available under the By-Laws, Certificate of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he/she be so indemnified; and

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1. Services to the Company. Indemnitee agrees to continue to serve as an officer of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to keep Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company and Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the Company, if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company, other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Company, by the Certificate of Incorporation, the By-Laws, and the DGCL. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as an officer of the Company.

 

 
 

 

Section 2. Definitions. As used in this Agreement:

 

(a) References to “agent” shall mean any person who is or was a director, officer, or employee of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other Enterprise (as defined below) at the request of, for the convenience of, or to represent the interests of the Company.

 

(b) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

 

(i) Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing more than fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities;

 

(ii) Change in Board. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

 

(iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty-one percent (51%) of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

 

(iv) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

 

(v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

For purposes of this Section 2(b), the following terms shall have the following meanings:

 

(A) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

(B) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

 
 

 

(C) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

(c) “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

 

(d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(e) “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

 

(f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, arbitrator’s fees, mediator’s fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable shall be presumed conclusively to be reasonable. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(g) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(h) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, claim, allegation, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken (or failure to act) by him or of any action (or failure to act) on his or her part while acting as director or officer of the Company, or by reason of the fact that he is or was serving at the request of the Company, including prior to the date of this Agreement, as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement. If the Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.

 

 
 

 

(i) Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he/she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause to believe that his or her conduct was unlawful. The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the By-Laws, vote of the Company’s stockholders or Disinterested Directors or applicable law.

 

Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

 

Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by him/her in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by him/her or on his/her behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, or a settlement of such claim, issue or matter (with or without payment of money or consideration), or a plea of nolo contendere shall be deemed to be a successful result as to such claim, issue or matter.

 

Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his/her Corporate Status, a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, he/she shall be indemnified against all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection therewith.

 

 
 

 

Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

Section 8. Additional Indemnification.

 

(a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.

 

(b) For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

 

(i) to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

 

(ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

 

Section 9. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

 

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

 

(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Actor similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or

 

(c) except as provided in Section 14(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

 
 

 

Section 10. Advances of Expenses; Settlement. In accordance with Section 9.3 of Article IX of the By-Laws and Section 11.2 of Article XI of the Certificate of Incorporation, and notwithstanding any provision of this Agreement to the contrary, the Company shall advance, to the extent not prohibited by law, the Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. No other form of undertaking shall be required other than the execution of this Agreement. This Section 10 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 9.

 

The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on Indemnitee without Indemnitee’s prior written consent.

 

Section 11. Procedure for Notification and Defense of Claim.

 

(a) Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. The written notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such action, suit or proceeding. The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

 

(b) The Company will be entitled to participate in the Proceeding at its own expense.

 

Section 12. Procedure Upon Application for Indemnification.

 

(a) Upon written request by Indemnitee for indemnification pursuant to Section 11(a), a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, the Board may elect one of the following: (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

 
 

 

(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after the submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

Section 13. Presumptions and Effect of Certain Proceedings.

 

(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b) Subject to Section 14(e), if the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) an intentional misstatement by Indemnitee of a material fact, or an intentional omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such sixty (60)-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 13(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) of this Agreement.

 

 
 

 

(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his/her conduct was unlawful.

 

(d) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

(e) Actions of Others. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

Section 14. Remedies of Indemnitee.

 

(a) Subject to Section 14(e), in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6 or 7 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 8 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 14(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b) In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

 

(c) If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) an intentional misstatement by Indemnitee of a material fact, or an intentional omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

 
 

 

(d) The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company if Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification and advancement shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.

 

(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

Section 15. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

 

(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the By-Laws, the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b) The Company shall use its best efforts to maintain an insurance policy or policies providing liability insurance for directors and officers in effect at all times. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such claim or of the commencement of a proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

 
 

 

(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

Section 16. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as an officer of the Company or as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company; or (b) one (1) year after the final termination of any Proceeding (including any rights of appeal thereto) then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his/her heirs, executors and administrators.

 

Section 17. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

Section 18. Enforcement.

 

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

 

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the By-Laws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

(c) The indemnification and advancement of expenses provided by or granted pursuant to this Agreement shall apply to Indemnitee’s service as an officer, director or key employee of the Company prior to the date of this Agreement.

 

(d) The indemnification and advancement of expenses provided by or granted pursuant to this Agreement shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

Section 19. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless it specifically states the intent of both parties hereto to supplement the terms herein and is executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

 
 

 

Section 20. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

 

Section 21. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

 

(i) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

 

(ii) If to the Company to

 

Deepika Vuppalanchi

Chief Executive Officer

Syra Health Corp.1119 Keystone Way N. #201

Carmel, IN 46032

 

or to any other address as may have been furnished in writing to Indemnitee by the Company.

 

Section 22. Contribution.

 

(a) Whether or not the indemnification provided under this Agreement is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

 

 
 

 

(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (b) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

Section 23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (c) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably Universal Registered Agents, Inc., 300 Creek View Road, Suite 209, City of Newark, County of New Castle, Delaware 19711 as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (d) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (e) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 24. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

Section 25. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

 
 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

  SYRA HEALTH CORP.
     
  By:  
     
  Title: Chief Executive Officer
   
  INDEMNITEE
     
     
     
  Address:

 

 

 

 

 

 

Exhibit 10.5

 

SYRA HEALTH CORP.

2022 OMNIBUS EQUITY INCENTIVE PLAN

 

Section 1. Purpose of Plan.

 

The name of the Plan is the Syra Health Corp. 2022 Omnibus Equity Incentive Plan (the “Plan”). The purposes of the Plan are to (i) provide an additional incentive to selected employees, directors, and independent contractors of the Company or its Affiliates whose contributions are essential to the growth and success of the Company, (ii) strengthen the commitment of such individuals to the Company and its Affiliates, (iii) motivate those individuals to faithfully and diligently perform their responsibilities and (iv) attract and retain competent and dedicated individuals whose efforts will result in the long-term growth and profitability of the Company. To accomplish these purposes, the Plan provides that the Company may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards or any combination of the foregoing.

 

Section 2. Definitions.

 

For purposes of the Plan, the following terms shall be defined as set forth below:

 

(a) “Administrator” means the Board, or, if and to the extent the Board does not administer the Plan, the Committee in accordance with Section 3 hereof.

 

(b) “Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified as of any date of determination.

 

(c) “Applicable Laws” means the applicable requirements under U.S. federal and state corporate laws, U.S. federal and state securities laws, including the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the Plan, as are in effect from time to time.

 

(d) “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Other Stock-Based Award granted under the Plan.

 

(e) “Award Agreement” means any written notice, agreement, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.

 

(f) “Beneficial Owner” (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.

 

(g) “Board” means the Board of Directors of the Company.

 

(h) “Bylaws” mean the bylaws of the Company, as may be amended and/or restated from time to time.

 

-1-
 

 

(i) “Cause” has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the Participant or, if no such agreement exists or if such agreement does not define “Cause,” then “Cause” means a Participant’s (i) conviction of a felony or a crime involving fraud or moral turpitude; (ii) theft, material act of dishonesty or fraud, intentional falsification of any employment or Company records, or commission of any criminal act which impairs Participant’s ability to perform appropriate employment duties or services for the Company; (iii) intentional or reckless conduct or gross negligence materially harmful to the Company or the successor to the Company after a Change in Control, including violation of a non-competition or confidentiality agreement; (iv) willful failure to follow lawful instructions of the person or body to which Participant reports; or (v) gross negligence or willful misconduct in the performance of Participant’s assigned duties. “Cause” shall not include mere unsatisfactory performance in the achievement of a Participant’s employment or service objectives. Any voluntary termination of employment or service by the Participant in anticipation of an involuntary termination of the Participant’s employment or service, as applicable, for Cause shall be deemed to be a termination for Cause.

 

(j) “Change in Capitalization” means any (i) merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization or corporate transaction or event, (ii) special or extraordinary dividend or other extraordinary distribution (whether in the form of cash, Common Stock or other property), stock split, reverse stock split, share subdivision or consolidation, (iii) combination or exchange of shares or (iv) other change in corporate structure, which, in any such case, the Administrator determines, in its sole discretion, affects the Shares such that an adjustment pursuant to Section 5 hereof is appropriate.

 

(k) “Change in Control” means the first occurrence of an event set forth in any one of the following paragraphs following the Effective Date:

 

(1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person which were acquired directly from the Company or any Affiliate thereof) representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (3) below; or

 

(2) the date on which individuals who constitute the Board as of the Effective Date and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended cease for any reason to constitute a majority of the number of directors serving on the Board; or

 

(3) there is consummated a merger or consolidation of the Company or any direct or indirect Subsidiary with any other corporation or other entity, other than (i) a merger or consolidation (A) which results in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary, fifty percent (50%) or more of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and (B) following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger or consolidation is then a Subsidiary, the ultimate parent thereof, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities; or

 

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(4) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than (A) a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of the Company following the completion of such transaction in substantially the same proportions as their ownership of the Company immediately prior to such sale or (B) a sale or disposition of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or, if such entity is a subsidiary, the ultimate parent thereof.

 

Notwithstanding the foregoing, (i) a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the holders of Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions and (ii) to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, a Change in Control shall be deemed to have occurred under the Plan with respect to any Award that constitutes deferred compensation under Section 409A of the Code only if a change in the ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code. For purposes of this definition of Change in Control, the term “Person” shall not include (i) the Company or any Subsidiary thereof, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary thereof, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of shares of the Company.

 

(l) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

 

(m) “Committee” means any committee or subcommittee the Board may appoint to administer the Plan. Subject to the discretion of the Board, the Committee shall be composed entirely of individuals who meet the qualifications of a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and any other qualifications required by the applicable stock exchange on which the Common Stock is traded.

 

(n) “Common Stock” means the Class A Common Stock of the Company, par value $0.001.

 

(o) “Company” means Syra Health Corp., a Delaware corporation (or any successor company, except as the term “Company” is used in the definition of “Change in Control” above).

 

(p) “Disability” has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the Participant or, if no such agreement exists or if such agreement does not define “Disability,” then “Disability” means that a Participant, as determined by the Administrator in its sole discretion, (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company or an Affiliate thereof.

 

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(q) “Effective Date” has the meaning set forth in Section 17 hereof.

 

(r) “Eligible Recipient” means an employee, director or independent contractor of the Company or any Affiliate of the Company who has been selected as an eligible participant by the Administrator; provided, however, to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, an Eligible Recipient of an Option or a Stock Appreciation Right means an employee, non-employee director or independent contractor of the Company or any Affiliate of the Company with respect to whom the Company is an “eligible issuer of service recipient stock” within the meaning of Section 409A of the Code.

 

(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

(t) “Exempt Award” shall mean the following:

 

(1) An Award granted in assumption of, or in substitution for, outstanding awards previously granted by a corporation or other entity acquired by the Company or any of its Subsidiaries or with which the Company or any of its Subsidiaries combines by merger or otherwise. The terms and conditions of any such Awards may vary from the terms and conditions set forth in the Plan to the extent the Administrator at the time of grant may deem appropriate, subject to Applicable Laws.

 

(2) An award that an Eligible Recipient purchases at Fair Market Value (including awards that an Eligible Recipient elects to receive in lieu of fully vested compensation that is otherwise due) whether or not the Shares are delivered immediately or on a deferred basis.

 

(u) “Exercise Price” means, (i) with respect to any Option, the per share price at which a holder of such Option may purchase Shares issuable upon exercise of such Award, and (ii) with respect to a Stock Appreciation Right, the base price per share of such Stock Appreciation Right.

 

(v) “Fair Market Value” of a share of Common Stock or another security as of a particular date shall mean the fair market value as determined by the Administrator in its sole discretion; provided, that, (i) if the Common Stock or other security is admitted to trading on a national securities exchange, the fair market value on any date shall be the closing sale price reported on such date, or if no shares were traded on such date, on the last preceding date for which there was a sale of a share of Common Stock on such exchange, or (ii) if the Common Stock or other security is then traded in an over-the-counter market, the fair market value on any date shall be the average of the closing bid and asked prices for such share in such over-the-counter market for the last preceding date on which there was a sale of such share in such market.

 

(w) “Free Standing Rights” has the meaning set forth in Section 8.

 

(x) “Good Reason” has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the Participant or, if no such agreement exists or if such agreement does not define “Good Reason,” “Good Reason” and any provision of this Plan that refers to “Good Reason” shall not be applicable to such Participant.

 

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(y) “Incentive Compensation” means annual cash bonus and any Award.

 

(z) “ISO” means an Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

 

(aa) “Nonqualified Stock Option” shall mean an Option that is not designated as an ISO.

 

(bb) “Option” means an option to purchase shares of Common Stock granted pursuant to Section 7 hereof. The term “Option” as used in the Plan includes the terms “Nonqualified Stock Option” and “ISO.”

 

(cc) “Other Stock-Based Award” means a right or other interest granted pursuant to Section 10 hereof that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock, including, but not limited to, unrestricted Shares, dividend equivalents or performance units, each of which may be subject to the attainment of performance goals or a period of continued provision of service or employment or other terms or conditions as permitted under the Plan.

 

(dd) “Participant” means any Eligible Recipient selected by the Administrator, pursuant to the Administrator’s authority provided for in Section 3 below, to receive grants of Awards, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be.

 

(ee) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.

 

(ff) “Plan” means this 2022 Omnibus Equity Incentive Plan.

 

(gg) “Related Rights” has the meaning set forth in Section 8.

 

(hh) “Restricted Period” has the meaning set forth in Section 9.

 

(ii) “Restricted Stock” means a Share granted pursuant to Section 9 below subject to certain restrictions that lapse at the end of a specified period (or periods) of time and/or upon attainment of specified performance objectives.

 

(jj) “Restricted Stock Unit” means the right granted pursuant to Section 9 hereof to receive a Share at the end of a specified restricted period (or periods) of time and/or upon attainment of specified performance objectives.

 

(kk) “Rule 16b-3” has the meaning set forth in Section 3.

 

(ll) “Section 16 Officer” means any officer of the Company whom the Board has determined is subject to the reporting requirements of Section 16 of the Exchange Act, whether or not such individual is a Section 16 Officer at the time the determination to recoup compensation is made.

 

(mm) “Shares” means Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger, consolidation or other reorganization) security.

 

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(nn) “Stock Appreciation Right” means a right granted pursuant to Section 8 hereof to receive an amount equal to the excess, if any, of (i) the aggregate Fair Market Value, as of the date such Award or portion thereof is surrendered, of the Shares covered by such Award or such portion thereof, over (ii) the aggregate Exercise Price of such Award or such portion thereof.

 

(oo) “Subsidiary” means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise controls, directly or indirectly, more than 50% of the voting shares or other similar interests or a sole general partner interest or managing member or similar interest of such other Person.

 

(pp) “Transfer” has the meaning set forth in Section 15.

 

Section 3. Administration.

 

(a) The Plan shall be administered by the Administrator and shall be administered, to the extent applicable, in accordance with Rule 16b-3 under the Exchange Act (“Rule 16b-3”).

 

(b) Pursuant to the terms of the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the Board, shall have the power and authority, without limitation:

 

(1) to select those Eligible Recipients who shall be Participants;

 

(2) to determine whether and to what extent Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards or a combination of any of the foregoing, are to be granted hereunder to Participants;

 

(3) to determine the number of Shares to be covered by each Award granted hereunder;

 

(4) to determine the terms and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder (including, but not limited to, (i) the restrictions applicable to Restricted Stock or Restricted Stock Units and the conditions under which restrictions applicable to such Restricted Stock or Restricted Stock Units shall lapse, (ii) the performance goals and periods applicable to Awards, (iii) the Exercise Price of each Option and each Stock Appreciation Right or the purchase price of any other Award, (iv) the vesting schedule and terms applicable to each Award, (v) the number of Shares or amount of cash or other property subject to each Award and (vi) subject to the requirements of Section 409A of the Code (to the extent applicable) any amendments to the terms and conditions of outstanding Awards, including, but not limited to, extending the exercise period of such Awards and accelerating the payment schedules of such Awards and/or, to the extent specifically permitted under the Plan, accelerating the vesting schedules of such Awards);

 

(5) to determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Awards;

 

(6) to determine the Fair Market Value in accordance with the terms of the Plan;

 

(7) to determine the duration and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant’s service or employment for purposes of Awards granted under the Plan;

 

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(8) to adopt, alter and repeal such administrative rules, regulations, guidelines and practices governing the Plan as it shall from time to time deem advisable;

 

(9) to construe and interpret the terms and provisions of, and supply or correct omissions in, the Plan and any Award issued under the Plan (and any Award Agreement relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either specifically granted under the Plan or necessary and advisable in the administration of the Plan; and

 

(10) to prescribe, amend and rescind rules and regulations relating to sub-plans established for the purpose of satisfying applicable non-United States laws or for qualifying for favorable tax treatment under applicable non-United States laws, which rules and regulations may be set forth in an appendix or appendixes to the Plan.

 

(c) Subject to Section 5, neither the Board nor the Committee shall have the authority to reprice or cancel and regrant any Award at a lower exercise, base or purchase price or cancel any Award with an exercise, base or purchase price in exchange for cash, property or other Awards without first obtaining the approval of the Company’s stockholders.

 

(d) All decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all Persons, including the Company and the Participants.

 

(e) The expenses of administering the Plan shall be borne by the Company and its Affiliates.

 

(f) If at any time or to any extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised by the Committee. Except as otherwise provided in the Certificate of Incorporation or Bylaws of the Company, any action of the Committee with respect to the administration of the Plan shall be taken by a majority vote at a meeting at which a quorum is duly constituted or unanimous written consent of the Committee’s members.

 

Section 4. Shares Reserved for Issuance Under the Plan.

 

(a) Subject to Section 5 hereof, the number of shares of Common Stock that are reserved and available for issuance pursuant to Awards granted under the Plan shall be 1,250,000 shares of Common Stock; provided, that, shares of Common Stock issued under the Plan with respect to an Exempt Award shall not count against such share limit.

 

(b) Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise. If an Award entitles the Participant to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. If any Shares subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of Shares to the Participant, the Shares with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for granting Awards under the Plan. Notwithstanding the foregoing, (i) Shares surrendered or withheld as payment of either the Exercise Price of an Award (including Shares otherwise underlying a Stock Appreciation Right that are retained by the Company to account for the Exercise Price of such Stock Appreciation Right) and/or withholding taxes in respect of an Award and (ii) any Shares reacquired by the Company in the open market or otherwise using cash proceeds from the exercise of Options shall no longer be available for grant under the Plan. In addition, (i) to the extent an Award is denominated in shares of Common Stock, but paid or settled in cash, the number of shares of Common Stock with respect to which such payment or settlement is made shall again be available for grants of Awards pursuant to the Plan and (ii) shares of Common Stock underlying Awards that can only be settled in cash shall not be counted against the aggregate number of shares of Common Stock available for Awards under the Plan. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised and, notwithstanding the foregoing, such number of Shares shall no longer be available for grant under the Plan.

 

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(c) No more than 1,250,000 Shares shall be issued pursuant to the exercise of ISOs.

 

Section 5. Equitable Adjustments.

 

In the event of any Change in Capitalization, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance under the Plan pursuant to Section 4, (ii) the kind, number of securities subject to, and the Exercise Price subject to outstanding Options and Stock Appreciation Rights granted under the Plan, (iii) the kind, number and purchase price of Shares or other securities or the amount of cash or amount or type of other property subject to outstanding Restricted Stock, Restricted Stock Units or Other Stock-Based Awards granted under the Plan; and/or (iv) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); provided, however, that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion. Without limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, but subject in all events to the requirements of Section 409A of the Code, for the cancellation of any outstanding Award granted hereunder in exchange for payment in cash or other property having an aggregate Fair Market Value equal to the Fair Market Value of the Shares, cash or other property covered by such Award, reduced by the aggregate Exercise Price or purchase price thereof, if any; provided, however, that if the Exercise Price or purchase price of any outstanding Award is equal to or greater than the Fair Market Value of the shares of Common Stock, cash or other property covered by such Award, the Administrator may cancel such Award without the payment of any consideration to the Participant. Further, without limiting the generality of the foregoing, with respect to Awards subject to foreign laws, adjustments made hereunder shall be made in compliance with applicable requirements. Except to the extent determined by the Administrator, any adjustments to ISOs under this Section 5 shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code. The Administrator’s determinations pursuant to this Section 5 shall be final, binding and conclusive.

 

Section 6. Eligibility.

 

The Participants in the Plan shall be selected from time to time by the Administrator, in its sole discretion, from those individuals that qualify as Eligible Recipients. No Participant who is a director, but is not also an employee or consultant, of the Company shall receive Awards and be paid cash compensation during any calendar year that exceed, in the aggregate, $150,000 in total value (with cash compensation measured for this purpose at its value upon payment and any Awards measured for this purpose at their grant date Fair Market Value, as determined for the Company’s financial reporting purposes), increased to $195,000 in the calendar year of such Participant’s initial service as a non-employee director.

 

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Section 7. Options.

 

(a) General. Options granted under the Plan shall be designated as Nonqualified Stock Options or ISOs. Each Participant who is granted an Option shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including, among other things, the Exercise Price of the Option, the term of the Option and provisions regarding exercisability of the Option, and whether the Option is intended to be an ISO or a Nonqualified Stock Option (and in the event the Award Agreement has no such designation, the Option shall be a Nonqualified Stock Option). The provisions of each Option need not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be outstanding concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section 7 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable Award Agreement.

 

(b) Exercise Price. The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the time of grant, but in no event shall the exercise price of an Option be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.

 

(c) Option Term. The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten (10) years after the date such Option is granted. Each Option’s term is subject to earlier expiration pursuant to the applicable provisions in the Plan and the Award Agreement. Notwithstanding the foregoing, subject to Section 7(d) of the Plan, the Administrator shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as the Administrator, in its sole discretion, deems appropriate.

 

(d) Exercisability. Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of performance goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at any time, in whole or in part, based on such factors as the Administrator may determine in its sole discretion.

 

(e) Method of Exercise. Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of whole Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent, as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category of Options, payment in whole or in part may also be made (i) by means of consideration received under any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), (ii) in the form of unrestricted Shares already owned by the Participant which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (iii) any other form of consideration approved by the Administrator and permitted by Applicable Laws or (iv) any combination of the foregoing.

 

(f) ISOs. The terms and conditions of ISOs granted hereunder shall be subject to the provisions of Section 422 of the Code and the terms, conditions, limitations and administrative procedures established by the Administrator from time to time in accordance with the Plan. At the discretion of the Administrator, ISOs may be granted only to an employee of the Company, its “parent corporation” (as such term is defined in Section 424(e) of the Code) or a Subsidiary of the Company.

 

(1) ISO Grants to 10% Stockholders. Notwithstanding anything to the contrary in the Plan, if an ISO is granted to a Participant who owns shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company, its “parent corporation” (as such term is defined in Section 424(e) of the Code) or a Subsidiary of the Company, the term of the ISO shall not exceed five (5) years from the time of grant of such ISO and the Exercise Price shall be at least one hundred and ten percent (110%) of the Fair Market Value of the Shares on the date of grant.

 

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(2) $100,000 Per Year Limitation For ISOs. To the extent the aggregate Fair Market Value (determined on the date of grant) of the Shares for which ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds $100,000, such excess ISOs shall be treated as Nonqualified Stock Options.

 

(3) Disqualifying Dispositions. Each Participant awarded an ISO under the Plan shall notify the Company in writing immediately after the date the Participant makes a “disqualifying disposition” of any Share acquired pursuant to the exercise of such ISO. A “disqualifying disposition” is any disposition (including any sale) of such Shares before the later of (i) two (2) years after the date of grant of the ISO and (ii) one (1) year after the date the Participant acquired the Shares by exercising the ISO. The Company may, if determined by the Administrator and in accordance with procedures established by it, retain possession of any Shares acquired pursuant to the exercise of an ISO as agent for the applicable Participant until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Shares.

 

(g) Rights as Stockholder. A Participant shall have no rights to dividends, dividend equivalents or distributions or any other rights of a stockholder with respect to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, and has paid in full for such Shares and has satisfied the requirements of Section 15 hereof.

 

(h) Termination of Employment or Service. Treatment of an Option upon termination of employment of a Participant shall be provided for by the Administrator in the Award Agreement.

 

(i) Other Change in Employment or Service Status. An Option shall be affected, both with regard to vesting schedule and termination, by leaves of absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment, partial Disability or other changes in the employment status or service status of a Participant, in the discretion of the Administrator.

 

Section 8. Stock Appreciation Rights.

 

(a) General. Stock Appreciation Rights may be granted either alone (“Free Standing Rights”) or in conjunction with all or part of any Option granted under the Plan (“Related Rights”). Related Rights may be granted either at or after the time of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Stock Appreciation Rights shall be made. Each Participant who is granted a Stock Appreciation Right shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including, among other things, the number of Shares to be awarded, the Exercise Price per Share, and all other conditions of Stock Appreciation Rights. Notwithstanding the foregoing, no Related Right may be granted for more Shares than are subject to the Option to which it relates. The provisions of Stock Appreciation Rights need not be the same with respect to each Participant. Stock Appreciation Rights granted under the Plan shall be subject to the following terms and conditions set forth in this Section 8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable, as set forth in the applicable Award Agreement.

 

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(b) Awards; Rights as Stockholder. A Participant shall have no rights to dividends or any other rights of a stockholder with respect to the shares of Common Stock, if any, subject to a Stock Appreciation Right until the Participant has given written notice of the exercise thereof and has satisfied the requirements of Section 15 hereof.

 

(c) Exercise Price. The Exercise Price of Shares purchasable under a Stock Appreciation Right shall be determined by the Administrator in its sole discretion at the time of grant, but in no event shall the exercise price of a Stock Appreciation Right be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.

 

(d) Exercisability.

 

(1) Stock Appreciation Rights that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator in the applicable Award Agreement.

 

(2) Stock Appreciation Rights that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Section 7 hereof and this Section 8 of the Plan.

 

(e) Payment Upon Exercise.

 

(1) Upon the exercise of a Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the Exercise Price per share specified in the Free Standing Right multiplied by the number of Shares in respect of which the Free Standing Right is being exercised.

 

(2) A Related Right may be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the Exercise Price specified in the related Option multiplied by the number of Shares in respect of which the Related Right is being exercised. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been so exercised.

 

(3) Notwithstanding the foregoing, the Administrator may determine to settle the exercise of a Stock Appreciation Right in cash (or in any combination of Shares and cash).

 

(f) Termination of Employment or Service. Treatment of a Stock Appreciation Right upon termination of employment of a Participant shall be provided for by the Administrator in the Award Agreement.

 

(g) Term.

 

(1) The term of each Free Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after the date such right is granted.

 

(2) The term of each Related Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years after the date such right is granted.

 

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(h) Other Change in Employment or Service Status. Stock Appreciation Rights shall be affected, both with regard to vesting schedule and termination, by leaves of absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment, partial Disability or other changes in the employment or service status of a Participant, in the discretion of the Administrator.

 

Section 9. Restricted Stock and Restricted Stock Units.

 

(a) General. Restricted Stock or Restricted Stock Units may be issued under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, Restricted Stock or Restricted Stock Units shall be made. Each Participant who is granted Restricted Stock or Restricted Stock Units shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including, among other things, the number of Shares to be awarded; the price, if any, to be paid by the Participant for the acquisition of Restricted Stock or Restricted Stock Units; the period of time restrictions, performance goals or other conditions that apply to Transferability, delivery or vesting of such Awards (the “Restricted Period”); and all other conditions applicable to the Restricted Stock and Restricted Stock Units. If the restrictions, performance goals or conditions established by the Administrator are not attained, a Participant shall forfeit his or her Restricted Stock or Restricted Stock Units, in accordance with the terms of the grant. The provisions of the Restricted Stock or Restricted Stock Units need not be the same with respect to each Participant.

 

(b) Awards and Certificates. Except as otherwise provided below in Section 9(c), (i) each Participant who is granted an Award of Restricted Stock may, in the Company’s sole discretion, be issued a share certificate in respect of such Restricted Stock; and (ii) any such certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to any such Award. The Company may require that the share certificates, if any, evidencing Restricted Stock granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a share transfer form, endorsed in blank, relating to the Shares covered by such Award. Certificates for shares of unrestricted Common Stock may, in the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture in such Restricted Stock Award. With respect to Restricted Stock Units to be settled in Shares, at the expiration of the Restricted Period, share certificates in respect of the shares of Common Stock underlying such Restricted Stock Units may, in the Company’s sole discretion, be delivered to the Participant, or his or her legal representative, in a number equal to the number of shares of Common Stock underlying the Restricted Stock Units Award. Notwithstanding anything in the Plan to the contrary, any Restricted Stock or Restricted Stock Units to be settled in Shares (at the expiration of the Restricted Period, and whether before or after any vesting conditions have been satisfied) may, in the Company’s sole discretion, be issued in uncertificated form. Further, notwithstanding anything in the Plan to the contrary, with respect to Restricted Stock Units, at the expiration of the Restricted Period, Shares, or cash, as applicable, shall promptly be issued (either in certificated or uncertificated form) to the Participant, unless otherwise deferred in accordance with procedures established by the Company in accordance with Section 409A of the Code, and such issuance or payment shall in any event be made within such period as is required to avoid the imposition of a tax under Section 409A of the Code.

 

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(c) Restrictions and Conditions. The Restricted Stock or Restricted Stock Units granted pursuant to this Section 9 shall be subject to the following restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or, subject to Section 409A of the Code where applicable, thereafter:

 

(1) The Administrator may, in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain performance goals, the Participant’s termination of employment or service with the Company or any Affiliate thereof, or the Participant’s death or Disability. Notwithstanding the foregoing, upon a Change in Control, the outstanding Awards shall be subject to Section 11 hereof.

 

(2) Except as provided in the applicable Award Agreement, the Participant shall generally have the rights of a stockholder of the Company with respect to Restricted Stock during the Restricted Period; provided, however, that dividends declared during the Restricted Period with respect to an Award, shall only become payable if (and to the extent) the underlying Restricted Stock vests. Except as provided in the applicable Award Agreement, the Participant shall generally not have the rights of a stockholder with respect to Shares subject to Restricted Stock Units during the Restricted Period; provided, however, that, subject to Section 409A of the Code, an amount equal to dividends declared during the Restricted Period with respect to the number of Shares covered by Restricted Stock Units shall, unless otherwise set forth in an Award Agreement, be paid to the Participant at the time (and to the extent) Shares in respect of the related Restricted Stock Units are delivered to the Participant. Certificates for Shares of unrestricted Common Stock may, in the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture in respect of such Restricted Stock or Restricted Stock Units, except as the Administrator, in its sole discretion, shall otherwise determine.

 

(3) The rights of Participants granted Restricted Stock or Restricted Stock Units upon termination of employment or service as a director or independent contractor to the Company or to any Affiliate thereof terminates for any reason during the Restricted Period shall be set forth in the Award Agreement.

 

(d) Form of Settlement. The Administrator reserves the right in its sole discretion to provide (either at or after the grant thereof) that any Restricted Stock Unit represents the right to receive the amount of cash per unit that is determined by the Administrator in connection with the Award.

 

Section 10. Other Stock-Based Awards.

 

Other Stock-Based Awards may be issued under the Plan. Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the individuals to whom and the time or times at which such Other Stock-Based Awards shall be granted. Each Participant who is granted an Other Stock-Based Award shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including, among other things, the number of shares of Common Stock to be granted pursuant to such Other Stock-Based Awards, or the manner in which such Other Stock-Based Awards shall be settled (e.g., in shares of Common Stock, cash or other property), or the conditions to the vesting and/or payment or settlement of such Other Stock-Based Awards (which may include, but not be limited to, achievement of performance criteria) and all other terms and conditions of such Other Stock-Based Awards. In the event that the Administrator grants a bonus in the form of Shares, the Shares constituting such bonus shall, as determined by the Administrator, be evidenced in uncertificated form or by a book entry record or a certificate issued in the name of the Participant to whom such grant was made and delivered to such Participant as soon as practicable after the date on which such bonus is payable. Notwithstanding anything set forth in the Plan to the contrary, any dividend or dividend equivalent Award issued hereunder shall be subject to the same restrictions, conditions and risks of forfeiture as apply to the underlying Award.

 

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Section 11. Change in Control.

 

Unless otherwise determined by the Administrator and evidenced in an Award Agreement, in the event that (a) a Change in Control occurs, and (b) the Participant is employed by the Company or any of its Affiliates immediately prior to the consummation of such Change in Control then upon the consummation of such Change in Control, the Administrator, in its sole and absolute discretion, may:

 

(a) provide that any unvested or unexercisable portion of any Award carrying a right to exercise become fully vested and exercisable; and

 

(b) cause the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to an Award granted under the Plan to lapse and such Awards shall be deemed fully vested and any performance conditions imposed with respect to such Awards shall be deemed to be fully achieved at target performance levels.

 

If the Administrator determines in its discretion pursuant to Section 3(b)(4) hereof to accelerate the vesting of Options and/or Share Appreciation Rights in connection with a Change in Control, the Administrator shall also have discretion in connection with such action to provide that all Options and/or Stock Appreciation Rights outstanding immediately prior to such Change in Control shall expire on the effective date of such Change in Control.

 

Section 12. Amendment and Termination.

 

The Board may amend, alter or terminate the Plan at any time, but no amendment, alteration or termination shall be made that would impair the rights of a Participant under any Award theretofore granted without such Participant’s consent. The Board shall obtain approval of the Company’s stockholders for any amendment that would require such approval in order to satisfy the requirements of any rules of the stock exchange on which the Common Stock is traded or other Applicable Law. Subject to Section 3(c), the Administrator may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Section 5 of the Plan and the immediately preceding sentence, no such amendment shall materially impair the rights of any Participant without his or her consent.

 

Section 13. Unfunded Status of Plan.

 

The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.

 

Section 14. Withholding Taxes.

 

Each Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for purposes of applicable taxes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of an amount up to the maximum statutory tax rates in the Participant’s applicable jurisdiction with respect to the Award, as determined by the Company. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by Applicable Laws, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an Award, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any applicable withholding tax requirements related thereto. Whenever Shares or property other than cash are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any related taxes to be withheld and applied to the tax obligations; provided, that, with the approval of the Administrator, a Participant may satisfy the foregoing requirement by either (i) electing to have the Company withhold from delivery of Shares or other property, as applicable, or (ii) delivering already owned unrestricted shares of Common Stock, in each case, having a value not exceeding the applicable taxes to be withheld and applied to the tax obligations. Such already owned and unrestricted shares of Common Stock shall be valued at their Fair Market Value on the date on which the amount of tax to be withheld is determined and any fractional share amounts resulting therefrom shall be settled in cash. Such an election may be made with respect to all or any portion of the Shares to be delivered pursuant to an award. The Company may also use any other method of obtaining the necessary payment or proceeds, as permitted by Applicable Laws, to satisfy its withholding obligation with respect to any Award.

 

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Section 15. Transfer of Awards.

 

Until such time as the Awards are fully vested and/or exercisable in accordance with the Plan or an Award Agreement, no purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any Award or any agreement or commitment to do any of the foregoing (each, a “Transfer”) by any holder thereof in violation of the provisions of the Plan or an Award Agreement will be valid, except with the prior written consent of the Administrator, which consent may be granted or withheld in the sole discretion of the Administrator. Any purported Transfer of an Award or any economic benefit or interest therein in violation of the Plan or an Award Agreement shall be null and void ab initio and shall not create any obligation or liability of the Company, and any Person purportedly acquiring any Award or any economic benefit or interest therein transferred in violation of the Plan or an Award Agreement shall not be entitled to be recognized as a holder of such Shares or other property underlying such Award. Unless otherwise determined by the Administrator in accordance with the provisions of the immediately preceding sentence, an Option or a Stock Appreciation Right may be exercised, during the lifetime of the Participant, only by the Participant or, during any period during which the Participant is under a legal Disability, by the Participant’s guardian or legal representative.

 

Section 16. Continued Employment or Service.

 

Neither the adoption of the Plan nor the grant of an Award shall confer upon any Eligible Recipient any right to continued employment or service with the Company or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company or any Affiliate thereof to terminate the employment or service of any of its Eligible Recipients at any time.

 

Section 17. Effective Date.

 

The Plan was approved by the Board on April 11, 2022 and shall be adopted and become effective on the date that it is approved by the Company’s stockholders (the “Effective Date”).

 

Section 18. Electronic Signature.

 

Participant’s electronic signature of an Award Agreement shall have the same validity and effect as a signature affixed by hand.

 

Section 19. Term of Plan.

 

No Award shall be granted pursuant to the Plan on or after the tenth (10th) anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date.

 

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Section 20. Securities Matters and Regulations.

 

(a) Notwithstanding anything herein to the contrary, the obligation of the Company to sell or deliver Shares with respect to any Award granted under the Plan shall be subject to all Applicable Laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Administrator. The Administrator may require, as a condition of the issuance and delivery of certificates evidencing shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such agreements and representations, and that such certificates bear such legends, as the Administrator, in its sole discretion, deems necessary or advisable.

 

(b) Each Award is subject to the requirement that, if at any time the Administrator determines that the listing, registration or qualification of Shares is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Shares, no such Award shall be granted or payment made or Shares issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Administrator.

 

(c) In the event that the disposition of Shares acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required by the Securities Act or regulations thereunder, and the Administrator may require a Participant receiving Common Stock pursuant to the Plan, as a condition precedent to receipt of such Common Stock, to represent to the Company in writing that the Common Stock acquired by such Participant is acquired for investment only and not with a view to distribution.

 

Section 21. Section 409A of the Code.

 

The Plan as well as payments and benefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A of the Code, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, the Participant shall not be considered to have terminated employment or service with the Company for purposes of the Plan and no payment shall be due to the Participant under the Plan or any Award until the Participant would be considered to have incurred a “separation from service” from the Company and its Affiliates within the meaning of Section 409A of the Code. Any payments described in the Plan that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Law requires otherwise. Notwithstanding anything to the contrary in the Plan, to the extent that any Awards (or any other amounts payable under any plan, program or arrangement of the Company or any of its Affiliates) are payable upon a separation from service and such payment would result in the imposition of any individual tax and penalty interest charges imposed under Section 409A of the Code, the settlement and payment of such awards (or other amounts) shall instead be made on the first business day after the date that is six (6) months following such separation from service (or death, if earlier). Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes of Section 409A of the Code. The Company makes no representation that any or all of the payments or benefits described in this Plan will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. The Participant shall be solely responsible for the payment of any taxes and penalties incurred under Section 409A.

 

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Section 22. Notification of Election Under Section 83(b) of the Code.

 

If any Participant shall, in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify the Company of such election within ten (10) days after filing notice of the election with the Internal Revenue Service.

 

Section 23. No Fractional Shares.

 

No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Administrator shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

Section 24. Beneficiary.

 

A Participant may file with the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant’s estate shall be deemed to be the Participant’s beneficiary.

 

Section 25. Paperless Administration.

 

In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.

 

Section 26. Severability.

 

If any provision of the Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.

 

Section 27. Clawback.

 

(a) If the Company is required to prepare a financial restatement due to the material non-compliance of the Company with any financial reporting requirement, then the Committee may require any Section 16 Officer to repay or forfeit to the Company, and each Section 16 Officer agrees to so repay or forfeit, that part of the Incentive Compensation received by that Section 16 Officer during the three (3) year period preceding the publication of the restated financial statement that the Committee determines was in excess of the amount that such Section 16 Officer would have received had such Incentive Compensation been calculated based on the financial results reported in the restated financial statement. The Committee may take into account any factors it deems reasonable in determining whether to seek recoupment of previously paid Incentive Compensation and how much Incentive Compensation to recoup from each Section 16 Officer (which need not be the same amount or proportion for each Section 16 Officer), including any determination by the Committee that a Section 16 Officer engaged in fraud, willful misconduct or committed grossly negligent acts or omissions which materially contributed to the events that led to the financial restatement. The amount and form of the Incentive Compensation to be recouped shall be determined by the Committee in its sole and absolute discretion, and recoupment of Incentive Compensation may be made, in the Committee’s sole and absolute discretion, through the cancellation of vested or unvested Awards, cash repayment or both.

 

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(b) Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any Applicable Laws, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such Applicable Law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

 

Section 28. Governing Law.

 

The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law of such state.

 

Section 29. Indemnification.

 

To the extent allowable pursuant to applicable law, each member of the Board and the Administrator and any officer or other employee to whom authority to administer any component of the Plan is designated shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided, however, that he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

Section 30. Titles and Headings, References to Sections of the Code or Exchange Act.

 

The titles and headings of the sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

 

Section 31. Successors.

 

The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

 

Section 32. Relationship to other Benefits.

 

No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare, or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

 

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Exhibit 10.6

 

 

Employment Agreement

 

THIS EMPLOYMENT AGREEMENT is made on this      15      day of      April, 2021     , by and between SYRA HEALTH, an Indiana Incorporation having its office at 1119 Keystone Way, Suite 101, Carmel, IN 46032 (“SYRA HEALTH”) and      /s/ Deepika Vuppalanchi      an individual residing at      13756 Monique Dr, Carmel, IN 46074      (“Employee.”)

 

WHEREAS, SYRA HEALTH is in a business of providing innovative solutions and services to myriad of industries.; and

 

Whereas, SYRA HEALTH desired to hire Employee to work, and the Employee desires to work for SYRA HEALTH subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual premises and covenants set forth herein, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, SYRA HEALTH and Employee mutually agree as follows:

 

1. Services to be provided: Employee agrees to be employed by SYRA HEALTH to provide the services described on Exhibit A attached hereto. While performing services hereunder, Employee should represent himself or herself as an employee of SYRA HEALTH.

 

2. Compensation: (a) SYRA HEALTH shall compensate Employee for Employee’s services hereunder as described on Exhibit A attached hereto. Employee’s compensation shall be paid in accordance with SYRA HEALTH’s standard payroll practices in effect from time to time.

 

(b) For Employee to be eligible for pay, employee must have worked a minimum of three (3) business days or twenty-four (24) work hours with the client and those hours should be approved by the client.

 

(c) SYRA HEALTH will withhold any amounts due under Section 2(a) any amounts required by applicable law, including federal, state and local income taxes and federal FICA and Medicare surtax withholdings.

 

(d) As further compensation, Employee shall be entitled to participate in such employee benefit plans as are established by SYRA HEALTH for the benefit of its employees.

 

3. Equipment and Supplies: SYRA HEALTH may provide equipment and supplies necessary for the performance of Employee’s duties hereunder, as deemed necessary by SYRA HEALTH, except as otherwise agreed by SYRA HEALTH and Employee from time to time. Such equipment and supplies shall be used by Employee only to the extent necessary for the performance of Employee’s duties hereunder. Upon termination of this Agreement, Employee shall immediately return all equipment supplied by SYRA HEALTH.

 

4. Probationary Period:

 

An employee’s first ninety (90) days of employment are considered a continuation of the employment selection process. The ninety (90) day probationary period provides the Company an opportunity to observe and evaluate the capacity of the employee, which includes the employee’s ability to satisfactorily perform the essential functions of his or her job; and to observe and evaluate the employee’s work habits and conduct, including attendance and the employee’s relationship with co- workers and superiors.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 1

 

 

 

 

During this probationary period, the Company may terminate employment immediately, with or without cause and with or without notice. Employee may terminate his or her employment with the Company with a fourteen (14) days’ notice, otherwise employee salary will be deducted in lieu of notice period.

 

This 90 day probationary period is not a term of employment and is not intended, nor does it, impact the at will nature of the relationship between the Company and the employee.

 

5. Term at Termination:

 

(a)The term of this Agreement shall commence on April 19, 2021        with the terms and conditions set forth herein.

 

(b)This Agreement may be terminated:

 

○By SYRA HEALTH, without cause, upon two weeks (14) days’ notice to the other party.
○Immediately by SYRA HEALTH, for cause, including, without limitation, to Employee’s failure or refusal to perform Employee’s duties hereunder.
○At any time by employee, without cause, upon thirty (30) days’ written notice to the other party
○Failure to serve the notice period during probation and after probation, employee salary will be deducted in lieu of notice period.
○Upon Employee’s death, as of the date of Employee’s death.

 

(c) SYRA HEALTH shall pay Employee all sums due hereunder as compensation or expense reimbursements within 60 days of Termination Date.

 

(d) There can be instances where SYRA HEALTH clients may abruptly end projects or seek replacement of the employee. When these instances occur, SYRA HEALTH reserves the right to terminate Employees hired/engaged immediately under contract to SYRA HEALTH and working at these SYRA HEALTH Client locations.

 

(e) If the timesheet is not approved by client or the payment is stopped by client then employee salary will not be released for those unapproved hours.

 

6. Manner of Conduct: Employee acknowledges that Employee’s conduct while performing services under this Agreement will reflect directly on SYRA HEALTH and the reputation of SYRA HEALTH’s business, and agrees to conduct himself or herself in such a manner as to foster and support desirable relationships with clients of SYRA HEALTH and to bolster the positive image of SYRA HEALTH’s business. Employee agrees that Employee will observe and comply with the policies and rules of SYRA HEALTH, respecting performance of Employee’s duties hereunder and will carry out and perform orders and directions stated by SYRA HEALTH from time to time.

 

7. Liability for Employee’s Actions; Indemnification: Employee and SYRA HEALTH expressly agree that SYRA HEALTH shall not be liable for any action or failure to act of Employee which is outside the scope of Employee’s employment hereunder. Employee agrees to indemnify and hold harmless SYRA HEALTH and its shareholders, directors, officers, employees and agents from and against any and all losses, damages, injuries, claims, demands, actions and causes of action, and all expenses, legal or otherwise (including court costs and attorneys’ fees), of any kind and nature arising against any of them as a result of or caused by any action or failure to act of Employee which is outside the scope of Employee’s employment hereunder. The waiver of liability and indemnification contained in this section shall continue in full force and effect notwithstanding the termination of this Agreement, whether by expiration of time, by operation of law or otherwise.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

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8. Restrictive Covenants: Employee acknowledges that SYRA HEALTH has established a reputation for superior performance in its field and a special relationship between itself and its clients. As a result of Employee’s performance of Employee’s duties hereunder, Employee shall receive special introduction to and the opportunity to develop relationships with the clients of SYRA HEALTH. During or after the termination of this Agreement, Employee’s disclosure to third parties of the names of or other significant or relevant information with respect to the clients or prospective clients of SYRA HEALTH, Employee’s ceasing employment with SYRA HEALTH to provide services to a client or prospective client of SYRA HEALTH either as an employee or independent contractor, or the solicitation by Employee, directly or indirectly, of the clients or prospective clients of SYRA HEALTH for the personal benefit of Employee, for the benefit of any third party or for any other reason would have an adverse impact upon the business of SYRA HEALTH. Further, after termination of this Agreement, Employee’s use of the knowledge and/or relationships obtained as a result of Employee’s employment by SYRA HEALTH would have an adverse effect upon the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee agrees as follows:

 

(a) Non-Employment by Clients of SYRA HEALTH: During the term of this Agreement, SYRA HEALTH will expend time, resources and expense to train Employee to provide services to clients of SYRA HEALTH. If Employee were to provide services, directly or indirectly, for a client of SYRA HEALTH (defined below) as an employee or independent contractor, such time, resources and expense would be lost and would have an adverse effect on the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee hereby agrees that during the term of this Agreement and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not provide services, directly or indirectly, to a client of SYRA HEALTH, whether as an employee or as an independent contractor.

 

For purposes hereof, “clients of SYRA HEALTH” shall include: (i) any client to whom SYRA HEALTH has provided services; or (ii) any client for which Employee directly provided services while employed by SYRA HEALTH.

 

(b) Non-Employment by Prospective Clients of SYRA HEALTH: During the term of this Agreement, SYRA HEALTH will expend time, resources and expense to train Employee to provide services to clients of SYRA HEALTH. If Employee were to provide services, directly or indirectly, for a prospective client of SYRA HEALTH (defined below) as an employee or independent contractor, such time, resources and expense would be lost and would have an adverse effect on the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee hereby agrees that during the term of this Agreement and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not provide services, directly or indirectly, to a prospective client of SYRA HEALTH, whether as an employee or as an independent contractor.

 

For purposes hereof, “prospective clients of SYRA HEALTH” shall include any person to whom or entity to which SYRA HEALTH has directly made a proposal for the sale of services.

 

(c) Non-Disclosure of Compensation: During the term of this Agreement, and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee agrees not to disclose Employee’s compensation to any client of SYRA HEALTH to which Employee was assigned during the six (6) month period immediately preceding the date of expiration or termination of this Agreement.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 3

 

 

 

 

(d) Solicitation by Client of SYRA HEALTH: During the term of this Agreement, in the event Employee is solicited for employment or for engagement as an independent contractor by any client of SYRA HEALTH to which Employee is assigned or has been assigned within the preceding one (1) year, Employee agrees to immediately disclose such communication in writing to SYRA HEALTH.

 

(e) Non-Disclosure of Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not disclose the names of or any other significant or relevant information with respect to the clients of SYRA HEALTH (defined above) to any third party unless such disclosure is in furtherance of the business of SYRA HEALTH or has been consented to in writing by SYRA HEALTH.

 

(f) Non-Disclosure of Prospective Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not disclose the names of or any other significant or relevant information with respect to the prospective clients of SYRA HEALTH (defined above) to any third party unless such disclosure is in furtherance of the business of SYRA HEALTH or has been consented to in writing by SYRA HEALTH.

 

(g) Non-Solicitation of Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit, for Employee’s personal benefit or the benefit of any third party, the clients of SYRA HEALTH (defined above), for the provision of any services offered by SYRA HEALTH to its clients at any time during Employee’s employment by SYRA HEALTH.

 

(h) Non-Solicitation of Prospective Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit, for Employee’s personal benefit or the benefit of any third party, the prospective clients of SYRA HEALTH (defined above), for the provision of any services offered by SYRA HEALTH to its clients at any time during Employee’s employment by SYRA HEALTH.

 

(i) Non-Solicitation of Employees and Independent Contractors: During the term of this Agreement, Employee will be exposed to and develop relationships with the employees and independent contractors of SYRA HEALTH. The solicitation of such employees of SYRA HEALTH to leave the employment of SYRA HEALTH or of such independent contractors to terminate their engagement by SYRA HEALTH, whether to be employed by, to own or hold any interest in or otherwise be involved with any business which competes with or is similar in nature to the business of SYRA HEALTH, whether as an employee, agent, independent contractor, partner, shareholder, officer, director, member, proprietor or otherwise, would have an adverse impact upon the business of SYRA HEALTH.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 4

 

 

 

 

Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee agrees that:

 

  ●During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit or otherwise attempt to induce any employee of SYRA HEALTH to leave the employment of SYRA HEALTH for any reason. For purposes hereof, “employee of SYRA HEALTH” shall include any employee employed by SYRA HEALTH at any time during the term of this Agreement.

 

  ●During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit or otherwise attempt to induce any independent contractor of SYRA HEALTH to terminate such independent contractor’s engagement with SYRA HEALTH for any reason. For purposes hereof, “independent contractor of SYRA HEALTH” shall include any person or entity engaged as an independent contractor by SYRA HEALTH at any time during the term of this Agreement.
    

9. Proprietary Information: During the term of this Agreement, Employee will be exposed to certain confidential and proprietary information belonging to SYRA HEALTH and certain methods of procuring and protecting SYRA HEALTH’s market and its business, including, but not limited to, SYRA HEALTH’s business plans; strategies; concepts; financial records; pricing schedules; operating procedures; client lists and requirements; contracts and agreements with clients; employee and independent contractor lists; employee and independent contractor compensation and billing rates; contracts and agreements with employees; contracts and agreements with independent contractors; identity of subcontractors; and contracts and agreements with subcontractors (the “Proprietary Information”), all of which is confidential and the sole property of SYRA HEALTH. Employee acknowledges that all of the Proprietary Information is the sole and exclusive property of SYRA HEALTH, and Employee agrees to maintain all of the Proprietary Information at all times as secret and confidential. Employee further acknowledges that the Proprietary Information, including any such Proprietary Information used or created by SYRA HEALTH in the future or created by Employee during the term of this Agreement, is a valuable, special and unique asset of SYRA HEALTH and constitutes confidential information in which SYRA HEALTH has a protectable interest. Employee expressly acknowledges that the Proprietary Information constitutes a “trade secret” as defined by the Indiana Uniform Trade Secrets Act, Indiana Code 24-2-3-1. et seq.

 

Therefore, to avoid disputes in the future and in consideration for entry into this Agreement, Employee agrees that during the term of this Agreement, and at all times thereafter, Employee will maintain the secrecy of the Proprietary Information and will not disclose any of the Proprietary Information to any person, firm, corporation or other entity for any reason or purpose whatsoever except in the usual discharge of Employee’s duties hereunder, and even then, Employee shall limit the access of others to the Proprietary Information to such persons or entities and to such extent as is necessary for Employee to carry out his duties for SYRA HEALTH. During the term of this Agreement, and at all times thereafter, Employee promises and agrees not to use the Proprietary Information for his own benefit or the benefit of any third party.

 

10. Employee Acknowledgment: Employee acknowledges and agrees that the restrictions in Sections 8 and 9 above will not prevent Employee from obtaining gainful employment in the future in Employee’s field of expertise or cause Employee undue hardship. Employee has carefully read and considered the provisions of Sections 8 and 9, and, having done so, agrees that the restrictions set forth therein are fair and reasonable and are reasonably required for the protection of the legitimate interests of SYRA HEALTH. Employee understands that this Agreement places certain restrictions on Employee’s future employment outside SYRA HEALTH.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 5

 

 

 

 

11. Tolling: In the event that Employee violates any of the covenants contained in Sections 8 or 9 of this Agreement, the time period of such covenant shall be tolled so long as such violation continues and during the course of any litigation arising under this Agreement.

 

12. Representations of Employee:

 

(a) Employee represents that Employee is not bound by any existing agreement of any type or nature which restricts Employee from accepting employment with SYRA HEALTH, or from performing the duties required of the position. Employee warrants that Employee has disclosed the existence of and is not restricted by any restrictive covenant or confidentiality agreement of any type of nature from any prior employment. Should a prior SYRA HEALTH assert that Employee is so restricted, Employee shall indemnify, defend and hold harmless SYRA HEALTH from any attorneys’ fees and costs incurred in defending these claims, as well as any and all damages that may be assessed against SYRA HEALTH.

 

(b) Employee warrants that Employee is eligible to legally work in the United States (being a citizen, documented resident alien or possessing other eligibility documentation).

 

13. Remedies: Since it is recognized that irreparable damage could result to SYRA HEALTH from any violation this Agreement, it is expressly agreed that, in addition to any and all other remedies available to it, SYRA HEALTH shall have the remedy of restraining order, injunction and such other equitable relief as may be decreed or issued by a court of competent jurisdiction to enforce the provisions of this Agreement. In the event that SYRA HEALTH takes legal action against Employee to enforce this Agreement, SYRA HEALTH shall be entitled to recover its attorneys’ fees and costs incurred in such action from Employee.

 

14. Employee Obligations: In the event that the Employee shall owe or otherwise be indebted to SYRA HEALTH for any sum of money at the time of expiration or termination of this Agreement, Employee agrees and authorizes SYRA HEALTH to deduct such amounts from any compensation or other funds owed by SYRA HEALTH to Employee hereunder. Employee acknowledges and agrees that this constitutes an assignment of Employee’s wages for purposes of repayment of the amounts owed and that this assignment of wages (but not Employee’s obligation to repay any amounts owed) is revocable at any time upon written notice to SYRA HEALTH; however, any remaining balance owed shall be payable in full immediately upon such revocation at the election of SYRA HEALTH. Employee acknowledges that Employee has delivered a signed copy of this Agreement to SYRA HEALTH on or before employment start date.

 

15. Intellectual Property: All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Employee during the course of performing work for SYRA HEALTH or its clients shall belong exclusively to SYRA HEALTH and shall to the extent possible, be considered a work made for hire for SYRA HEALTH within the meaning of Title 17 of the United States Code, and Employee hereby assigns all rights to any deliverable that is not considered a work made for hire to SYRA HEALTH. Notwithstanding the foregoing, SYRA HEALTH acknowledges that any deliverable developed by Employee prior to the date of this Agreement or for any other party independent of any work performed by Employee under this Agreement for SYRA HEALTH remains the exclusive property of Employee or its assignee, and Employee hereby grants SYRA HEALTH a non-exclusive, paid up, perpetual, worldwide license to use, and to sublicense to its client to use, any component of such property of Employee that becomes or is part of the deliverable created by Employee hereunder.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 6

 

 

 

 

16. Severability: In the event that any provision of this Agreement shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. In the event that any provision of Section 8 or 9 relating to time period shall be declared by a court of competent jurisdiction to exceed the maximum time period such court deems reasonable and enforceable, said time period shall be deemed to become and thereafter be the maximum time period of restriction that such court deems reasonable and enforceable.

 

17. Waiver: The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be constructed as a waiver of any subsequent breach.

 

18. Assignment: Each of the respective provisions of this Agreement shall be binding upon and shall inure to the benefit of each of the parties and their respective assigns, successors, heirs, shareholders, officers, directors, employees and agents. This Agreement may be transferred and assigned to any successor to all or any part of the business of SYRA HEALTH and shall be fully enforceable against Employee by any such successor. The rights and obligations of Employee under this Agreement are not assignable by Employee without prior written consent of SYRA HEALTH.

 

19. Entire Agreement: This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. This Agreement may be modified or amended only by an agreement in writing signed by or on behalf of the party against whom enforcement of any waiver, change, or modification, extension or discharge is sought.

 

20. Applicable Laws: This Agreement shall be interpreted and enforced in accordance with the laws of the State of Indiana, and the parties hereby consent exclusively to the jurisdiction of the state and local courts of Indiana and waive any objection relating to improper venue or forum non covenants to the conduct of any proceeding in any such court.

 

21. Survival: Employee and SYRA HEALTH agree that the provisions of Sections 8 and 9 hereof shall survive the termination of this Agreement.

 

22. Consent of SYRA HEALTH: Whenever the term “consent of SYRA HEALTH” is used in this Agreement, it shall be deemed to mean the written consent of an officer of SYRA HEALTH.

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 7

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year written above.

 

SYRA HEALTH:

 

Signature: /s/ Sandeep Allam  
Printed Name: Sandeep Allam  
Title: President  
Date: 4/28/2021  

 

EMPLOYEE:    
 
Signature: /s/ Deepika Vuppalanchi  
Printed Name: Deepika Vuppalanchi  
Date: 4/19/2021  

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 8

 

 

 

 

Exhibit A (Part 1)

 

1. Services to be Provided: Employee shall provide the following services

 

Line of Business : Technical/Non-Technical  
Employment Category : Full Time – Salaried/Hourly  
Employee Classification : Exempt/Non-Exempt  

 

Job Title & Responsibilities: Refer Exhibit A (Part 2)

 

2. Compensation: Employee shall be compensated for Employee’s services as follows:

 

(a) $  150,000        (     One Hundred And Fifty Thousand Only                         ) Dollars per Annum          .

 

(b) SYRA HEALTH runs a semi-monthly payroll

 

Employee will get paid two times in a month that is every 1st and 16th of the month. Every 1st (pay period from 1st to 15th of the previous month) and 16th (pay period from 16th to 30th/31st of previous month) are the pay dates.

 

For example:

 

The First Paycheck for the pay period from 1st January to 15th January is due on the 1st February. The second paycheck for the pay period from 16th January to 31st January is due on the 16th February

 

The Subsequent paychecks will be received by employee semi-monthly.

 

Please note: If the check date falls on a Saturday, Sunday or a national holiday, direct deposits will be posted on the following business day.

 

3. Benefits: Employee is eligible for Benefits under this Employment Agreement

 

Medical/ Vision/ Basic Life/ Dental Insurance:

 

Employee is eligible for the Insurance under this agreement as per the eligibility defined above under employment category.

 

Vacation:

 

(a)Employee shall be entitled to eighty (80) hours of paid vacation during each year of Employee’s employment hereunder.

 

(b)All vacations must be scheduled at least thirty (30) days in advance with SYRA HEALTH.

 

  (c)Vacation shall be deemed to have been earned at the rate of 0.833 days per calendar month at the end of business on the last day of each calendar month of Employee’s employment hereunder. Employee can’t use advance vacation hours which have not yet been earned.

 

If Employee’s employment terminates at a time when Employee has used more vacation hours than Employee has earned, Employee shall be required to pay back to SYRA HEALTH any compensation paid to Employee for such excess vacation hours used, and Employee expressly authorizes SYRA HEALTH to withhold any such amounts due from Employee’s final paycheck.

 

Unused vacation time is to be forfeited at the expiration of the year for which it was accrued;

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 9

 

 

 

 

Holiday:

 

Employee shall be entitled to six (6) days of Holidays under this agreement as per the observed days defined in the employee benefit guide.

 

4. Once Employee has signed the applicable Employee Agreement, the individual shall be required to commence performing services. If the individual does not give a minimum of 14 days’ termination notice during probation period and 30 days termination notice after probation period to SYRA HEALTH, other than due to the death or disability of such individual, then SYRA HEALTH shall hold the right to deduct the notice period pay from employee’s salary.

 

SYRA HEALTH:  
   
Signature: /s/ Sandeep Allam  
Printed Name: Sandeep Allam  
Title: President  
Date: 4/28/2021  

 

EMPLOYEE:  
   
Signature: /s/ Deepika Vuppalanchi  
Printed Name: Deepika Vuppalanchi  
Date: 4/19/2021  

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 10

 

 

 

 

Exhibit A (Part 2)

 

Line of Business : Technical/Non-Technical  
Employment Category : Full Time – Salaried/Hourly  
Employee Classification : Exempt/Non-Exempt  

 

Job Title: CEO  

 

Responsibilities:

 

Management

 

SYRA HEALTH:  
   
Signature:   /s/ Sandeep Allam  
Printed Name: Sandeep Allam  
Title: President  
Date: 4/28/2021  
   
EMPLOYEE:  
   
Signature: /s/ Deepika Vuppalanchi  
Printed Name: Deepika Vuppalanchi  
Date: 4/19/2021  

 

  Employee Initial:  /s/ DV  

 

1119 Keystone Way, Suite 101, Carmel, IN | Phone 317-922-0922 | Fax 866-896-0246

 

Page 11

 

 

Exhibit 10.7

 

1119 Keystone Way, Suite #201,

Carmel, IN 46032

317-922-0922 Tel

866-896-0246 Fax

 

September 01, 2021

 

To

 

Deepika Vuppalanchi

13756 Monique Dr.

Carmel, Indiana 46074

 

Subject: Increase in salary

 

Dear Deepika,

 

We would like to express our gratitude by awarding you a salary increase of $200,000 per annum starting from August 01, 2021.

 

Your accomplishments have been integral to our success, and we deeply appreciate your efforts.

 

We are lucky to have you as part of our team and wish to do so for years to come.

 

Thank you for being part of Syra Health.

 

Sincerely,

 

/s/ Sandeep Allam
Sandeep Allam  
President  
Syra Health  

 

 

 

1119 Keystone Way, Suite #201, Carmel, IN 46032, Phone: 317-922-0922, Fax: 866-896-0246

 

 

 

Exhibit 10.8

 

1119 Keystone Way, Suite #201,

Carmel, IN 46032

317-922-0922 Tel

866-896-0246 Fax

 

March 01, 2022

 

To

 

Deepika Vuppalanchi

13756 Monique Dr.

Carmel, Indiana 46074

 

Subject: Increase in salary

 

Dear Deepika,

 

We would like to express our gratitude by awarding you a salary increase of $301,500 per annum starting from March 01, 2022.

 

Your accomplishments have been integral to our success, and we deeply appreciate your efforts. We are lucky to have you as part of our team and wish to do so for years to come.

 

Thank you for being part of Syra Health.

 

Sincerely,

 

/s/ Sandeep Allam  
Sandeep Allam  
President  
Syra Health  

 

 

 

1119 Keystone Way, Suite #201, Carmel, IN 46032, Phone: 317-922-0922, Fax: 866-896-0246

 

- 1 -

 

Exhibit 10.9

 

THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Third Amendment (this “Amendment”) to the Employment Agreement is dated as of October 18, 2022 and is entered into by and between Syra Health Corp., a Delaware corporation (the “Corporation”), and Deepika Vuppalanchi (the “Employee”). All capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Employment Agreement (as defined herein).

 

WHEREAS, on April 15, 2021, the Corporation entered into an employment agreement with the Employee, as amended on September 1, 2021 and March 1, 2022 (as amended, the “Employment Agreement”); and

 

WHEREAS, the Corporation and the Employee desire to amend the Employment Agreement as set forth herein.

 

NOW THEREFORE, in consideration of the above, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

  1. Section 8(c) of the Employment Agreement is amended and restated in its entirety as follows:

 

(c) Intentionally Omitted.

 

  2. This Amendment shall be for the benefit of and be binding upon, the parties hereto and their respective successors and assigns. Except as amended hereby, the terms and provisions of the Employment Agreement shall remain in full force and effect, and the Employment Agreement is in all respects ratified and confirmed. On and after the date of this Amendment, each reference in the Employment Agreement to the “Agreement”, “hereinafter”, “herein”, “hereinafter”, “hereunder”, “hereof”, or words of like import shall mean and be a reference to the Employment Agreement as amended by this Amendment. This Amendment shall be construed, enforced, and governed under the internal laws of the State of Indiana, without giving effect to any choice of law provision or rule of any other jurisdiction. This Amendment may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Amendment transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first indicated above.

 

  SYRA HEALTH CORP.
     
  By: /s/ Sandeep Allam
  Name: Sandeep Allam
  Title: President

 

  EMPLOYEE
   
  /s/ Deepika Vuppalanchi
  Deepika Vuppalanchi

 

 

 

 

Exhibit 10.10

 

BUSINESS LOAN AGREEMENT

 

 

Principal

 

Loan Date

 

Maturity

 

Loan No.

 

Call / Coll

 

Account

 

Officer

  Initials
$1,500,000.00   02-07-2022   12-31-2022   709505950   4A / 012   S9070940   MAP    

 

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.   Any item above containing ***** has been omitted due to text length limitations.

 

Borrower: Syra Health Corp Lender: Citizens State Bank of New Castle
  1119 Keystone Way Ste 301   Carmel Branch
  Carmel, lN 46032-3356   1238 Broad St, P O Box C
      New Castle, IN 47362
      (888) 529-5450
       

 

THIS BUSINESS LOAN AGREEMENT dated February 7, 2022, is made and executed between Syra Health Corp (“Borrower”) and Citizens State Bank of New Castle (“Lender”) on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (Bl the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (Cl all such Loans shall be and remain subject to the terms and conditions of this Agreement.

 

TERM. This Agreement shall be effective as of February 7, 2022, and shall continue in full force and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until December 31, 2022.

 

LINE OF CREDIT. The Indebtedness includes a revolving line of credit. Advances under the Indebtedness, as well as directions for payment from Borrower’s accounts, may be requested only in writing by Borrower or as provided in the “Advance Authority” section below. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person as described in the “Advance Authority” section below or {B) credited to any of Borrower’s accounts with Lender.

 

ADVANCE AUTHORITY. The following person or persons are authorized, except as provided in this paragraph, to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority: Sandeep Allam, Officer of Syra Health Corp; Harikrishna Allam, Officer of Syra Health Corp; Feroz Syed, Officer of Syra Health Corp; and Deepika Vuppalanchi, Officer of Syra Health Corp. FOR EACH LINE OF CREDIT ADVANCE, BORROWER REQUIRED TO COMPLETE BORROWING BASE CALCULATION WORKSHEET AND PROVIDE CURRENT AGING OF ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE TO THE BANK. LINE OF CREDIT LOAN BALANCE NOT TO EXCEED 75 % OF ACCOUNTS RECEIVABLE LESS THAN 90 DAYS PLUS STATE OF INDIANA ACCOUNTS RECEIVABLE OVER 90 DAYS.

 

DRAW REQUESTS MUST BE MADE BY: COMPLETING THE BORROWING BASE CALCULATION WORKSHEET. THE COMPLETED WORKSHEET WILL THEN BE EMAILED ALONG WITH SYRA HEAL TH CORP CURRENT AR/AP AGING REPORTS TO CITIZENS STATE BANK, AT LEAST 1 BUSINESS DAY PRIOR TO NEEDING LOC DRAW PROCEEDS. FUTURE DRAWS ARE AT LENDER DISCRETION AND SUBJECT TO BORROWER MAINTAINING FINANCIAL CONDITION SATISFACTORY TO LENDER.

 

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

 

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel.

 

Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 2

 

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.

 

Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.

 

No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.

 

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

 

Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Indiana. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 1119 Keystone Way Ste 301, Carmel, IN 46032-3356. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s state of organization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities.

 

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.

 

Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under { 1) any provision of (a) Borrower’s articles of incorporation or organization, or bylaws, or {b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties.

 

Financial Information. Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.

 

Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

 

Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 3

 

Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

 

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.

 

Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided .

 

Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral.

 

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 4

 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower’s books and records at all reasonable times.

 

Financial Statements. Furnish Lender with the following:

 

Annual Statements. As soon as available, but in no event later than thirty (30) days after the end of each fiscal year, Borrower’s balance sheet and income statement for the year ended, prepared by Borrower.

 

Tax Returns. As soon as available, but in no event later than thirty (30) days after the applicable filing date for the tax reporting period ended, Borrower’s Federal and other governmental tax returns, prepared by a tax professional satisfactory to Lender.

 

Additional Requirements. For each Line of Credit Advance, borrower required to complete Borrowing Base Calculation Worksheet and provide current aging of accounts receivable and accounts payable to the Bank. Line of Credit loan balance not to exceed 75% of accounts receivable less than 90 days plus State of Indiana accounts receivable over 90 days.

 

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.

 

Additional Information. Furnish such additional information and statements, as Lender may request from time to time.

 

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower’s properties and operations, in form, amounts, coverages and with .insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require.

 

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following : (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured ; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.

 

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

 

Loan Fees, Charges and Expenses. In addition to all other agreed upon fees, charges, and expenses, pay the following: Citizens State Bank will require an additional $1000.00 fee if an extension is required in 2023.

 

Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing .

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 5

 

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

 

Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.

 

Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.

 

Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral , including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such Jaw, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest.

 

Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense.

 

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by Borrower’s chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement.

 

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

 

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 6

 

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (Cl be treated as a balloon payment which will be due and payable at the Note’s maturity.

 

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

 

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts receivable, except to Lender.

 

Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise), consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure.

 

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.

 

Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower’s obligations under this Agreement or in connection herewith.

 

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar. proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 7

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

 

Payment Default. Borrower fails to make any payment when due under the Loan.

 

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s or any Grantor’s property or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.

 

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false l:ir misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

 

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 8

 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.

 

Insecurity. Lender in good faith believes itself insecure.

 

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law , in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Granter shall not affect Lender’s right to declare a default and to exercise its rights and remedies. All Loans shall be repaid under all circumstances without relief from any Indiana or other valuation and appraisement laws.

 

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions .are a part of this Agreement:

 

Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys ‘ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys ‘ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.

 

Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 9

 

Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.

 

Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Indiana without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Indiana.

 

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Granter, .shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered , when actually received by telefacsimile (unless otherwise required by law) , when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party ‘s address , For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

 

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance, If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

 

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates.

 

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein, without the prior written consent of Lender.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 10

 

Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature , shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

 

Time is of the Essence. Time is of the essence in the performance of this Agreement.

 

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require , Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

 

Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.

 

Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.

 

Borrower. The word “Borrower” means Syra Health Corp and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

Collateral. The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor ‘s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

 

Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.

 

Event of Default. The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.

 

GAAP. The word “GAAP” means generally accepted accounting principles.

 

Grantor. The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 11

 

Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan.

 

Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or .part of the Note.

 

Hazardous Substances. The words “Hazardous Substances” mean materials that because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term “ Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.

 

Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

 

Lender. The word “Lender” means Citizens State Bank of New Castle, its successors and assigns.

 

Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.

 

Note. The word “ Note” means the Note dated February 7, 2022 and executed by Syra Health Corp in the principal amount of $1,500,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

 

Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and [6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s assets.

 

Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.

 

Security Agreement. The words 11 Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.

 

Security Interest. The words “ Security Interest” mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

 

 
 

 

Loan No: 709505950 BUSINESS LOAN AGREEMENT
(Continued)
Page 12

 

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED FEBRUARY 7, 2022.

 

BORROWER:

 

     
SYRA HEALTH CORP      
       
By: /s/ Sandeep Allam   By: /s/ Harikrishna Allam
  Sandeep Allam, Officer of Syra Health Corp     Harikishna Allam, Officer of Syra Health Corp
         
By: /s/ Farod Syad   By:

/s/ Deepika Vuppalanchi

  Harikishna Allam, Officer of Syra Health Corp     Deepika Vuppalanchi, Officer of Syra Health Corp
       
LENDER:      
       
CITIZENS STATE BANK OF NEW CASTLE      
       
By: /s/ Matthew Patterson      
  Matthew Patterson, Relationship Manager      

 

 

LaserPro, Ver. 21.4.0.034 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. IN F:\HFS\CFI\LPL\C40.FC TR-72301 PR-9

 

 

 

 

 

Exhibit 10.11

 

COMMERCIAL SECURITY AGREEMENT

 

Principal   Loan Date   Maturity   Loan No.   Call / Coll   Account   Officer   Initials
$1,500,000.00   02-07-2022   12-31-2022   709505950   4A / 012   S9070940   MAP    

 

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing ***** has been omitted due to text length limitations.

 

Grantor: Syra Health Corp Lender: Citizens State Bank of New Castle
  1119 Keystone Way Ste 301   Carmel Branch
  Carmel, lN 46032-3356   1238 Broad St, P O Box C
      New Castle, IN 47362
      (888) 529-5450
       

 

THIS COMMERCIAL SECURITY AGREEMENT dated February 7, 2022, is made and executed between Syra Health Corp (“Grantor”) and Citizens State Bank of New Castle (“Lender”).

 

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

 

COLLATERAL DESCRIPTION. The word “Collateral” as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

 

All inventory, equipment, accounts {including but not limited to all health-care-insurance receivables), chattel paper, instruments (including but not limited to all promissory notes), letter-of-credit rights, letters of credit, documents, deposit accounts, investment property, money, other rights to payment and performance, and general intangibles {including but not limited to all software and all payment intangibles); all oil, gas and other minerals before extraction; all oil, gas, other minerals and accounts constituting as-extracted collateral; all fixtures; all timber to be cut; all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies, and commingled goods relating to the foregoing property, and all additions, replacements of and substitutions for all or any part of the foregoing property: all insurance refunds relating to the foregoing property; all good will relating to the foregoing property: all records and data and embedded software relating to the foregoing property, and all equipment, inventory and software to utilize, create, maintain and process any such records and data on electronic media; and all supporting obligations relating to the foregoing property; all whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property; and all products and proceeds (including but not limited to all insurance payments) of or relating to the foregoing property.

 

In addition, the word “Collateral” also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

 

(A) All accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described herein, whether added now or later.

 

(B) All products and produce of any of the property described in this Collateral section.

 

(C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment or other disposition of any of the property described in this Collateral section.

 

(D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party’s insurer, whether due to judgment, settlement or other process.

 

(E) All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor’s right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 2

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

GRANTOR’S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that:

 

Perfection of Security Interest. Grantor agrees to take whatever actions are requested by Lender to perfect and continue Lender’s security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender’s interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.

 

Notices to Lender. Grantor will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from time to time) prior to any (1) change in Grantor’s name; (2) change in Grantor’s assumed business name(s); (3) change in the management of the Corporation Grantor; (4) change in the authorized signer(s); (5) change in Grantor’s principal office address; (6) change in Grantor’s state of organization; (7) conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantor’s name or state of organization will take effect until after Lender has received notice.

 

No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement.

 

Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lender’s prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

 

Location of the Collateral. Except in the ordinary course of Grantor’s business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantor’s address shown above, or at the location specified in the Collateral definition in this Agreement, or at such other locations as are acceptable to Lender. Upon Lender’s request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor’s operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 3

 

Removal of the Collateral. Except in the ordinary course of Grantor’s business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lender’s prior written consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Indiana, without Lender’s prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

 

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor’s business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor’s business does not include a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement, Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

 

Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lender’s rights in the Collateral against the claims and demands of all other persons.

 

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral.

 

Inspection of Collateral. Lender and Lender’s designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located.

 

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized in Lender’s sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, attorneys’ fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized.

 

Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender’s interest in the Collateral, in Lender’s opinion, is not jeopardized.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 4

 

Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor’s due diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

 

Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days’ prior written notice to Lender and not including any disclaimer of the insurer’s liability for failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses “single interest insurance,” which will cover only Lender’s interest in the Collateral.

 

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral if the estimated cost of repair or replacement exceeds $1,000.00, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

 

Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (1 5) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor’s sole responsibility.

 

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

 

Financing Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender’s security interest. At Lender’s request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender’s security interest in the Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 5

 

GRANTOR’S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor’s right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender’s security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender’s sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

 

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor’s failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2} the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon the occurrence of any Event of Default.

 

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

 

Payment Default. Grantor fails to make any payment when due under the Indebtedness.

 

Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.

 

Default in Favor of Third Parties. Any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of any guarantor’s or Grantor’s property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

 

False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

 

Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Insolvency. The dissolution or termination of Grantor’s existence as a going business, the insolvency of Grantor, the appointment of a receiver for any part of Grantor’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 6

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Grantor’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Adverse Change. A material adverse change occurs in Grantor’s financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.

 

Insecurity. Lender in good faith believes itself insecure.

 

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Indiana Uniform Commercial Code. In addition and without limitation, Lender may exercise any one or more of the following rights and remedies:

 

Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.

 

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

 

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender’s own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person’s right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid. Under all circumstances, the Indebtedness will be repaid without relief from any Indiana or other valuation and appraisement laws.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 7

 

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lender’s right to the appointment of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver.

 

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender’s discretion transfer any Collateral into Lender’s own name or that of Lender’s nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender.

 

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

 

Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

 

Election of Remedies. Except as may be prohibited by applicable law, all of Lender’s rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s failure to perform, shall not affect Lender’s right to declare a default and exercise its remedies.

 

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees: Expenses. Grantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court.

 

Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.

 

Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Indiana without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Indiana.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 8

 

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of any of Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.

 

Power of Attorney. Grantor hereby appoints Lender as Grantor’s irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender’s security interest in the Collateral.

 

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

 

Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantor’s interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor’s successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness.

 

Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor’s Indebtedness shall be paid in full,

 

Time is of the Essence. Time is of the essence in the performance of this Agreement.

 

 
 

 

Loan No: 709505950 COMMERCIAL SECURITY AGREEMENT
(Continued)
Page 9

 

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

 

Agreement. The word “Agreement” means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

 

Borrower. The word “Borrower” means Syra Health Corp and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

Collateral. The word “Collateral” means all of Grantor’s right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

 

Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.

 

Event of Default. The words “Event of Default” mean any of the events of default set forth in this Agreement in the default section of this Agreement.

 

Grantor. The word “Grantor” means Syra Health Corp.

 

Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Indebtedness.

 

Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.

 

Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.

 

Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents.

 

Lender. The word “Lender” means Citizens State Bank of New Castle, its successors and assigns.

 

Note. The word “Note” means the Note dated February 7, 2022 and executed by Syra Health Corp in the principal amount of $1,500,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.

 

Property. The word “Property” means all of Grantor’s right, title and interest in and to all the Property as described in the “Collateral Description” section of this Agreement.

 

Related Documents. The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.

 

 
 

 

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 7, 2022.

 

GRANTOR:      
         
SYRA HEALTH CORP      
         
By: /s/ Sandeep Allam   By: /s/ Harikrishna Allam
  Sandeep Allam, Officer of Syra Health Corp     Harikishna Allam, Officer of Syra Health Corp
         
By: /s/ Farod Syad   By: /s/ Deepika Vuppalanchi
  Harikishna Allam, Officer of Syra Health Corp     Deepika Vuppalanchi, Officer of Syra Health Corp
         
LENDER:      
         

CITIZENS STATE BANK OF NEW CASTLE

     
         
X /s/ Matthew Patterson      
  Matthew Patterson, Relationship Manager      

 

 

LaserPro, Ver. 21.4.0.034 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. IN F:\HFS\CFI\LPL\E40.FC TR-72301 PR-9

 

 

 

 

 

Exhibit 10.12

 

PROMISSORY NOTE

 

Principal

 

Loan Date

 

Maturity

 

Loan No

 

Call / Coll

 

Account

 

Officer

  Initials
$1,500,000.00   02-07-2022   12-31-2022   709505950   4A / 012   S9070940   MAP    

 

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing”***” has been omitted due to text length limitations.

 

Borrower: Syra Health Corp Lender: Citizens State Bank of New Castle
  1119 Keystone Way Ste 301   Carmel Branch
  Carmel, IN 46032-3356   1238 Broad St, P O Box C
      New Castle, IN 47362
      (888) 529-5450
       

 

Principal Amount: $1,500,000.00 Date of Note: February 7, 2022

 

PROMISE TO PAY. Syra Health Corp (“Borrower”) promises to pay to Citizens State Bank of New Castle (“Lender”), or order, in lawful money of the United States of America, the principal amount of One Million Five Hundred Thousand & 00/100 Dollars ($1,500,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.

 

PAYMENT. Borrower will pay this loan in full immediately upon Lender’s demand. If no demand is made, Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on December 31, 2022. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning March 7, 2022, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; and then to any late charges. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.

 

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the NATIONAL PRIME AS QUOTED DAILY IN THE WALL STREET JOURNAL (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more often than each DAILY. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 1.500 percentage points over the Index (the “Margin”), rounded to the nearest 0.125 percent, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 4.750% per annum based on a year of 360 days. If Lender determines, in its sole discretion, that the Index has become unavailable or unreliable, either temporarily, indefinitely, or permanently, during the term of this Note, Lender may amend this Note by designating a substantially similar substitute index. Lender may also amend and adjust the Margin to accompany the substitute index. The change to the Margin may be a positive or negative value, or zero. In making these amendments, Lender may take into consideration any then-prevailing market convention tor selecting a substitute index and margin for the specific Index that is unavailable or unreliable. Such an amendment to the terms of this Note will become effective and bind Borrower 10 business days after Lender gives written notice to Borrower without any action or consent of the Borrower. NOTICE: Under no circumstances will the interest rate on this Note be less than 4.750% per annum or more than (except for any higher default rate shown below) the lesser of 21.000% per annum or the maximum rate allowed by applicable law.

 

INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.

 

PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $51.00. Other than Borrower’s obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid in full” without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Citizens State Bank of New Castle, Carmel Branch, 1238 Broad St, P 0 Box C, New Castle, IN 47362.

 

 
 

 

Loan No: 709505950

PROMISSORY NOTE

(Continued)

Page 2

 

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment.

 

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional 2.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

 

DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note:

 

Payment Default. Borrower fails to make any payment when due under this Note.

 

Other Defaults. Borrower falls to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.

 

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

 

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout. or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

 

Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

 

lnsecurity. Lender in good faith believes itself insecure.

 

LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. Under all circumstances, the Indebtedness will be repaid without relief from any Indiana or other valuation and appraisement laws.

 

 
 

 

Loan No: 709505950

PROMISSORY NOTE

(Continued)

Page 3

 

ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including without limitation all attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

 

GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Indiana without regard to its conflicts of law provisions. This Note has been accepted by Lender In the State of Indiana.

 

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized charge with which Borrower pays is later dishonored.

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

COLLATERAL. Borrower acknowledges this Note is secured by the following collateral described in the security instrument listed herein:

 

(A) a Commercial Security Agreement dated February 7, 2022 made and executed between Syra Health Corp and Lender on collateral described as: inventory, chattel paper, accounts, equipment, general intangibles, fixtures, standing timber and mineral, oil and gas.

 

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested only in writing by Borrower or as provided in this paragraph. All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender’s office shown above. The following person or persons are authorized, except as provided in this paragraph, to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority: Sandeep Allam, Officer of Syre Health Corp; Harikrishna Allam, Officer of Syra Health Corp; Feroz Syed, Officer of Syra Health Corp; and Deepika Vuppalanchi, Officer of Syra Health Corp. FOR EACH LINE OF CREDIT ADVANCE, BORROWER REQUIRED TO COMPLETE BORROWING BASE CALCULATION WORKSHEET AND PROVIDE CURRENT AGING OF ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE TO THE BANK. LINE OF CREDIT LOAN BALANCE NOT TO EXCEED 75% OF ACCOUNTS RECEIVABLE LESS THAN 90 DAYS PLUS STATE OF INDIANA ACCOUNTS RECEIVABLE OVER 90 DAYS.

 

 
 

 

Loan No: 709505950

PROMISSORY NOTE

(Continued)

Page 4

 

DRAW REQUESTS MUST BE MADE BY: COMPLETING THE BORROWING BASE CALCULATION WORKSHEET. THE COMPLETED WORKSHEET WILL THEN BE EMAILED ALONG WITH SYRA HEALTH CORP CURRENT AR/AP AGING REPORTS TO CITIZENS STATE BANK, AT LEAST 1 BUSINESS DAY PRIOR TO NEEDING LOC DRAW PROCEEDS. FUTURE DRAWS ARE AT LENDER DISCRETION AND SUBJECT TO BORROWER MAINTAINING FINANCIAL CONDITION SATISFACTORY TO LENDER. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer print-outs.

 

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any inaccurate information about Borrower’s account(s) to a consumer reporting agency. Borrower’s written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: Citizens State Bank of New Castle, Carmel Branch, 1238 Broad St, PO Box C, New Castle, IN 47362.

 

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific default provisions or rights of Lender shall not preclude Lender’s right to declare payment of this Note on its demand. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER:      
       

SYRA HEALTH CORP

 

     
By: /s/ Sandeep Allam   By: /s/ Harikrishna Allam
  Sandeep Allam, Officer of Syra Health Corp     Harikrishna Allam, Officer of Syra Health Corp
         
By: /s/ Feroz Syed   By: /s/ Deepika Vuppalanchi
  Feroz Syed, Officer of Syra Health Corp     Deepika Vuppalanchi, Officer of Syra Health Corp
         
LENDER:      
       
CITIZENS STATE BANK OF NEW CASTLE      
       
By: /s/ Matthew Patterson      
  Matthew Patterson, Relationship Manager      

 

 

 

 

 

 

Exhibit 10.13

 

PROFESSIONAL SERVICES CONTRACT

 

Contract #0000000000000000000056593

 

This Contract (“Contract”), entered into by and between Indiana Family and Social Services Administration, Division of Mental Health and Addiction (the “State”) and SYRA HEALTH CORP (the “Contractor”), is executed pursuant to the terms and conditions set forth herein. In consideration of those mutual undertakings and covenants, the parties agree as follows:

 

1.Duties of Contractor.

 

The Contractor shall coordinate the work of the State Epidemiological Outcomes Workgroup (SEOW) and support data-driven decision-making regarding prevention efforts across State agencies and bodies, including but not limited to, the Division of Mental Health and Addiction (DMHA). A detailed list of duties is set forth in Exhibit 1 and Exhibit 2, attached hereto and incorporated herein.

 

2.Consideration.

 

The Contractor will be paid at the rates described on Exhibit 1, which is attached hereto and incorporated herein, for performing the duties set forth above. Total remuneration under this Contract shall not exceed $ 610,000.00.

 

3.Term.

 

This Contract shall be effective for a period of two years. It shall commence on July 1, 2021, and shall remain in effect through June 30, 2023.

 

4.Access to Records.

 

The Contractor and its subcontractors, if any, shall maintain all books, documents, papers, accounting records, and other evidence pertaining to all costs incurred under this Contract. They shall make such materials available at their respective offices at all reasonable times during this Contract, and for three (3) years from the date of final payment under this Contract, for inspection by the State or its authorized designees. Copies shall be furnished at no cost to the State if requested.

 

5.Assignment; Successors.

 

A.The Contractor binds its successors and assignees to all the terms and conditions of this Contract. The Contractor may assign its right to receive payments to such third parties as the Contractor may desire without the prior written consent of the State, provided that the Contractor gives written notice (including evidence of such assignment) to the State thirty (30) days in advance of any payment so assigned. The assignment shall cover all unpaid amounts under this Contract and shall not be made to more than one party.

 

B.The Contractor shall not assign or subcontract the whole or any part of this Contract without the State’s prior written consent. Additionally, the Contractor shall provide prompt written notice to the State of any change in the Contractor’s legal name or legal status so that the changes may be documented and payments to the successor entity may be made.

 

-1-

 

 

6.Assignment of Antitrust Claims.

 

As part of the consideration for the award of this Contract, the Contractor assigns to the State all right, title and interest in and to any claims the Contractor now has, or may acquire, under state or federal antitrust laws relating to the products or services which are the subject of this Contract.

 

7.Audits.

 

The Contractor acknowledges that it may be required to submit to an audit of funds paid through this Contract. Any such audit shall be conducted in accordance with IC § 5-11-1, et seq., and audit guidelines specified by the State.

 

The State considers the Contractor to be a “Contractor” under 2 C.F.R. 200.330 for purposes of this Contract. However, if it is determined that the Contractor is a “subrecipient” and if required by applicable provisions of 2 C.F.R. 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements), Contractor shall arrange for a financial and compliance audit, which complies with 2 C.F.R. 200.500 et seq.

 

8.Authority to Bind Contractor.

 

The signatory for the Contractor represents that he/she has been duly authorized to execute this Contract on behalf of the Contractor and has obtained all necessary or applicable approvals to make this Contract fully binding upon the Contractor when his/her signature is affixed, and accepted by the State.

 

9.Changes in Work.

 

The Contractor shall not commence any additional work or change the scope of the work until authorized in writing by the State. The Contractor shall make no claim for additional compensation in the absence of a prior written approval and amendment executed by all signatories hereto. This Contract may only be amended, supplemented or modified by a written document executed in the same manner as this Contract.

 

10.Compliance with Laws.

 

A.The Contractor shall comply with all applicable federal, state, and local laws, rules, regulations, and ordinances, and all provisions required thereby to be included herein are hereby incorporated by reference. The enactment or modification of any applicable state or federal statute or the promulgation of rules or regulations thereunder after execution of this Contract shall be reviewed by the State and the Contractor to determine whether the provisions of this Contract require formal modification.

 

B.The Contractor and its agents shall abide by all ethical requirements that apply to persons who have a business relationship with the State as set forth in IC § 4-2-6, et seq., IC § 4-2-7, et seq. and the regulations promulgated thereunder. If the Contractor has knowledge, or would have acquired knowledge with reasonable inquiry, that a state officer, employee, or special state appointee, as those terms are defined in IC § 4-2-6-1, has a financial interest in the Contract, the Contractor shall ensure compliance with the disclosure requirements in IC § 4-2-6-10.5 prior to the execution of this Contract. If the Contractor is not familiar with these ethical requirements, the Contractor should refer any questions to the Indiana State Ethics Commission, or visit the Inspector General’s website at http://www.in.gov/ig/. If the Contractor or its agents violate any applicable ethical standards, the State may, in its sole discretion, terminate this Contract immediately upon notice to the Contractor. In addition, the Contractor may be subject to penalties under IC §§ 4-2-6, 4-2-7, 35-44.1-1-4, and under any other applicable laws.

 

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C.The Contractor certifies by entering into this Contract that neither it nor its principal(s) is presently in arrears in payment of taxes, permit fees or other statutory, regulatory or judicially required payments to the State of Indiana. The Contractor agrees that any payments currently due to the State of Indiana may be withheld from payments due to the Contractor. Additionally, further work or payments may be withheld, delayed, or denied and/or this Contract suspended until the Contractor is current in its payments and has submitted proof of such payment to the State.

 

D.The Contractor warrants that it has no current, pending or outstanding criminal, civil, or enforcement actions initiated by the State, and agrees that it will immediately notify the State of any such actions. During the term of such actions, the Contractor agrees that the State may delay, withhold, or deny work under any supplement, amendment, change order or other contractual device issued pursuant to this Contract.

 

E.If a valid dispute exists as to the Contractor’s liability or guilt in any action initiated by the State or its agencies, and the State decides to delay, withhold, or deny work to the Contractor, the Contractor may request that it be allowed to continue, or receive work, without delay. The Contractor must submit, in writing, a request for review to the Indiana Department of Administration (IDOA) following the procedures for disputes outlined herein. A determination by IDOA shall be binding on the parties. Any payments that the State may delay, withhold, deny, or apply under this section shall not be subject to penalty or interest, except as permitted by IC § 5-17-5.

 

F.The Contractor warrants that the Contractor and its subcontractors, if any, shall obtain and maintain all required permits, licenses, registrations, and approvals, and shall comply with all health, safety, and environmental statutes, rules, or regulations in the performance of work activities for the State. Failure to do so may be deemed a material breach of this Contract and grounds for immediate termination and denial of further work with the State.

 

G.The Contractor affirms that, if it is an entity described in IC Title 23, it is properly registered and owes no outstanding reports to the Indiana Secretary of State.

 

H.As required by IC § 5-22-3-7:

 

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(1)The Contractor and any principals of the Contractor certify that:

 

(A)the Contractor, except for de minimis and nonsystematic violations, has not violated the terms of:

 

(i)IC §24-4.7 [Telephone Solicitation Of Consumers];

 

 

(ii)IC §24-5-12 [Telephone Solicitations]; or

 

(iii)IC §24-5-14 [Regulation of Automatic Dialing Machines];

 

in the previous three hundred sixty-five (365) days, even if IC § 24-4.7 is preempted by federal law; and

 

(B)the Contractor will not violate the terms of IC § 24-4.7 for the duration of the Contract, even if IC §24-4.7 is preempted by federal law.

 

(2)The Contractor and any principals of the Contractor certify that an affiliate or principal of the Contractor and any agent acting on behalf of the Contractor or on behalf of an affiliate or principal of the Contractor, except for de minimis and nonsystematic violations,

 

(A)has not violated the terms of IC § 24-4.7 in the previous three hundred sixty-five (365) days, even if IC §24-4.7 is preempted by federal law; and

 

(B)(will not violate the terms of IC § 24-4.7 for the duration of the Contract, even if IC §24-4.7 is preempted by federal law.

 

11.Condition of Payment.

 

All services provided by the Contractor under this Contract must be performed to the State’s reasonable satisfaction, as determined at the discretion of the undersigned State representative and in accordance with all applicable federal, state, local laws, ordinances, rules and regulations. The State shall not be required to pay for work found to be unsatisfactory, inconsistent with this Contract or performed in violation of any federal, state or local statute, ordinance, rule or regulation.

 

12.Confidentiality, Security and Privacy of Personal Information.

 

Terms used, but otherwise not defined in this Contract shall have the same meaning as those found in 45 CFR Parts 160, 162, and 164.

 

A.“HIPAA” means the Health Insurance Portability and Accountability Act of 1996 (sections 1171 through 1179 of the Social Security Act), including any subsequent amendments to such Act.

 

B.“HIPAA Rules” mean the rules adopted by and promulgated by the US Department of Health and Human Services (“HHS”) under HIPAA and other relevant federal laws currently in force or subsequently made, such as the Health Information Technology for Economic and Clinical Heath Act (“HITECH”), as enumerated under 45 CFR Parts 160, 162, and 164, including without limitation any and all additional or modified regulations thereof. Subsets of the HIPAA Rules include:

 

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(1)“HIPAA Enforcement Rule” as defined in 45 CFR Part 160;

 

(2)“HIPAA Security Rule” as defined in 45 CFR Part 164, Subparts A and C;

 

(3)“HIPAA Breach Rule” as defined in 45 CFR Part 164, Subparts A and D; and

 

(4)“HIPAA Privacy Rule” as defined in 45 CFR Part 164, Subparts A and E.

 

C.If Contractor is deemed a Business Associate to the State, Contractor is hereby authorized by the State to create, receive, maintain, and/or transmit Protected Health Information (“PHI”) and other Personally Identifiable Information (meaning personal information as collectively defined in IC 4-1-6-1 and IC 4-1-11-3, “PII”) on the State’s behalf pursuant to and consistent with the Services performed by Contractor under this Contract.

 

D.Contractor agrees that as a Business Associate to the State it is obligated to comply with the HIPAA Rules, as such Rules apply to Business Associates, throughout the term of this Contract and thereafter as may be required by federal law and such compliance will be at Contractor’s sole expense. Further:

 

(1)Contractor will not use or further disclose PHI or PII except as expressly permitted by this Contract or as required by law. Contractor understands that this prohibition expressly applies to any information provided by the Social Security Administration, directly or through the State. It is further provided that nothing in this Contract shall be construed to permit Contractor use or disclose PHI in a manner that would violate the provisions of the HIPAA Privacy Rule as such Rule applies to the State with regard to the Services performed by Contractor under this Contract or otherwise cause the State to be non- compliant with the HIPAA Privacy Rule.

 

(2)Contractor understands it must fully comply with the HIPAA Security Rule and will employ appropriate and compliant safeguards to reasonably prevent the use or disclosure of PHI and PII other than as permitted by this Contract or required by the HIPAA Privacy Rule. Such safeguards will be designed, implemented, operated, and managed by Contractor at Contractor’s sole expense and following the Contractor’s best professional judgment regarding such safeguards. Upon the State’s reasonable request, Contractor will review such safeguards with the State. Contractor will implement the following HIPAA requirements for any forms of PHI or PII that the Contractor receives, maintains, or transmits on behalf of the State:

 

(A)Administrative safeguards under 45 CFR 164.308;

 

(B)Physical safeguards under 45 CFR 164.310;

 

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(C)Technical safeguards under 45 CFR 164.312; and

 

(D)Policies and procedures and documentation requirements under 45 CFR 164.316.

 

(3)Contractor understands that it is subject to the HIPAA Enforcement Rule under which Contractor may be subject to criminal and civil penalties for violations of and non- compliance with the HIPAA Rules.

 

E.Improper Disclosure, Security Incident, and Breach Notification.

 

(1)Contractor understands that it is subject to the HIPAA Breach Rule.

 

(2)For the purposes of this Contract, the term Breach has the same meaning as defined in the HIPAA Breach Rule. The term “Security Incident” shall mean an action or event that has resulted in the improper use or disclosure of PHI or PII in Contractor’s safekeeping (in violation of this Contract and/or in violation of the HIPAA Privacy Rule), the reasonable possibility or suspected possibility that an improper use or disclosure of PHI or PII may have occurred, or circumstances in which PHI or PII has been exposed to an opportunity for improper use or disclosure.

 

(3)If a Security Incident occurs or if Contractor suspects that a Security Incident may have occurred with respect to PHI and/or PII in Contractor’s safekeeping:

 

(A)Contractor shall notify the State of the Security Incident within one (1) business day of when Contractor discovered the Security Incident; such notification shall be made to the FSSA Privacy & Security Office in a manner reasonably prescribed by the FSSA Privacy & Security Officer and shall include as much detail as the Contractor reasonably may be able to acquire within the one (1) business day.

 

(B)For the purposes of such Security Incidents, “discovered” and “discovery” shall mean the first day on which such Security Incident is known to the Contractor or, by exercising reasonable diligence, would have been known to the Contractor. Regardless of whether the Contractor failed to exercise reasonable diligence, improperly delaying the notification of discovery beyond the one day requirement, the Contractor will notify the FSSA Privacy & Security Office within one day of gaining actual knowledge of a breach.

 

(C)In collaboration with the FSSA Privacy & Security Office, Contractor shall undertake all commercially reasonable efforts necessary to thoroughly investigate the Security Incident and to provide all results of such investigation to the FSSA Privacy & Security Office, including but not limited to Contractor personnel involved, source and cause of the Security Incident, specific information disclosed, disclosure victims (those whose PHI/PII was disclosed), disclosure recipients, supporting materials, actions taken to mitigate or stop the Security Incident, and similar details.

 

(D)Contractor’s investigation must be undertaken expeditiously and completed to the extent that a determination of whether a Breach has occurred can be reasonably made, including the identification of the victims or likely victims, within a reasonable timeframe as mutually agreed upon with the FSSA Privacy & Security Office, from the date of discovery of the Security Incident. Contractor shall provide details of its investigation to the FSSA Privacy & Security Office on an ongoing basis until the investigation is complete.

 

(E)Contractor and the FSSA Privacy & Security Office will collaborate on the results of Contractor’s investigation; the determination as to whether a Breach has occurred rests solely with the FSSA Privacy & Security Office.

 

(F)If it is determined by the FSSA Privacy & Security Office that a Breach has occurred:

 

(i)Contractor agrees that it shall be responsible for, including all costs with respect to, fulfilling the State’s and/or Contractor’s obligations for notice to all of the known and suspected victims of the Breach. Such notice shall comply with the HIPAA Breach Rule notification requirements and/or applicable notification requirements under State law.

 

(ii)Contractor further agrees that such notification will be made under its name, unless otherwise specified by the FSSA Privacy & Security Office. Contractor will coordinate its Breach notification efforts with the FSSA Privacy & Security Office; the FSSA Privacy & Security Office will approve Contractor’s Breach notification procedures and plans, including the format and content of the notice(s) prior to such notification being made.

 

(iii)Contractor accepts full responsibility for the Breach and any resulting losses or damages incurred by the State or any victim of the Breach.

 

(iv)Contractor will undertake all commercially reasonable efforts necessary to mitigate any deleterious effects of the Breach for the known and suspected victims of the Breach.

 

(v)The State, through the FSSA Privacy & Security Office, will make the appropriate notifications to HHS and/or the applicable State agencies with respect to the Breach, unless the Contractor is directed to do so by the FSSA Privacy & Security Office.

 

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(G)Contractor will undertake commercially reasonable corrective actions to eliminate or minimize to the greatest degree possible the opportunity for an identified Security Incident to reoccur and provide the FSSA Privacy & Security Office with its plans, status updates, and written certification of completion regarding such corrective actions.

 

F.Subcontractors. Contractor agrees that in accordance with the HIPAA Privacy Rule any subcontractors engaged by Contractor (in compliance with this Contract) that will create, receive, maintain, or transmit State PHI/PII on Contractor’s behalf will contractually agree to the same restrictions, conditions, and requirements that apply to Contractor with respect to such PHI/PII.

 

G.Access by Individuals to their PHI. Contractor acknowledges that in accordance with the HIPAA Privacy Rule individuals for whom Contractor has direct possession of their PHI on the State’s behalf have the right to inspect and amend their PHI, and have the right for an accounting of uses and disclosures of such PHI, except as otherwise provided therein. Contractor shall provide such right of inspection, amendment, and accounting of disclosures to such individuals upon reasonable request by the State (or by such individuals if the State directly refers such individuals to Contractor). In situations in which Contractor does not have direct possession of such PHI, then the State shall be responsible for such inspection, amendment, and accounting of disclosures rights by individuals.

 

H.Access to Records. Contractor shall make available to HHS and/or the State, Contractor’s internal practices, books, and records relating to the use and disclosure of PHI and PII provided to Contractor by the State or created, received, maintained, or transmitted by Contractor on the State’s behalf. Contractor shall promptly inform the State by giving notice to the FSSA Privacy & Security Office of any request by HHS (or its designee) for such internal practices, books, and/or records and shall provide the State with copies of any materials or other information made available to HHS.

 

I.Return of Protected Health Information. Upon request by the State or upon termination of this Contract, Contractor will, at the State’s sole option, either return or destroy all copies of any PHI or PII provided to Contractor by the State, including PHI or PII created, received, maintained, or transmitted by Contractor on the State’s behalf and Contractor shall warrant in writing that it has returned or destroyed such PHI and/or PII. Further, upon termination of this agreement Contractor will not retain any copies of any such PHI and PII and shall warrant same in writing.

 

J.At the sole discretion of the State, the State may terminate this Contract for Contractor’s material breach of this Section 12.

 

K.Contractor agrees to participate in a disaster recovery plan, as appropriate to the Contractor’s Services, as determined by the State to be necessary to uphold integral business functions in the event of an unforeseen disaster.

 

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L.Drug and Alcohol Records. In the performance of the Services under this Contract, Contractor may have access to confidential information regarding alcohol and drug abuse patient records. Contractor agrees that such information is confidential and protected information and promises and assures that any such information, regardless of form, disclosed to Contractor for the purposes of this Contract will not be disclosed or discussed with others without the prior written consent of the State. The Contractor and the State will comply with the applicable requirements of 42 CFR Part 2 and any other applicable federal or state law or regulatory requirement concerning such information. The Contractor will report any unauthorized disclosures of such information in compliance with Section 12.F.

 

M.Confidentiality of State Information. The Contractor understands and agrees that data, materials, and information disclosed to the Contractor may contain confidential and protected information. The Contractor covenants that data, material and information gathered, based upon or disclosed to the Contractor for the purpose of this Contract, will not be disclosed to or discussed with third parties without the prior written consent of the State.

 

The parties acknowledge that the services to be performed by Contractor for the State under this contract may require or allow access to data, materials, and information containing Social Security numbers maintained by the State in its computer system or other records. In addition to the covenant made above in this section and pursuant to 10 IAC 5-3-1(4), the Contractor and the State agree to comply with the provisions of IC 4-1-10 and IC 4-1-11. If any Social Security number(s) is/are disclosed by Contractor, Contractor agrees to pay the cost of the notice of disclosure of a breach of the security of the system in addition to any other claims and expenses for which it is liable under the terms of this contract. The Contractor shall report any unauthorized disclosures of Social Security numbers to the FSSA Privacy & Security Office within one (1) business day of the date of discovery.

 

N.Contractor will indemnify and hold the State harmless from any loss, damage, costs, expense, judgment, sanction or liability, including, but not limited to, attorneys’ fees and costs, that the State incurs or is subject to, as a result of a breach of this Section by the Contractor or any subcontractor, agent or person under Contractor’s control. In the event a claim is made against the State for any such claim, cause of action, liability, damage, cost or expense, State may, at its sole option: (i) tender the defense to Contractor, who shall provide qualified and competent counsel to represent the State interest at Contractor’s expense; or (ii) undertake its own defense, utilizing such professionals as it deems reasonably necessary, holding Contractor responsible for all reasonable costs thereof. In any event, State shall have the sole right to control and approve any settlement or other compromise of any claim brought against it that is covered by this Section.

 

O.Contractor shall adhere to all relevant FSSA Application Security policies located at http://in.gov/fssa/4979.htm for any related activities provided to FSSA under this contract. Contractor is responsible for validating that any subcontractors they engage will also comply with these policies. Any exceptions to these policies require written approval from the FSSA Privacy & Security Office.

 

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13.Continuity of Services.

 

A.The Contractor recognizes that the service(s) to be performed under this Contract are vital to the State and must be continued without interruption and that, upon Contract expiration, a successor, either the State or another contractor, may continue them. The Contractor agrees to:

 

(1)Furnish phase-in training; and

 

(2)Exercise its best efforts and cooperation to effect an orderly and efficient transition to a successor.

 

B.The Contractor shall, upon the State’s written notice:

 

(1)Furnish phase-in, phase-out services for up to sixty (60) days after this Contract expires; and

 

(2)Negotiate in good faith a plan with a successor to determine the nature and extent of

 

(3)phase-in, phase-out services required. The plan shall specify a training program and a date for transferring responsibilities for each division of work described in the plan, and shall be subject to the State’s approval. The Contractor shall provide sufficient experienced personnel during the phase-in, phase-out period to ensure that the services called for by this Contract are maintained at the required level of proficiency.

 

C.The Contractor shall allow as many personnel as practicable to remain on the job to help the successor maintain the continuity and consistency of the services required by this Contract. The Contractor also shall disclose necessary personnel records and allow the successor to conduct on-site interviews with these employees. If selected employees are agreeable to the change, the Contractor shall release them at a mutually agreeable date and negotiate transfer of their earned fringe benefits to the successor.

 

D.The Contractor shall be reimbursed for all reasonable phase-in, phase-out costs (i.e., costs incurred within the agreed period after contract expiration that result from phase-in, phase-out operations).

 

14.Debarment and Suspension.

 

A.The Contractor certifies by entering into this Contract that neither it nor its principals nor any of its subcontractors are presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from entering into this Contract by any federal agency or by any department, agency or political subdivision of the State of Indiana. The term “principal” for purposes of this Contract means an officer, director, owner, partner, key employee or other person with primary management or supervisory responsibilities, or a person who has a critical influence on or substantive control over the operations of the Contractor.

 

B.The Contractor certifies that it has verified the state and federal suspension and debarment status for all subcontractors receiving funds under this Contract and shall be solely responsible for any recoupment, penalties or costs that might arise from use of a suspended or debarred subcontractor. The Contractor shall immediately notify the State if any subcontractor becomes debarred or suspended, and shall, at the State’s request, take all steps required by the State to terminate its contractual relationship with the subcontractor for work to be performed under this Contract.

 

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15.Default by State.

 

If the State, sixty (60) days after receipt of written notice, fails to correct or cure any material breach of this Contract, the Contractor may cancel and terminate this Contract and institute measures to collect monies due up to and including the date of termination.

 

16.Disputes.

 

A.Should any disputes arise with respect to this Contract, the Contractor and the State agree to act immediately to resolve such disputes. Time is of the essence in the resolution of disputes.

 

B.The Contractor agrees that, the existence of a dispute notwithstanding, it will continue without delay to carry out all of its responsibilities under this Contract that are not affected by the dispute. Should the Contractor fail to continue to perform its responsibilities regarding all non- disputed work, without delay, any additional costs incurred by the State or the Contractor as a result of such failure to proceed shall be borne by the Contractor, and the Contractor shall make no claim against the State for such costs.

 

C.If the parties are unable to resolve a contract dispute between them after good faith attempts to do so, a dissatisfied party shall submit the dispute to the Commissioner of the Indiana Department of Administration for resolution. The dissatisfied party shall give written notice to the Commissioner and the other party. The notice shall include: (1) a description of the disputed issues, (2) the efforts made to resolve the dispute, and (3) a proposed resolution. The Commissioner shall promptly issue a Notice setting out documents and materials to be submitted to the Commissioner in order to resolve the dispute; the Notice may also afford the parties the opportunity to make presentations and enter into further negotiations. Within thirty (30) business days of the conclusion of the final presentations, the Commissioner shall issue a written decision and furnish it to both parties. The Commissioner’s decision shall be the final and conclusive administrative decision unless either party serves on the Commissioner and the other party, within ten (10) business days after receipt of the Commissioner’s decision, a written request for reconsideration and modification of the written decision. If the Commissioner does not modify the written decision within thirty (30) business days, either party may take such other action helpful to resolving the dispute, including submitting the dispute to an Indiana court of competent jurisdiction. If the parties accept the Commissioner’s decision, it may be memorialized as a written Amendment to this Contract if appropriate.

 

D.The State may withhold payments on disputed items pending resolution of the dispute. The unintentional nonpayment by the State to the Contractor of one or more invoices not in dispute in accordance with the terms of this Contract will not be cause for the Contractor to terminate this Contract, and the Contractor may bring suit to collect these amounts without following the disputes procedure contained herein.

 

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E.With the written approval of the Commissioner of the Indiana Department of Administration, the parties may agree to forego the process described in subdivision C. relating to submission of the dispute to the Commissioner.

 

F.This paragraph shall not be construed to abrogate provisions of IC § 4-6-2-11 in situations where dispute resolution efforts lead to a compromise of claims in favor of the State as described in that statute. In particular, releases or settlement agreements involving releases of legal claims or potential legal claims of the state should be processed consistent with IC § 4-6-2-11, which requires approval of the Governor and Attorney General.

 

17.Drug-Free Workplace Certification.

 

As required by Executive Order No. 90-5 dated April 12, 1990, issued by the Governor of Indiana, the Contractor hereby covenants and agrees to make a good faith effort to provide and maintain a drug-free workplace. The Contractor will give written notice to the State within ten (10) day s after receiving actual notice that the Contractor, or an employee of the Contractor in the State of Indiana, has been convicted of a criminal drug violation occurring in the workplace. False certification or violation of this certification may result in sanctions including, but not limited to, suspension of contract payments, termination of this Contract and/or debarment of contracting opportunities with the State for up to three (3) years.

 

In addition to the provisions of the above paragraph, if the total amount set forth in this Contract is in excess of $25,000.00, the Contractor certifies and agrees that it will provide a drug-free workplace by:

 

A.Publishing and providing to all of its employees a statement notifying them that the unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited in the Contractor’s workplace, and specifying the actions that will be taken against employees for violations of such prohibition;

 

B.Establishing a drug-free awareness program to inform its employees of: (1) the dangers of drug abuse in the workplace; (2) the Contractor’s policy of maintaining a drug-free workplace; (3) any available drug counseling, rehabilitation and employee assistance programs; and (4) the penalties that may be imposed upon an employee for drug abuse violations occurring in the workplace;

 

C.Notifying all employees in the statement required by subparagraph (A) above that as a condition of continued employment, the employee will: (1) abide by the terms of the statement; and (2) notify the Contractor of any criminal drug statute conviction for a violation occurring in the workplace no later than five (5) days after such conviction;

 

D.Notifying the State in writing within ten (10) days after receiving notice from an employee under subdivision (C)(2) above, or otherwise receiving actual notice of such conviction;

 

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E.Within thirty (30) days after receiving notice under subdivision (C)(2) above of a conviction, imposing the following sanctions or remedial measures on any employee who is convicted of drug abuse violations occurring in the workplace: (1) taking appropriate personnel action against the employee, up to and including termination; or (2) requiring such employee to satisfactorily participate in a drug abuse assistance or rehabilitation program approved for such purposes by a federal, state or local health, law enforcement, or other appropriate agency; and

 

F.Making a good faith effort to maintain a drug-free workplace through the implementation of subparagraphs (A) through (E) above.

 

18.Employment Eligibility Verification.

 

As required by IC § 22-5-1.7, the Contractor swears or affirms under the penalties of perjury that the Contractor does not knowingly employ an unauthorized alien. The Contractor further agrees that:

 

A.The Contractor shall enroll in and verify the work eligibility status of all his/her/its newly hired employees through the E-Verify program as defined in IC § 22-5-1.7-3. The Contractor is not required to participate should the E-Verify program cease to exist. Additionally, the Contractor is not required to participate if the Contractor is self-employed and does not employ any employees.

 

B.The Contractor shall not knowingly employ or contract with an unauthorized alien. The Contractor shall not retain an employee or contract with a person that the Contractor subsequently learns is an unauthorized alien.

 

C.The Contractor shall require his/her/its subcontractors, who perform work under this Contract, to certify to the Contractor that the subcontractor does not knowingly employ or contract with an unauthorized alien and that the subcontractor has enrolled and is participating in the E - Verify program. The Contractor agrees to maintain this certification throughout the duration of the term of a contract with a subcontractor.

 

The State may terminate for default if the Contractor fails to cure a breach of this provision no later than thirty (30) days after being notified by the State.

 

19.Employment Option.

 

If the State determines that it would be in the State’s best interest to hire an employee of the Contractor, the Contractor will release the selected employee from any non-competition agreements that may be in effect. This release will be at no cost to the State or the employee.

 

20.Force Majeure.

 

In the event that either party is unable to perform any of its obligations under this Contract or to enjoy any of its benefits because of natural disaster or decrees of governmental bodies not the fault of the affected party (hereinafter referred to as a “Force Majeure Event”), the party who has been so affected shall immediately or as soon as is reasonably possible under the circumstances give notice to the other party and shall do everything possible to resume performance. Upon receipt of such notice, all obligations under this Contract shall be immediately suspended. If the period of nonperformance exceeds thirty (30) days from the receipt of notice of the Force Majeure Event, the party whose ability to perform has not been so affected may, by giving written notice, terminate this Contract.

 

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21.Funding Cancellation.

 

As required by Financial Management Circular 2007-1 and IC § 5-22-17-5, when the Director of the State Budget Agency makes a written determination that funds are not appropriated or otherwise available to support continuation of performance of this Contract, this Contract shall be canceled. A determination by the Director of State Budget Agency that funds are not appropriated or otherwise available to support continuation of performance shall be final and conclusive.

 

22.Governing Law .

 

This Contract shall be governed, construed, and enforced in accordance with the laws of the State of Indiana, without regard to its conflict of laws rules. Suit, if any, must be brought in the State of Indiana.

 

23.HIPAA Compliance.

 

This information has been incorporated into Clause 12.

 

24.Indemnification.

 

The Contractor agrees to indemnify, defend, and hold harmless the State, its agents, officials, and employees from all third party claims and suits including court costs, attorney’s fees, and other expenses caused by any act or omission of the Contractor and/or its subcontractors, if any, in the performance of this Contract. The State will not provide indemnification to the Contractor.

 

25.Independent Contractor; Workers’ Compensation Insurance.

 

The Contractor is performing as an independent entity under this Contract. No part of this Contract shall be construed to represent the creation of an employment, agency, partnership or joint venture agreement between the parties. Neither party will assume liability for any injury (including death) to any persons, or damage to any property, arising out of the acts or omissions of the agents, employees or subcontractors of the other party. The Contractor shall provide all necessary unemployment and workers’ compensation insurance for the Contractor’s employees, and shall provide the State with a Certificate of Insurance evidencing such coverage prior to starting work under this Contract.

 

26.Indiana Veteran Owned Small Business Enterprise Compliance

 

Award of this Contract was based, in part, on the Indiana Veteran Owned Small Business Enterprise (“IVOSB”) participation plan, as detailed in the IVOSB Subcontractor Commitment Form, commonly referred to as “Attachment A-1” in the procurement documentation and incorporated by reference herein. Therefore, any changes to this information during the Contract term must be approved by IDOA’s Division of Supplier Diversity and may require an amendment. It is the State’s expectation that the Contractor will meet the subcontractor commitments during the Contract term. The following certified IVOSB subcontractor(s) will be participating in this Contract:

 

IVB   PHONE  

COMPANY

NAME

 

SCOPE OF

PRODUCTS and/or SERVICES

 

UTILIZATION

DATE

  PERCENT
Veteran   317-927-7004   Bingle Research Group, Inc.   Building Brands Through Research   07/01/2021 –06/30/2023   6.82


 

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A copy of each subcontractor agreement must be submitted to the Division of Supplier Diversity within thirty (30) days of the effective date of this Contract. The subcontractor agreements may be uploaded into Pay Audit (Indiana’s subcontractor payment auditing system), emailed to IndianaVeteransPreference@idoa. IN.gov, or mailed to IDOA, 402 W. Washington Street, Room W-462, Indianapolis, IN 46204. Failure to provide a copy of any subcontractor agreement may be deemed a violation of the rules governing IVOSB procurement and may result in sanctions allowable under 25 IAC 9-5-2. Requests for changes must be submitted to IndianaVeteransPreference@idoa. IN.gov for review and approval before changing the participation plan submitted in connection with this Contract.

 

The Contractor shall report payments made to certified IVOSB subcontractors under this Contract on a monthly basis using Pay Audit. The Contractor shall notify subcontractors that they must confirm payments received from the Contractor in Pay Audit. The Pay Audit system can be accessed on the IDOA webpage at: www.in.gov/idoa/mwbe/payaudit.htm. The Contractor may also be required to report IVOSB certified subcontractor payments directly to the Division of Supplier Diversity, as reasonably requested and in the format required by the Division of Supplier Diversity.

 

The Contractor’s failure to comply with the provisions in this clause may be considered a material breach of the Contract.

 

27.Information Technology Enterprise Architecture Requirements.

 

If this Contract involves information technology-related products or services, the Contractor agrees that all such products or services are compatible with any of the technology standards found at https://www.in.gov/iot/2394.htm that are applicable, including the assistive technology standard. The State may terminate this Contract for default if the terms of this paragraph are breached.

 

28.Insurance.

 

A.The Contractor and its subcontractors (if any) shall secure and keep in force during the term of this Contract the following insurance coverages (if applicable) covering the Contractor for any and all claims of any nature which may in any manner arise out of or result from Contractor’s performance under this Contract:

 

(1)Commercial general liability, including contractual coverage, and products or completed operations coverage (if applicable), with minimum liability limits not less than $700,000 per person and $5,000,000 per occurrence unless additional coverage is required by the State. The State is to be named as an additional insured on a primary, non-contributory basis for any liability arising directly or indirectly under or in connection with this Contract.

 

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(2)Automobile liability for owned, non-owned and hired autos with minimum liability limits not less than $700,000 per person and $5,000,000 per occurrence. The State is to be named as an additional insured on a primary, non-contributory basis.

 

(3)Errors and Omissions liability with minimum liability limits of $1,000,000 per claim and in the aggregate. Coverage for the benefit of the State shall continue for a period of two (2) years after the date of service provided under this Contract.

 

(4)Fiduciary liability if the Contractor is responsible for the management and oversight of various employee benefit plans and programs such as pensions, profit-sharing and savings, among others with limits no less than $700,000 per cause of action and

 

(5)$5,000,000 in the aggregate.

 

(6)Valuable Papers coverage, if applicable, with an Inland Marine Policy Insurance with limits sufficient to pay for the re-creation and reconstruction of such records.

 

(7)Surety or Fidelity Bond(s) if required by statute or by the agency.

 

(8)Cyber Liability if requested by the State addressing risks associated with electronic transmissions, the internet, networks and informational assets, and having limits of no less than $700,000 per occurrence and $5,000,000 in the aggregate.

 

The Contractor shall provide proof of such insurance coverage by tendering to the undersigned State representative a certificate of insurance prior to the commencement of this Contract and proof of workers’ compensation coverage meeting all statutory requirements of IC § 22-3-2. In addition, proof of an “all states endorsement” covering claims occurring outside the State is required if any of the services provided under this Contract involve work outside of Indiana. All insurance documents are to be sent electronically to insurancedocuments.fssa@fssa.in.gov.

 

B.The Contractor’s insurance coverage must meet the following additional requirements:

 

(1)The insurer must have a certificate of authority or other appropriate authorization to operate in the state in which the policy was issued.

 

(2)Any deductible or self-insured retention amount or other similar obligation under the insurance policies shall be the sole obligation of the Contractor.

 

(3)The State will be defended, indemnified and held harmless to the full extent of any coverage actually secured by the Contractor in excess of the minimum requirements set forth above. The duty to indemnify the State under this Contract shall not be limited by the insurance required in this Contract.

 

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(4)The insurance required in this Contract, through a policy or endorsement(s), shall include a provision that the policy and endorsements may not be canceled or modified without thirty (30) days’ prior written notice to the undersigned State agency.

 

(5)The Contractor waives and agrees to require their insurer to waive their rights of subrogation against the State of Indiana.

 

C.Failure to provide insurance as required in this Contract may be deemed a material breach of contract entitling the State to immediately terminate this Contract. The Contractor shall furnish a certificate of insurance and all endorsements to the State before the commencement of this Contract.

 

29.Key Person(s).

 

A.If both parties have designated that certain individual(s) are essential to the services offered, the parties agree that should such individual(s) leave their employment during the term of this Contract for whatever reason, the State shall have the right to terminate this Contract upon thirty (30) days’ prior written notice.

 

B.In the event that the Contractor is an individual, that individual shall be considered a key person and, as such, essential to this Contract. Substitution of another for the Contractor shall not be permitted without express written consent of the State.

 

Nothing in sections A and B, above shall be construed to prevent the Contractor from using the services of others to perform tasks ancillary to those tasks which directly require the expertise of the key person. Examples of such ancillary tasks include secretarial, clerical, and common labor duties. The Contractor shall, at all times, remain responsible for the performance of all necessary tasks, whether performed by a key person or others.

 

Key person(s) to this Contract is/are None.

 

30.Licensing Standards.

 

The Contractor, its employees and subcontractors shall comply with all applicable licensing standards, certification standards, accrediting standards and any other laws, rules, or regulations governing services to be provided by the Contractor pursuant to this Contract. The State will not pay the Contractor for any services performed when the Contractor, its employees or subcontractors are not in compliance with such applicable standards, laws, rules, or regulations. If any license, certification or accreditation expires or is revoked, or any disciplinary action is taken against an applicable license, certification, or accreditation, the Contractor shall notify the State immediately and the State, at its option, may immediately terminate this Contract.

 

31.Merger & Modification.

 

This Contract constitutes the entire agreement between the parties. No understandings, agreements, or representations, oral or written, not specified within this Contract will be valid provisions of this Contract. This Contract may not be modified, supplemented, or amended, except by written agreement signed by all necessary parties.

 

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32.Minority and Women’s Business Enterprises Compliance .

 

Award of this Contract was based, in part, on the Minority and/or Women’s Business Enterprise (“MBE” and/or “WBE”) participation plan as detailed in the Minority and Women’s Business Enterprises Subcontractor Commitment Form, commonly referred to as “Attachment A” in the procurement documentation and incorporated by reference herein. Therefore, any changes to this information during the Contract term must be approved by the Division of Supplier Diversity and may require an amendment. It is the State’s expectation that the Contractor will meet the subcontractor commitments during the Contract term.

 

The following Division of Supplier Diversity certified MBE and/or WBE subcontractors will be participating in this Contract:

 

MBE/WBE   PHONE   COMPANY NAME  

SCOPE OF PRODUCTS

and/or SERVICES

  UTILIZATION DATE   PERCENT
Minority   

317-567-3905

 

  IT Transformers    Provide reliable, technology-enabled solutions quickly, cost-effectively, and successfully  

07/01/2021 –06/30/2023

 

 

8.69

 

Woman   317-313-7948   Certified Fraud & Forensic Investigations   Protect the financial interests of their customers   07/01/2021 –06/30/2023   

10.66

 

 

A copy of each subcontractor agreement must be submitted to the Division of Supplier Diversity within thirty (30) days of the effective date of this Contract. The subcontractor agreements may be uploaded into Pay Audit (Indiana’s subcontractor payment auditing system), emailed to MWBECompliance@idoa.IN.gov, or mailed to the Division of Supplier Diversity, 402 W. Washington Street, Room W-462, Indianapolis IN 46204. Failure to provide a copy of any subcontractor agreement may be deemed a violation of the rules governing MBE/WBE procurement and may result in sanctions allowable under 25 IAC 5-7-8. Requests for changes must be submitted to MWBECompliance@idoa.IN.gov for review and approval before changing the participation plan submitted in connection with this Contract.

 

The Contractor shall report payments made to Division of Supplier Diversity certified subcontractors under this Contract on a monthly basis using Pay Audit. The Contractor shall notify subcontractors that they must confirm payments received from the Contractor in Pay Audit. The Pay Audit system can be accessed on the IDOA webpage at:

 

www.in.gov/idoa/mwbe/payaudit.htm. The Contractor may also be required to report Division of Supplier Diversity certified subcontractor payments directly to the Division, as reasonably requested and in the format required by the Division of Supplier Diversity.

 

The Contractor’s failure to comply with the provisions in this clause may be considered a material breach of the Contract.

 

33.Nondiscrimination.

 

Pursuant to the Indiana Civil Rights Law, specifically IC § 22-9-1-10, and in keeping with the purposes of the federal Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, the Contractor covenants that it shall not discriminate against any employee or applicant for employment relating to this Contract with respect to the hire, tenure, terms, conditions or privileges of employment or any matter directly or indirectly related to employment, because of the employee’s or applicant’s race, color, national origin, religion, sex, age, disability, ancestry, status as a veteran, or any other characteristic protected by federal, state, or local law (“Protected Characteristics”). The Contractor certifies compliance with applicable federal laws, regulations, and executive orders prohibiting discrimination based on the Protected Characteristics in the provision of services. Breach of this paragraph may be regarded as a material breach of this Contract, but nothing in this paragraph shall be construed to imply or establish an employment relationship between the State and any applicant or employee of the Contractor or any subcontractor.

 

The State is a recipient of federal funds, and therefore, where applicable, the Contractor and any subcontractors shall comply with requisite affirmative action requirements, including reporting, pursuant to 41 CFR Chapter 60, as amended, and Section 202 of Executive Order 11246 as amended by Executive Order 13672.

 

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34.Notice to Parties.

 

Whenever any notice, statement or other communication is required under this Contract, it will be sent by E-mail or first class U.S. mail service to the following addresses, unless otherwise specifically advised.

 

A.Notices to the State shall be sent to:
Jay Chaudhary, Director
Division of Mental Health and Addiction
402 W Washington St IGCS Room W353
Indianapolis, IN 46204
E-mail: jay.chaudhary@fssa.in.gov

 

B.Notices to the Contractor shall be sent to:
Deepika Vuppalanchi, CEO
Syra Health Corp
1119 Keystone Way, Ste 101
Carmel, IN 46032
E-mail: deepikav@syrahealth.com

 

As required by IC § 4-13-2-14.8, payments to the Contractor shall be made via electronic funds transfer in accordance with instructions filed by the Contractor with the Indiana Auditor of State.

 

35.Order of Precedence; Incorporation by Reference .

 

Any inconsistency or ambiguity in this Contract shall be resolved by giving precedence in the following order: (1) this Contract, (2) attachments prepared by the State, (3) RFP #21-66776, (4) Contractor’s response to RFP #21-66776, and (5) attachments prepared by the Contractor. All attachments, and all documents referred to in this paragraph, are hereby incorporated fully by reference.

 

36.Ownership of Documents and Materials.

 

A.All documents, records, programs, applications, data, algorithms, film, tape, articles, memoranda, and other materials (the “Materials”) not developed or licensed by the Contractor prior to execution of this Contract, but specifically developed under this Contract shall be considered “work for hire” and the Contractor hereby transfers and assigns any ownership claims to the State so that all Materials will be the property of the State. If ownership interest in the Materials cannot be assigned to the State, the Contractor grants the State a non-exclusive, non-cancelable, perpetual, worldwide royalty-free license to use the Materials and to use, modify, copy and create derivative works of the Materials.

 

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B.Use of the Materials, other than related to contract performance by the Contractor, without the prior written consent of the State, is prohibited. During the performance of this Contract, the Contractor shall be responsible for any loss of or damage to the Materials developed for or supplied by the State and used to develop or assist in the services provided while the Materials are in the possession of the Contractor. Any loss or damage thereto shall be restored at the Contractor’s expense. The Contractor shall provide the State full, immediate, and unrestricted access to the Materials and to Contractor’s work product during the term of this Contract.

 

37.Payments.

 

A.All payments shall be made 35 days in arrears in conformance with State fiscal policies and procedures and, as required by IC §4-13-2-14.8, the direct deposit by electronic funds transfer to the financial institution designated by the Contractor in writing unless a specific waiver has been obtained from the Indiana Auditor of State. No payments will be made in advance of receipt of the goods or services that are the subject of this Contract except as permitted by IC §4-13-2-20.

 

B.Claims shall be submitted for reimbursement in accordance with the specified Component Descriptions and Unit Descriptions defined on the State-generated FSSA Contract Claim Reimbursement Form. Costs are incurred on the date goods, services, and/or deliverables are satisfactorily provided in full and/or after a reimbursable expense has been paid. Reimbursement shall be based on actual goods, services and/or deliverables provided and/or actual reimbursable expenses previously paid. Claims shall be submitted to the State within sixty (60) calendar days following the end of the month in which goods, services or deliverable were provided and/or expenses were paid. The State has the discretion, and reserves the right, to not pay any claims submitted later than sixty (60) calendar days after a specific Contract Claim Reimbursement Form Item Description expiration date or termination of this agreement. Payment for claims submitted after that time may, at the discretion of the State, be denied.

 

C.At the time that the final claim is submitted, all reconciliation issues must be resolved including the return of any incorrectly reimbursed monies or credits received for expenses previously reimbursed. Incorrectly reimbursed funds or credits received for expenses reimbursed will be returned immediately upon discovery as a direct payment, not credit, to the “State of Indiana.” Each return of funds will be accompanied with a completed FSSA Contract Claim Reimbursement Form identifying specific Components to be credited (negative) and each associated month reported on the original reimbursement request. Payments and FSSA Contract Claim Reimbursement Forms will be submitted to FSSA Administrative Services using the address provided on the reimbursement form.

 

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D.Claims must be submitted with accompanying supportive documentation, as designated by the State. Incomplete claims submitted or claims submitted without supportive documentation will be returned to the Contractor and/or Grantee and not processed for payment. Failure to successfully perform or execute the policies and/or provisions made in this contract may result in the denial and/or partial payment of claims submitted for reimbursement.

 

E.If the Contractor is being paid in advance for the maintenance of equipment, software or a service as a subscription, then pursuant to IC § 4-13-2-20(b)(14), the Contractor agrees that if it fails to fully provide or perform under this Contract, upon receipt of written notice from the State, it shall promptly refund the consideration paid, pro-rated through the date of non- performance.

 

38.Penalties/Interest/Attorney’s Fees.

 

The State will in good faith perform its required obligations hereunder and does not agree to pay any penalties, liquidated damages, interest or attorney’s fees, except as permitted by Indiana law, in part, IC § 5-17-5, IC § 34-54-8, IC § 34-13-1 and IC § 34-52-2.

 

Notwithstanding the provisions contained in IC § 5-17-5, any liability resulting from the State’s failure to make prompt payment shall be based solely on the amount of funding originating from the State and shall not be based on funding from federal or other sources.

 

39.Progress Reports.

 

The Contractor shall submit progress reports to the State upon request. The report shall be oral, unless the State, upon receipt of the oral report, should deem it necessary to have it in written form. The progress reports shall serve the purpose of assuring the State that work is progressing in line with the schedule, and that completion can be reasonably assured on the scheduled date.

 

40.Public Record.

 

The Contractor acknowledges that the State will not treat this Contract as containing confidential information, and will post this Contract on the transparency portal as required by Executive Order 05-07 and IC § 5-14-3.5-2. Use by the public of the information contained in this Contract shall not be considered an act of the State.

 

41.Renewal Option.

 

This Contract may be renewed under the same terms and conditions, subject to the approval of the Commissioner of the Department of Administration and the State Budget Director in compliance with IC § 5-22-17-4. The term of the renewed contract may not be longer than the term of the original Contract.

 

42.Severability.

 

The invalidity of any section, subsection, clause or provision of this Contract shall not affect the validity of the remaining sections, subsections, clauses or provisions of this Contract.

 

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43.Substantial Performance .

 

This Contract shall be deemed to be substantially performed only when fully performed according to its terms and conditions and any written amendments or supplements.

 

44.Taxes.

 

The State is exempt from most state and local taxes and many federal taxes. The State will not be responsible for any taxes levied on the Contractor as a result of this Contract.

 

45.Termination for Convenience .

 

This Contract may be terminated, in whole or in part, by the State, which shall include and is not limited to IDOA and the State Budget Agency whenever, for any reason, the State determines that such termination is in its best interest. Termination of services shall be effected by delivery to the Contractor of a Termination Notice at least thirty (30) days prior to the termination effective date, specifying the extent to which performance of services under such termination becomes effective. The Contractor shall be compensated for services properly rendered prior to the effective date of termination. The State will not be liable for services performed after the effective date of termination. The Contractor shall be compensated for services herein provided but in no case shall total payment made to the Contractor exceed the original contract price or shall any price increase be allowed on individual line items if canceled only in part prior to the original termination date. For the purposes of this paragraph, the parties stipulate and agree that IDOA shall be deemed to be a party to this Contract with authority to terminate the same for convenience when such termination is determined by the Commissioner of IDOA to be in the best interests of the State.

 

46.Termination for Default.

 

A.With the provision of thirty (30) days’ notice to the Contractor, the State may terminate this Contract in whole or in part if the Contractor fails to:

 

(1)Correct or cure any breach of this Contract; the time to correct or cure the breach may be extended beyond thirty (30) days if the State determines progress is being made and the extension is agreed to by the parties;

 

(2)Deliver the supplies or perform the services within the time specified in this Contract or any extension;

 

(3)Make progress so as to endanger performance of this Contract; or

 

(4)Perform any of the other provisions of this Contract.

 

B.If the State terminates this Contract in whole or in part, it may acquire, under the terms and in the manner the State considers appropriate, supplies or services similar to those terminated, and the Contractor will be liable to the State for any excess costs for those supplies or services. However, the Contractor shall continue the work not terminated.

 

C.The State shall pay the contract price for completed supplies delivered and services accepted. The Contractor and the State shall agree on the amount of payment for manufacturing materials delivered and accepted and for the protection and preservation of the property. Failure to agree will be a dispute under the Disputes clause. The State may withhold from these amounts any sum the State determines to be necessary to protect the State against loss because of outstanding liens or claims of former lien holders.

 

D.The rights and remedies of the State in this clause are in addition to any other rights and remedies provided by law or equity or under this Contract.

 

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47.Travel.

 

No expenses for travel will be reimbursed unless specifically authorized by this Contract. Permitted expenses will be reimbursed at the rate paid by the State and in accordance with the Budget Agency’s Financial Management Circular — Travel Policies and Procedures in effect at the time the expenditure is made. Out-of-state travel requests must be reviewed by the State for availability of funds and for conformance with Circular guidelines.

 

48.Waiver of Rights.

 

No right conferred on either party under this Contract shall be deemed waived, and no breach of this Contract excused, unless such waiver is in writing and signed by the party claimed to have waived such right. Neither the State’s review, approval or acceptance of, nor payment for, the services required under this Contract shall be construed to operate as a waiver of any rights under this Contract or of any cause of action arising out of the performance of this Contract, and the Contractor shall be and remain liable to the State in accordance with applicable law for all damages to the State caused by the Contractor’s negligent performance of any of the services furnished under this Contract.

 

49.Work Standards.

 

The Contractor shall execute its responsibilities by following and applying at all times the highest professional and technical guidelines and standards. If the State becomes dissatisfied with the work product of or the working relationship with those individuals assigned to work on this Contract, the State may request in writing the replacement of any or all such individuals, and the Contractor shall grant such request.

 

50.Prohibition of Needle Exchange Programs.

 

The Grantee shall not expend any Block Grant Monies received hereunder to conduct a needle exchange program for addicted persons. Should the Surgeon General of the United States determine that a demonstration needle exchange program would be effective in reducing drug abuse and the risk that the public will become infected with the etiologic agent for AIDS specific to 42 U.S.C. § 300x-31(a)(1)F), this prohibition may be eliminated.

 

51.Compliance with Charitable Choice Requirements.

 

The Grantee shall comply with 42 CFR §54 regarding charitable choice regulations applicable to 42 U.S.C.§ 300x-65, 42 CF Part 54 [§54.8(b) and §54.8(c)(4)] and 68 FR 56430-56449.

 

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52.Marijuana Attestation Statement by SAMHSA.

 

Grant funds may not be used, directly or indirectly, to purchase, prescribe, or provide marijuana or treatment using marijuana. Treatment in this context includes the treatment of opioid use disorder. Grant funds also cannot be provided to any individual who or organization that provides or permits marijuana use for the purposes of treating substance use or mental disorders. See, e.g., 45 C.F.R. § 75.300(a) (requiring HHS to “ensure that Federal funding is expended . . . in full accordance with U.S. statutory . . . requirements.”); 21 U.S.C. §§ 812(c) (10) and 841 (prohibiting the possession, manufacture, sale, purchase or distribution of marijuana). This prohibition does not apply to those providing such treatment in the context of clinical research permitted by the DEA and under an FDA-approved investigational new drug application where the article being evaluated is marijuana or a constituent thereof that is otherwise a banned controlled substance under federal law.

 

53.State Boilerplate Affirmation Clause.

 

I swear or affirm under the penalties of perjury that I have not altered, modified, changed or deleted the State’s standard contract clauses (as contained in the 2021 OAG/ IDOA Professional Services Contract Manual or the 2021 SCM Template) in any way except as follows:

 

12. Confidentiality, Security and Privacy of Personal Information. Modified.

23. HIPAA Compliance. Incorporated into Clause 12.

37. Payments. Modified.

50. Prohibition of Needle Exchange Programs. Added.

51. Compliance with Charitable Choice Requirements. Added.

52. Marijuana Attestation Statement by SAMHSA. Added.

 

THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.

 

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Non-Collusion and Acceptance

 

The undersigned attests, subject to the penalties for perjury, that the undersigned is the Contractor, or that the undersigned is the properly authorized representative, agent, member or officer of the Contractor. Further, to the undersigned’s knowledge, neither the undersigned nor any other member, employee, representative, agent or officer of the Contractor, directly or indirectly, has entered into or been offered any sum of money or other consideration for the execution of this Contract other than that which appears upon the face hereof. Furthermore, if the undersigned has knowledge that a state officer, employee, or special state appointee, as those terms are defined in IC § 4-2-6-1, has a financial interest in the Contract, the Contractor attests to compliance with the disclosure requirements in IC § 4-2-6-10.5.

 

Agreement to Use Electronic Signatures

 

I agree, and it is my intent, to sign this Contract by accessing State of Indiana Supplier Portal using the secure password assigned to me and by electronically submitting this Contract to the State of Indiana. I understand that my signing and submitting this Contract in this fashion is the legal equivalent of having placed my handwritten signature on the submitted Contract and this affirmation. I understand and agree that by electronically signing and submitting this Contract in this fashion I am affirming to the truth of the information contained therein. I understand that this Contract will not become binding on the State until it has been approved by the Department of Administration, the State Budget Agency, and the Office of the Attorney General, which approvals will be posted on the Active Contracts Database: https://fs.gmis.in.gov/psp/guest/SUPPLIER/ERP/c/SOI_CUSTOM_APPS.SOI_PUBLIC_CNTRCT S.GBL

 

In Witness Whereof, the Contractor and the State have, through their duly authorized representatives, entered into this Contract. The parties, having read and understood the foregoing terms of this Contract, do by their respective signatures dated below agree to the terms thereof.

 

SYRA HEALTH CORP  Indiana Family and Social Services Administration, Division of Mental Health
    
By: By:
Title: Chief Executive OfficerTitle: Director
Date: 9/2/2021 | 08:30 PDTDate: 9/3/2021 | 05:57 PDT

 

Electronically Approved by:

Indiana Office of Technology

Electronically Approved by:

Department of Administration

   
By: (for) By: (for)
  Tracy E. Barnes, Chief Information Officer   Rebecca Holw erda, Commissioner
       

Electronically Approved by:

State Budget Agency

Electronically Approved as to Form and Legality by:

Office of the Attorney General

By: (for) By: (for)
  Zachary Q. Jackson, Director   Theodore E. Rokita, Attorney General

 

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Exhibit 1 Scope of Work

 

Syra Health Corp, (Contractor) shall coordinate the work of the State Epidemiological Outcomes Workgroup (SEOW) and support data-driven decision-making regarding prevention efforts across State agencies and bodies, including but not limited to, the Division of Mental Health and Addiction (DMHA). The SEOW is a critical component to enable States to allocate limited prevention funds; report on NOMs; and to address the Substance Abuse and Mental Health Services Administration (SAMHSA)’s Strategic Prevention Framework (SPF) that was implemented by Center for Substance Abuse Prevention (CSAP). The SPF guides States and Territories in developing comprehensive plans to prevent substance abuse and reduce problems associated with substance abuse and mental illness.

 

This scope of work will cover the following: State Fiscal Year 2022 (July 1, 2021, through June

 

30,2022) and State Fiscal Year 2023 (July 1, 2022, through June 30, 2023).

 

This project is supported entirely through federal funds. This project is funded through the Substance Abuse Prevention and Treatment Block Grant funds, in the amount of $610,000.00 (SFY22 Total: $305,000.00 and SFY23 Total: $305,000.00)

 

The Contractor shall provide support and management of the SEOW. The overall goal of the SEOW is to use data to inform and enhance state and community decisions regarding substance abuse and mental, emotional, and behavioral disorder prevention, programs, practices, and policies, as well as promote positive behavioral health over the lifespan.

 

The SEOW will be responsible for the identification, collection, analysis, and reporting of substance use incidence, prevalence, related data, and the National Outcome Measures (NOMs) related to substance abuse and the use/misuse of alcohol, tobacco, and other drugs. The creation of data products will inform prevention priorities, planning, practices, and policies. The

 

SEOW will assist with building capacity of the prevention workforce to understand and use data in an accurate and effective manner.

 

The Contractor shall utilize existing or archival data from various academic, federal, and state sources and will be regularly collated and analyzed continuously to document current needs and monitor changes in need. Examples of data sources include, but are not limited to: The Monitoring the Future Survey, The Indiana Youth Survey, The Indiana College Substance Use Survey, The Treatment Episode Data Set, The Drug Abuse Warning Network, The National Survey on Drug Use and Health, as well as data from state partners including, but not limited to, the Indiana Department of Health, Indiana Department of Correction, the Indiana Professional Licensing Agency, and the Indiana Department of Veterans Affairs.

 

The Contractor shall place special emphasis on supporting data collection and interpretation on Indiana’s Strategic Substance Abuse Prevention and Mental Health Promotion priorities in the areas of alcohol, tobacco, tobacco-related products, other substances, and mental health. Special consideration will be given to priority populations who are at high risk of mental health and substance use disorders and experience health disparities due to barriers in access to care or culturally incompetent provision of care. DMHA has identified the following priority populations: college students, Native Americans, rural populations, underserved high-need geographic areas in Indiana, and underserved racial and ethnic minorities, including LGBTQ+.

 

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The Contractor shall work with a subcontractor to evaluate the DMHA Prevention Regional Model. This will involve a review of the overall system measures which includes, but is not limited to, the Client Consultation Boards and Regional Councils for ten regions.

 

Duties, Requirements and Deliverable Descriptions

 

SEOW Monthly Progress Reports

 

●The Contractor shall submit a monthly progress report detailing the work and activities completed on behalf of the SEOW. This may include, but is not limited to, planning for meetings and consultations; data review, mining or analysis; development of content for reports; regional prevention system evaluation planning; and/or planning for symposium.

 

●The Contractor shall submit the Progress Report no later than 15 days following the last day of the month.

 

SEOW meetings

 

●The Contractor shall hold at least five meetings annually, facilitate discussion, and work with members appointed by the State in interpreting data and reports.

 

●The Contractor shall provide biennial recommendations for suggested improvements for the functioning of the SEOW group and for the enhancement of reported data. The Contractor is expected to provide consultation with DMHA on data interpretation and data application.

 

●The Contractor shall assist in the preparation of summary documents regarding decisions and recommendations made to the Division of Mental Health and Addiction.

 

●The Contractor shall submit the meeting agenda, attendance roster, and summary of meeting notes and recommendations no later than 30 days after the meeting date.

 

Data Portal / Tableau support

 

●The Contractor shall support the DMHA in providing a user-friendly data portal. The Contractor shall provide updated data on an annual basis. The data portal will be hosted by DMHA.

 

●The Contractor shall submit the updated data by June 30 of each state fiscal year.

 

State level consultations

 

●The Contractor shall provide two consultations annually as requested by DMHA to aid in strategic planning efforts. The State may request up to 2 more consultations free of charge, if necessary.

 

●The Contractor shall submit a summary of each state-level consultation no later than 30 days after the completion of the consultation.

 

Local level consultations

 

●The Contractor shall provide consultation, planning, technical assistance, and/or presentation to Local Epidemiological Outcomes Workgroups (LEOW’s), members of the DMHA Regional System for the Prevention of Substance Misuse, and/or other prevention providers at the county or regional level as requested by DMHA. It is expected that the Contractor will provide at least two, but no more than four, local level consultations annually as designated by the Division of Mental Health and Addiction.

 

●The Contractor shall submit a summary of local level consultations by June 30 of each

 

●state fiscal year.

 

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Prevention priorities

 

●The Contractor shall provide guidance to DMHA on the identification of priority areas to be included in the Prevention Strategic Plan. The Contractor shall review progress on prevention priorities and findings will be reported in a brief annually.

 

●The Contractor shall submit the brief no later than June 30 of each fiscal year.

 

Annual epidemiological report draft

 

●The Contractor shall produce drafts of each chapter of the annual epidemiological report and share with the SEOW members for review and feedback.

 

●The Contractor shall submit drafts by May 1 of each fiscal year.

 

Annual epidemiological report

 

●The Contractor shall produce the final version of the annual epidemiological report for publication and dissemination, including requested hard and electronic versions for dissemination by DMHA and other SEOW agencies (approximately 50 hard/paper copies shall be provided).

 

●The Contractor shall submit the final report by June 30 of each fiscal year.

 

Dissemination list for annual epidemiological report

 

●The Contractor shall provide a list of dissemination methods and recipient agencies for the final annual epidemiological report.

 

●The Contractor shall submit the dissemination list by June 30 of each fiscal year.

 

Drug fact sheets

 

●The Contractor shall produce a summary brief of the annual epidemiological report, including requested hard and electronic versions for dissemination by DMHA and other SEOW agencies (approximately 50 hard/paper copies shall be provided).

 

●The Contractor shall produce the summary brief by June 30 of each state fiscal year.

 

Special topics briefs

 

●The Contractor shall produce four (4) briefs on special topics that target specific subject matters, populations, or geographic areas within Indiana. Topics will be selected in consultation with other SEOW members.

 

●The Contractor shall produce the briefs, including requested hard and electronic versions

 

●for dissemination by DMHA and other SEOW agencies (approximately 50 hard/paper copies shall be provided), by June 30 of each state fiscal year.

 

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Presentation to Mental Health and Addiction Policy Advisory Council

 

●The Contractor shall provide a presentation of the SEOW findings and facilitate discussion around their use to the Mental Health and Addiction Policy Advisory Council (MHAPAC) annually.

 

●The Contractor shall submit any presentation materials (i.e., slide deck, handouts) no

 

●later than 30 days after the presentation.

 

SEOW symposium

 

●The Contractor shall convene an annual symposium for members of the SEOW, MHAPAC, and the public that will share data, discuss its applications, and highlight the work of the SEOW.

 

●The symposium will be hosted by DMHA at the Government Center Conference Center

 

●or other facility. Meals will not be provided to participants by DMHA or the Contractor; the symposium agenda will allow a lunch break for participants.

 

●The Contractor will be responsible for logistical considerations of the symposium, including, but not limited to, agenda, content, speakers, registration, and surveys.

 

●The Contractor shall submit a summary of the symposium, including the agenda, number of attendees, and results of any surveys or recommendations. This shall be submitted no later than 45 days after the symposium.

 

Regional Prevention System Evaluation Plan

 

●The contractor shall work with a sub-contractor to evaluate the DMHA Regional System for the Prevention of Substance Misuse. The contractor and sub-contractor shall consult with DMHA and the regional prevention system management vendor to identify key outcomes and evaluation measures and develop an evaluation plan. The contractor shall submit the draft of the plan to DMHA for review prior to finalization.

 

●The Contractor shall review and revise the evaluation plan as needed and in consultation with DMHA.

 

●The contractor shall submit the evaluation plan no later than November 30, 2021.

 

Regional Prevention System Evaluation Progress Summary

 

●The contractor shall submit quarterly progress summaries, detailing the evaluation efforts and activities for that period.

 

●The contractor shall submit the quarterly progress summaries no later than 15 days following the last day of each quarter.

 

Regional Prevention System Evaluation Report

 

●The contractor shall prepare a final evaluation report summarizing the evaluation process, findings, and recommendations. The contractor shall review the evaluation report with DMHA.

 

●contractor shall submit the evaluation report during SFY23, no later than June 30, 2023.

 

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Other requirements

 

●The Contractor shall assure that the SEOW maintains a surveillance program consistent with the federal guidelines regarding the National Outcome Measures (NOMs) initiative. Substance abuse and mental health NOMs are drawn from many types of data: substance use and mental illness incidence and prevalence, related consequence data, and program process and output data.

 

●The Contractor shall employ professional staff with statistical and epidemiological expertise

 

●and develop a comprehensive and systematic strategy for monitoring substance use and abuse across the state.

 

●The Contractor shall assure that all data is stored on secure computers and servers in accordance with HIPAA and other state and federal regulations governing the protection of human subjects in research.

 

Deliverables and Payments Table

 

Deliverables

(See Deliverable Description above)

  Documentation 

SFY22 Payment

   SFY23 Payment 

SEOW Monthly Progress Report

  Submit a monthly progress report detailing the work and activities completed on behalf of the SEOW no later than 15 days following the last day of the month. Monthly Payment: $21,000 Total payment per SFY: $252,000 

Monthly:

$21,000.00

Total:

$252,000.00

  

Monthly:

$21,000.00

Total:

$252,000.00

 
SEOW meetings  Submit meeting agenda, attendance roster, summary of meeting notes and recommendations no later than 30 days after the meeting. 

Per meeting:

$1,000.00

Total: $5,000.00

  

Per meeting:

$1,000.00

Total: $5,000.00

 
Data portal/tableau support  Submit updated data by June 30 of each fiscal year.  $5,000.00   $5,000.00 
State level consultations  Submit a summary of each state level consultation no later than 30 days after the completion of the consultation. (2 payments per year)   

Per payment:

$2,000.00

Total: $4,000

    

Per payment:

$2,000.00

Total: $4,000.00

 
Local level consultations  Submit a summary of local level consultations by June 30 of each state fiscal year.  $4,000.00   $4,000.00 
Prevention Priorities  Submit the brief no later than June 30 of each fiscal year.  $6,000.00   $6,000.00 
Annual epidemiological report draft  Submit draft by May 1 of each fiscal year.  $5,000.00   $5,000.00 
Annual epidemiological report  Submit the final report by June 30 of each fiscal year.  $5,000.00   $5,000.00 

Dissemination list for annual epidemiological

 

report

  Submit the dissemination list by June 30 of each fiscal year.  $1,000.00   $1,000.00 
Drug fact sheets  Submit the summary brief by June 30 of each state fiscal year.  $1,000.00   $1,000.00 
Special topics briefs  Submit four (4) briefs by June 30 of each state fiscal year. (4 payments per fiscal year)   

Per brief:

$2,000.00

Total: $8,000.00

    

Per brief:

$2,000.00

Total:

$8,000.00

 

Presentation to Mental Health and Addiction Policy Advisory Council

  Submit presentation materials (i.e., slide deck, handouts) no later than 30 days after the presentation.  $1,000.00   $1,000.00 
SEOW Symposium  Submit a summary of the symposium (agenda, number of attendees, results of any surveys or recommendations) no later than 45 days after the symposium  $2,000.00   $2,000.00 

Regional Prevention System Evaluation Plan

  SFY22: Submit the evaluation plan no later than November 30, 2021.  $2,000.00   $0.00 

Regional Prevention System Evaluation Progress Report

  Submit the progress summary no later than 15 days following the last day of each quarter.   

Quarterly:

$1,000.00

Total: $4,000.00

    

Quarterly:

$1,000.00

Total: $4,000.00

 
Regional Prevention System Evaluation Report  Submit the evaluation report no later than June 30, 2023 (Payment in SFY23 only)  $0.00   $2,000.00 

 

Total SFY22: $305,000.00
Total SFY23: $305,000.00
Total Amount: $610,000.00

 

Federal Funding Source:
Amount: $610,000.00
Grant Name: Block Grants for Substance Abuse Prevention and Treatment CFDA Number: 93.959

 

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Exhibit 2
State of Indiana Additional Terms and Conditions
Software as a Service Engagements

 

Exhibit 2 to the Contract between the State acting through Family and Social Services Administration and Syra Health Corp Inc.

 

DEFINITIONS

 

Data means all information, whether in oral, written, or electronic form, created by or in any way originating with the State.

 

Data Breach means any actual or reasonably suspected unauthorized access to or acquisition of Encrypted Data.

 

Encrypted Data means Data that is required to be encrypted under the contract and Statement of Work.

 

Indiana Office of Technology means the agency established by Ind. Code § 4-13.1-2-1.

 

Information Security Framework means the State of Indiana’s written policy and standards document governing matters affecting security and available at https://www.in.gov/iot/security/information-security-framework2/.

 

Security Incident means any actual or reasonably suspected unauthorized access to the Contractor’s system, regardless of whether Contractor is aware of a Data Breach. A Security Incident may or may not become a Data Breach.

 

Service(s) means that which is provided to the State by Contractor pursuant to this contract and the Contractors obligations under the contract.

 

Service Level Agreement means a written agreement between both the State and the Contractor that is subject to the terms and conditions of this contract. Service Level Agreements should include: (1) the technical service level performance promises (i.e. metrics for performance and intervals for measure); (2) description of service quality; (3) identification of roles and responsibilities; (4) remedies, such as credits; and (5) an explanation of how remedies or credits are calculated and issued.

 

Statement of Work means the written agreement between both the State and Contractor attached to and incorporated into this contract.

 

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TERMS

 

1.Data Ownership: The State owns all rights, title, and interest in the Data. The Contractor shall not access State user accounts or Data, except: (1) in the normal course of data center operations; (2) in response to Service or technical issues; (3) as required by the express terms of this contract, applicable Statement of Work, or applicable Service Level Agreement; or (4) at the State’s written request.

 

Contractor shall not collect, access, or use Data except as strictly necessary to provide Service to the State. No information regarding State’s use of the Service may be disclosed, provided, rented, or sold to any third party for any reason unless required by law or regulation or by an order of a court of competent jurisdiction. This obligation shall survive and extend beyond the term of this contract.

 

2. Data Protection: Protection of personal privacy and Data shall be an integral part of the business activities of the Contractor to ensure there is no inappropriate or unauthorized use of Data at any time. To this end, the Contractor shall safeguard the confidentiality, integrity, and availability of Data and shall comply with the following conditions:

 

a.The Contractor shall implement and maintain appropriate administrative, technical, and organizational security measures to safeguard against unauthorized access, disclosure, or theft of Data. Contractor shall implement and maintain heightened security measures with respect to Encrypted Data. Such security measures shall be in accordance with Indiana Office of Technology practice and recognized industry practice, including but not limited to the following:

 

1.Information Security Framework; and

 

2.Indiana Office of Technology Cloud Product and Service Agreements, Standard ID: IOT-CS-SEC-010.

 

b. All Encrypted Data shall be subject to controlled access. Any stipulation of responsibilities shall be included in the Statement of Work and will identify specific roles and responsibilities.

 

c. The Contractor shall encrypt all Data at rest and in transit. The State may, in the Statement of Work, identify Data it deems as that which may be publicly disclosed that is not subject to encryption. Data so designated may be maintained without encryption at rest and in transit. The level of protection and encryption for all Encrypted Data shall meet or exceed that required in the Information Security Framework.

 

d. At no time shall any Data or processes — that either belong to or are intended for the use of State — be copied, disclosed, or retained by the Contractor or any party related to the Contractor for subsequent use in any transaction that does not include the State.

 

e. The Contractor shall not use any information collected in connection with the Services for any purpose other than fulfilling its obligations under the contract.

 

3. Data Location: Storage of Data at rest shall be located solely in data centers in the United States and the Contractor shall provide its Services to the State and its end users solely from locations in the United States. The Contractor shall not store Data on portable devices, including personal laptop and desktop computers. The Contractor shall access Data remotely only as required to provide technical support. The Contractor shall provide technical user support on a 24/7 basis unless specified otherwise in the Service Level Agreement.

 

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4. Notice Regarding Security Incident or Data Breach:

 

a. Incident Response: Contractor may need to communicate with outside parties regarding a Security Incident, which may include contacting law enforcement, fielding media inquiries, and seeking external expertise as mutually agreed upon, defined by law, or contained in the contract. Discussing Security Incidents and Data Breaches with the State must be handled on an urgent basis, as part of contractor’s communication and mitigation processes as mutually agreed upon in the Service Level Agreement, contained in the contract, and in accordance with IC 4-1-11 and IC 24-4.9 as they may apply.

 

b. Security Incident Reporting Requirements: The Contractor shall report a Security Incident to the State-identified contact(s) as soon as possible by telephone and email, but in no case later than two (2) business days after the Security Incident occurs. Notice requirements may be clarified in the Service Level Agreement and shall be construed in accordance with IC 4-1- 11 and IC 24-4.9 as they may apply.

 

c. Data Breach Reporting Requirements: If a Data Breach occurs, the Contractor shall do the following in accordance with IC 4-1-11 and IC 24-4.9 as they may apply: (1) as soon as reasonably possible notify the State-identified contact(s) by telephone and email, but in no case later than two (2) business days after the Data Breach occurs unless a shorter notice period is required by applicable law; and (2) take commercially-reasonable measures to address the Data Breach in a timely manner. Notice requirements may be clarified in the Service Level Agreement. If the Data involved in the Data Breach involves protected health information, personally identifying information, social security numbers, or otherwise confidential information, other sections of this contract may apply. The requirements discussed in those sections must be met in addition to the requirements of this section.

 

5. Responsibilities Regarding Data Breach: This section applies when a Data Breach occurs with respect to Encrypted Data within the possession or control of the Contractor.

 

a. The Contractor shall: (1) cooperate with the State as reasonably requested by the State to investigate and resolve the Data Breach; (2) promptly implement necessary remedial measures, if necessary; and (3) document and provide to the State responsive actions taken related to the Data Breach, including any post-incident review of events and actions taken to make changes in business practices in providing the Services, if necessary.

 

b. Unless stipulated otherwise in the Statement of Work, if a Data Breach is a result of the Contractor’s breach of its contractual obligation to encrypt Data or otherwise prevent its release as reasonably determined by the State, the Contractor shall bear the costs associated with: (1) the investigation and resolution of the Data Breach; (2) notifications to individuals, regulators, or others required by federal and/or state law, or as otherwise agreed to in the Statement of Work; (3) a credit monitoring service required by federal and/or state law, or as otherwise agreed to in the Statement of Work; (4) a website or a toll-free number and call center for affected individuals required by federal and/or state law — all of which shall not amount to less than the average per-record per-person cost calculated for data breaches in the United States (in, for example, the most recent Cost of Data Breach Study: Global Analysis published by the Ponemon Institute at the time of the Data Breach); and (5) complete all corrective actions as reasonably determined by Contractor based on root cause and on advice received from the Indiana Office of Technology. If the Data involved in the Data Breach involves protected health information, personally identifying information, social security numbers, or otherwise confidential information, other sections of this contract may apply. The requirements discussed in those sections must be met in addition to the requirements of this section.

 

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6. Notification of Legal Requests: If the Contractor is requested or required by deposition or written questions, interrogatories, requests for production of documents, subpoena, investigative demand or similar process to disclose any Data, the Contractor will provide prompt written notice to the State and will cooperate with the State’s efforts to seek an appropriate protective order or other reasonable assurance that such Data will be accorded confidential treatment that the State may deem necessary.

 

7. Termination and Suspension of Service:

 

a. In the event of a termination of the contract, the Contractor shall implement an orderly return of Data in a mutually agreeable and readable format. The Contractor shall provide to the State any information that may be required to determine relationships between data rows or columns. It shall do so at a time agreed to by the parties or shall allow the State to extract its Data. Upon confirmation from the State, the Contractor shall securely dispose of the Data.

 

b. During any period of Service suspension, the Contractor shall not take any action that results in the erasure of Data or otherwise dispose of any of the Data.

 

c. In the event of termination of any Services or contract in its entirety, the Contractor shall not take any action that results in the erasure of Data until such time as the State provides notice to Contractor of confirmation of successful transmission of all Data to the State or to the State’s chosen vendor.

 

During this period, the Contractor shall make reasonable efforts to facilitate the successful transmission of Data. The Contractor shall be reimbursed for all phase-out costs (i.e., costs incurred within the agreed period after contract expiration or termination that result from the transfer of Data or other information to the State). A reimbursement rate shall be agreed upon by the parties during contract negotiation and shall be memorialized in the Statement of Work. After such period, the Contractor shall have no obligation to maintain or provide any Data and shall thereafter, unless legally prohibited, delete all Data in its systems or otherwise in its possession or under its control. The State shall be entitled to any post-termination assistance generally made available with respect to the Services, unless a unique data retrieval arrangement has been established as part of a Service Level Agreement.

 

d. Upon termination of the Services or the contract in its entirety, Contractor shall, within 30 days of receipt of the State’s notice given in 7(c) above, securely dispose of all Data in all of its forms, including but not limited to, CD/DVD, backup tape, and paper. Data shall be permanently deleted and shall not be recoverable, according to National Institute of Standards and Technology (NIST)-approved methods. Certificates of destruction shall be provided to the State upon completion.

 

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8. Background Checks: The Contractor shall conduct a Federal Bureau of Investigation Identity History Summary Check for each employee involved in provision of Services: (1) upon commencement of the contract; (2) prior to hiring a new employee; and (3) for any employee upon the request of the State. The Contractor shall not utilize any staff, including subcontractors, to fulfill the obligations of the contract who have been convicted of any crime of dishonesty, including but not limited to criminal fraud, or otherwise convicted of any felony or misdemeanor offense for which incarceration for up to one (1) year is an authorized penalty. The Contractor shall promote and maintain an awareness of the importance of securing the State’s information among the Contractor’s employees, subcontractors, and agents. If any individual providing Services under the contract is not acceptable to the State, in its sole opinion, as a result of the background or criminal history investigation, the State, in its sole option shall have the right to either: (1) request immediate replacement of the individual; or (2) immediately terminate the contract, related Statement of Work, and related Service Level Agreement.

 

9. Access to Security Logs and Reports: The Contractor shall provide to the State reports on a schedule and in a format specified in the Service Level Agreement as agreed to by both the Contractor and the State. Reports shall include latency statistics, user access, user access IP address, user access history, and security logs for all Data. The State’s audit requirements shall, if applicable, be defined in the Statement of Work.

 

10. Contract Audit: The Contractor shall allow the State to audit conformance to the contract terms. The State may perform this audit or contract with a third party at its discretion and at the State’s expense.

 

11. Data Center Audit: The Contractor shall perform an annual independent audit of its data center(s) where Data, State applications, or other State information is maintained. The Contractor shall perform this independent audit at its expense and shall, upon completion, provide an unredacted version of the complete audit report to the State. (The Contractor may redact its proprietary information from the unredacted version, however.) A Service Organization Control (SOC) 2 audit report or equivalent approved by the Indiana Office of Technology sets the minimum level of a third-party audit.

 

The parties agree that any documents provided to the State under this paragraph shall be deemed a trade secret of contractor and is deemed administrative or technical information that would jeopardize a record keeping or security system, and shall be exempt from disclosure under the Indiana Access to Public Records Act, IC 5-14-3.

 

12. Change Control and Advance Notice: The Contractor shall give notice to the State for change management requests. Contractor shall provide notice to the State regarding change management requests that do not constitute an emergency change management request at least two (2) weeks in advance of implementation. Contractor shall provide notice to the State regarding emergency change management requests no more than twenty-four (24) hours after implementation.

 

Contractor shall make updates and upgrades available to the State at no additional cost when contractor makes such updates and upgrades generally available to its users. No update, upgrade, or other change to the Service may decrease the Service’s functionality, adversely affect State’s use of or access to the Service, or increase the cost of the Service to the State.

 

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13. Security: Upon request, the Contractor shall, on an annual basis, disclose its non- proprietary system security plans or security processes and technical limitations to the State such that adequate protection and flexibility can be attained between the State and the Contractor. For example: virus checking and port sniffing. The State and the Contractor shall share information sufficient to understand each other’s roles and responsibilities. The Contractor shall take into consideration feedback from the Indiana Office of Technology with respect to the Contractor’s system security plans.

 

The parties agree that any documents provided to the State under this paragraph shall be deemed a trade secret of Contractor and is deemed administrative or technical information that would jeopardize a record keeping or security system, and shall be exempt from disclosure under the Indiana Access to Public Records Act, IC 5-14-3.

 

14. Non-disclosure and Separation of Duties: The Contractor shall enforce role-based access control, separation of job duties, require commercially-reasonable nondisclosure agreements, and limit staff knowledge of Data to that which is absolutely necessary to perform job duties. Upon request, the Contractor shall annually provide to the State a list of individuals that have access to the Data and/or the ability to service the systems that maintain the Data.

 

15. Import and Export of Data: The State shall have the ability to import or export Data in piecemeal or in entirety at its discretion, with reasonable assistance provided by the Contractor, at any time during the term of contract. This includes the ability for the State to import or export Data to/from other parties at the State’s sole discretion. Contractor shall specify in the Statement of Work if the State is required to provide its’ own tools for this purpose, including the optional purchase of contractor’s tools if Contractor’s applications are not able to provide this functionality directly.

 

16. Responsibilities and Uptime Guarantee: The Contractor shall be responsible for the acquisition and operation of all hardware, software, and network support related to the Services being provided. The technical and professional activities required for establishing, managing, and maintaining the environments are the responsibilities of the contractor. Subject to the Service Level Agreement, the Services shall be available to the State at all times. The Contractor shall allow the State to access and use the Service to perform synthetic transaction performance testing.

 

The contractor shall investigate and provide to the State a detailed incident report regarding any unplanned Service interruptions or outages. The State may terminate the contract for cause if it reasonably determines that the frequency of Contractor-preventable outages is sufficient to warrant termination.

 

17. Subcontractor Disclosure: Contractor shall identify all of its strategic business partners related to Services, including but not limited to all subcontractors or other entities or individuals who may be a party to a joint venture or similar agreement with the Contractor, and who may be involved in any application development and/or operations.

 

The Contractor shall be responsible for the acts and omissions of its subcontractors, strategic business partners, or other entities or individuals who provide or are involved in the provision of Services.

 

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18. Business Continuity and Disaster Recovery: The State’s recovery time objective shall be defined in the Service Level Agreement. The Contractor shall ensure that the State’s recovery time objective has been met and tested as detailed in the Service Level Agreement. The Contractor shall annually provide to the State an attestation that the business continuity and disaster recovery plan which details how the State’s recovery time objective has been met and tested. The parties agree that any documents provided to the State under this paragraph shall be deemed administrative or technical information that would jeopardize a record keeping or security system, and shall be exempt from disclosure under the Indiana Access to Public Records Act, IC 5-14-3. The contractor shall work with the State to perform an annual disaster recovery test and take action to correct any issues detected during the test in a time frame mutually agreed upon between the Contractor and the State in the Service Level Agreement.

 

The State’s Data shall be maintained in accordance with the applicable State records retention requirement, as determined by the State. The Contractor shall annually provide to the State a resource utilization assessment detailing the Data maintained by the contractor. This report shall include the volume of Data, the file formats, and other content classifications as determined by the State.

 

19. Compliance with Accessibility Standards: The Contractor shall comply with and adhere to Accessibility Standards of Section 508 Amendment to the Rehabilitation Act of 1973, or any other state laws or administrative regulations identified by the State.

 

20. State Additional Terms and Conditions Revision Declaration: The clauses in this Exhibit have not been altered, modified, changed, or deleted in any way except for the following clauses which are named below:

 

4. Notice Regarding Security Incident or Data Breach. Modified.

 

6. Notification of Legal Request. Modified.

 

11. Data Center Audit. Modified.

 

13. Security. Modified.

 

14. Non-disclosure and Separation of Duties. Modified.

 

16. Responsibilities and Uptime Guarantee. Modified.

 

18. Business Continuity and Disaster Recovery. Modified.

 

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Exhibit 10.14

 

VENDOR MASTER SERVICES AGREEMENT

 

This Vendor Master Services Agreement (the “Agreement”) is made as of the 29th day of September, 2021, (the “Effective Date”) between PRECISIONvalue (Chicago), LLC, with an address of 72 West Adams Street, Suite 1200, Chicago, IL 60603 (“Precision”) and SyraHealth, with an office at 1119 Keystone Way N #201, Carmel, IN 46032 (“Vendor”) (with each of Precision and Vendor being hereinafter referred to individually as a “Party” and collectively as the “Parties”).

 

RECITALS

 

WHEREAS, Precision is in the business of providing specialized services to support the development and commercialization of personalized medicine products by its clients in the biopharmaceuticals, biotechnology and diagnostics industries; and

 

WHEREAS, Vendor is in the business of providing services relating to medical communications support; and

 

WHEREAS, Precision may desire to engage Vendor to furnish certain services from time to time in connection with services provided by Precision to is clients (each such client being hereinafter referred to as a “Precision Client” and each such Precision agreement with a Precision Client being hereinafter referred to as a “Prime Contract”), and Vendor desires to perform such services, all on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants herein, Precision and Vendor hereby agree as follows:

 

(1) Services. Precision may engage Vendor to perform services (collectively, the “Services”) as mutually agreed upon by the Parties from time to time pursuant to one or more statements of work substantially in the form of Exhibit A attached hereto (each, an “SOW”).

 

(2) Statements of Work. Each SOW shall include a description of the services and deliverables to be provided by the Vendor, the fees and expenses to be paid in connection with the services described therein, and any project specific requirements. Each SOW shall reference and be subject to the terms and conditions of this Agreement, and, in the event of any conflict between the terms of an SOW and this Agreement, the terms of this Agreement shall control unless the SOW expressly acknowledges the conflict and expressly states that the conflicting SOW provisions will control.

 

(3) Change Orders. Any change in the details of an SOW or the assumptions upon which the SOW is based may require changes in the budget and/or time lines, and shall require a written amendment to the SOW (a “Change Order”). Each Change Order shall detail the requested changes to the applicable task, responsibility, duty, budget, fees, time line or other matter, as appropriate. A Change Order will become effective only upon the execution of the Change Order by both Parties. Both Parties agree to act in good faith and promptly when considering a Change Order requested by the other Party.

 

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(4) Affiliates. The Parties agree that Affiliates of Precision may obtain Services from the Vendor hereunder if the Affiliate enters into an SOW in its own name. In such event, the Affiliate shall be bound by the terms of this Agreement and shall have all of the rights and obligations of Precision under this Agreement with respect to the Services contemplated by each SOW to which it is a party, and where the context requires, references to “Precision” in this Agreement (and the related rights and obligations) shall apply to the relevant Precision Affiliate. Precision shall not have any liability with respect to any SOW entered into by any such Affiliate except to the extent Precision otherwise expressly agrees in writing. For purposes of this Agreement, an “Affiliate” of any Party shall be any person or entity that, directly or indirectly, controls, is controlled by or is under common control with such Party, and the term “control,” whether used as a noun or a verb, means the possession, directly or indirectly, of the power to affirmatively direct, or affirmatively cause the direction of, the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.

 

(5) Independent Contractors. Vendor is an independent contractor of Precision. Nothing contained herein shall in any way constitute an agency, partnership or joint venture between the Parties or be construed to evidence the intention of the Parties to constitute an agency, partnership or joint venture. Neither Party, nor any of its employees, consultants, contractors, agents, are agents, employees or joint venturers of the other, nor do they have any authority whatsoever to bind such other Party by contract or otherwise. Vendor will be fully responsible for all withholding and paying of taxes and social security for its personnel, and for compliance with all applicable federal and state employment laws, including, but not limited to worker’s compensation, unemployment insurance, affirmative action, and other personnel related legal requirements.

 

(6) Non-Exclusive Relationship. Nothing in this Agreement shall be construed as an obligation of Precision or any Precision Affiliate to request Services from Vendor unless and until the parties enter into a SOW for such Services.

 

(7) Performance.

 

  a) Performance. Vendor shall perform the Services in strict conformance with the requirements of this Agreement, the applicable SOW, and any applicable terms and conditions of any Prime Contract to which the Services relate (as set out in an SOW or as described in a written notice given by Precision to Vendor from time to time). Vendor acknowledges that time is of the essence in connection with its performance and delivery obligations hereunder.

 

  b) Standards for Performance; Compliance with Law. Vendor shall perform the Services in accordance with the highest professional and industry standards and practices. Vendor shall comply with all laws, rules and regulations applicable the Services, Vendor, Precision or the Precision Client, as applicable (collectively, “Applicable Law”) which may include, but are not limited to, the United States Federal Food, Drug, and Cosmetic Act and its implementing regulations; the U.S. Foreign Corrupt Practices Act and the UK Bribery Act and all similar laws of other countries where Services are being provided (“Anti-Corruption Laws”); Data Privacy Laws (as hereinafter defined); and any applicable FTC rules or regulations. In addition, Vendor shall obtain and maintain all applicable licenses, accreditations, certifications, permits, and authorizations required to provide the Services in the country in which they are performed.

 

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  c) Progress Reports. Vendor shall provide regular updates as to the progress of the Services at a frequency and in a manner mutually agreed upon in the applicable SOW.

 

  d) Equipment and Materials. Unless otherwise specified in the applicable SOW, Vendor, at its sole expense, shall provide all equipment, materials, and supplies necessary to accomplish the Services.

 

  e) Records. Vendor shall maintain records related to the Services (“Records”) in the ordinary course of its business in the manner that a prudent organization providing services similar to the Services would maintain similar records, and shall keep full and accurate records and accounts of all its activities in connection with this Agreement, including reasonable substantiation of all Services provided and expenses incurred, and (ii) maintain a system of internal controls sufficient to provide reasonable assurance that all transactions related to this Agreement are executed and are properly recorded in Vendor’s books and records. All Records shall be maintained by Vendor for at least five (5) years after completion of the Services, and at least sixty (60) days before the expiration of such five (5) year period Vendor shall contact Precision in writing to determine if Precision wishes to obtain the Records from Vendor, and, if requested, provide such Records to Precision or its designee, at Precision’s request.

 

  f) Correction of Deficiencies. Vendor shall correct any Services not performed in accordance with the requirements of this Agreement at no cost to Precision. If Vendor does not immediately correct such deficiencies after notice thereof, Precision may cause the same to be corrected by a third party or by Precision, at the expense of Vendor. This remedy shall be in addition to any other remedies, in law or in equity, available to Precision.

 

(8) Vendor Representations, Warranties and Covenants. Vendor represents, warrants and agrees that:

 

  a) all of its employees, staff, contractors, agents and any other persons or entities retained to perform any of the Services are properly qualified and trained to perform the Services in accordance with the terms of this Agreement and the applicable SOW;

 

  b) it is licensed, registered, or qualified under local law, regulations, policies, and administrative requirements to do business and, to the extent required by applicable law, has obtained all legal and regulatory approvals, consents, licenses and permissions and completed such registrations as may be necessary or required by law to provide the Services;

 

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  c) it will not perform any actions that are prohibited by local and other anti-corruption laws, including, without limitation, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act and all similar laws of other countries where Services are being provided (collectively, “Anti- Corruption Laws”), and, without limiting the foregoing, shall not make any payments, or offer or transfer anything of value, to any government official or government employee, or any political party official or candidate for political office or to any other third party related to the transaction in a manner that would violate any Anti-Corruption Laws;

 

  d) in providing the Services, it will not and has not infringed, and the use of deliverables and materials (in whatever form) provided by the Vendor as part of the Services and the intellectual property rights in the same has not and will not infringe the rights of any third party;

 

  e) it has not provided any Services or Work Product that contains any viruses, disabling code, or other features that would impair or otherwise interfere with Precision’s use of the Work Product or the systems the Work Product is intended to be used with; (ii) it has provided all Services and Work Product free and clear of any encumbrances or liens and shall clear all rights for Precision’s and the Precision Clients’ use and enjoyment of the Services and Work Product; and (iii) it has not infringed, and the use of the deliverables and materials (in whatever form) provided by the Vendor as part of the Services and the intellectual property rights in the same will not infringe the intellectual property or other rights of any third party; and

 

  f) neither it nor its Affiliates nor any of their employees, subcontractors and agents have been (i) debarred under Section 306 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §335a (a) or (b) as amended, or any equivalent legislation in any jurisdiction, or (ii) threatened to be debarred or voluntarily excluded or indicted for a crime or otherwise engaged in conduct for which a person can be debarred, or subject to any government sanction that would prevent the rendering of Services, nor (iii) excluded from participation in any health-care program (state or federally- funded or otherwise); and it shall immediately notify Precision in the event of any such debarment, voluntary exclusion, charge, criminal conviction, caution, threat, indictment or exclusion occurring during the term of this Agreement.

 

Where Precision has approved the use by Vendor of a third party, the representations and warranties above shall also be deemed to have been given by Vendor in respect of such third party.

 

(9) Materials. At the completion of the Services described in an SOW, Vendor shall return to Precision or its designee, or if Precision so directs in writing, destroy in a manner approved by Precision, all materials that were furnished to Vendor for or in connection with such SOW by or on behalf of Precision or the Precision Client any materials that were generated by Vendor in connection with the Services, other than materials which expressly constitute Vendor’s property under the terms of this Agreement (collectively, “Materials”).

 

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(10) Intellectual Property.

 

  a) Precision Property. All concepts, layouts, content, data, information, inventions, discoveries or other materials furnished by or on behalf of Precision or a Precision Client for use in connection with the Services, including, without limitation, Materials (collectively “Precision Property”) shall be the sole and exclusive property of Precision.

 

  b) Work Product. All ideas, concepts, layouts, content, information, reports, results information, reports, results, inventions, improvements, discoveries, enhancements, modifications, and data of every kind and description conceived, generated, made or reduced to practice, as the case may be, and other intellectual property produced, generated, or otherwise made or obtained by Vendor and its contractors in connection with the performance of Services hereunder or through the use of Materials or Precision Confidential Information (collectively, “Work Product”) shall be the sole and exclusive property of Precision. All Work Product shall be considered a work made for hire to the fullest extent permitted by law and all right, title and interest therein, including the worldwide copyrights, shall be the property of Precision. In the event any of said Work Product or portion thereof shall not be legally qualified as a work made for hire, Vendor hereby assigns to Precision all Work Product and all existing and future intellectual property rights (including, without limitation, patents, copyright and related rights) therein to the fullest extent permitted by law. Vendor hereby irrevocably appoints Precision to be Vendor’s attorney in fact to execute and do any such instrument or thing and generally to use the Vendor’s name for the purpose of giving Precision or its nominee the benefit of this Section (10). Vendor shall further ensure that all contractors, vendors, and agents execute assignment agreements with Vendor to provide Vendor with full ownership rights in and to the Work Product so as to allow Vendor to assign such Work Product to Precision and Vendor and all such third parties shall waive all moral or other equivalent rights in and to the Work Product.

 

  c) Vendor Property. Notwithstanding the foregoing, Precision acknowledges that Vendor possesses certain confidential and proprietary inventions, processes, know-how, trade secrets, improvements, other intellectual properties and other assets, which have been independently developed by Vendor and which relate to its business or operations (collectively “Vendor Property”). The Parties agree that Vendor Property is the sole and exclusive property of Vendor. Vendor hereby grants to Precision and the applicable Precision Client an irrevocable, non- exclusive, royalty-free, world-wide, perpetual, transferable and sub-licensable license (through multiple tiers) to use, copy, modify, adapt, create derivatives of or otherwise exploit or have used (but not to sell) Vendor Property (including improvements and modifications thereto as described in this Section), so as to permit the full, unrestricted use and benefit of any Work Product delivered to Precision under this Agreement or any SOW.

 

  d) Third Party Materials. Vendor may license third party rights or materials to include in the Work Product only with Precision’s prior written consent. Vendor shall ensure that all third party materials are licensed to Precision on an irrevocable, perpetual, royalty-free, and worldwide basis to allow Precision, Precision Clients and their Affiliates to copy, use, adapt, modify, or otherwise exploit such third party materials for any purpose without any further payment or obligation of any kind to any such third party, subject, however to any restrictions or conditions approved by Precision in advance and in writing.

 

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(11) Confidentiality.

 

  a) For purposes of this Agreement, (i) the term “Precision Confidential Information” shall mean all commercial, business, financial, pricing, sales, personnel, strategic, scientific, medical and technical information and data relating to Precision, its Affiliates, Precision Clients and their Affiliates, the Services, including, without limitation, Materials, this Agreement, its Exhibits and any subsequent SOWs, all Work Product, and any and all information and data generated or derived as a result of Vendor’s performance of the Services under this Agreement, in whatever form (including, without limitation, in written, oral, visual or electronic form or on any magnetic or optical disk or memory and wherever located), (ii) the term “Vendor Confidential Information” shall mean all information regarding Vendor operations, methods, and pricing and all Vendor Property (as defined in Section (10) above), disclosed by Vendor to Precision in connection with this Agreement and the Services provided hereunder; and (iii) the term “Confidential Information” shall mean Precision Confidential Information and/or Vendor Confidential Information, as applicable.

 

  b) Each Party (the “Receiving Party”) agrees that, during the term of this Agreement and for a period of five (5) years thereafter, it shall maintain the Confidential Information of the other Party (the “Disclosing Party”) in strict secrecy and confidence and shall not disclose any of the Disclosing Party’s Confidential Information to any third party, nor shall it use such Confidential Information for any purpose other than in connection with the Services and this Agreement, without the express written consent of the Disclosing Party, except that Precision may disclose Vendor Confidential Information to Precision Clients and Precision Affiliates provided such entities are subject to legally binding nondisclosure restrictions at least as restrictive as the terms of this agreement. The Receiving Party agrees to use the same degree of care to prevent any unauthorized access, disclosure or publication of the Confidential Information of the Disclosing Party as the Receiving Party uses to protect its own Confidential Information of like nature but in no event less than a reasonable degree of care.

 

  c) The foregoing obligation of confidentiality and nonuse will not apply to any information which (i) is already in, or comes into, the public domain other than through the Receiving Party’s unauthorized disclosure; (ii) the Receiving Party can demonstrate was already in its possession prior to receipt of the Confidential Information as evidenced by the Receiving Party’s contemporaneous written records, (iii) is approved for public release by written authorization of the Disclosing Party, or (iv) is required by law, regulation, rule, act or order of any governmental authority or agency to be disclosed by the Receiving Party; provided, however, that in the event the Receiving Party is ordered by a court or other government agency to disclose any Confidential Information, the Receiving Party shall, so long as it is legally permissible, give the Disclosing Party reasonable advance written notice so as to permit the Disclosing Party to seek a protective order with respect to such information and thereafter the Receiving Party shall disclose only the minimum information required to be disclosed in order to comply. If the Receiving Party is required by law to disclose any of the Disclosing Party’s Confidential Information, the Receiving Party shall disclose only that information required to comply with the legal requirement and shall continue to maintain the confidentiality of the Disclosing Party’s Confidential Information with respect to all other third parties.

 

  d) All Precision Confidential Information and copies thereof shall be the property of Precision and/or the relevant Precision Affiliate or Precision Client and, unless otherwise agreed by Precision in writing, at the written request of Precision at any time, Vendor shall, return to Precision or destroy all (or identified portion of) Precision Confidential Information in its possession. Notwithstanding the foregoing, Vendor may retain one archival copy of such Confidential Information in a limited access file for purposes of monitoring its ongoing obligations hereunder and to comply with any applicable regulatory requirements.

 

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(12) Data Privacy.

 

  a) For purposes of this Agreement, the following terms shall have the meanings given to them below:

 

  i) “Data Protection Laws” means EU Data Protection Laws and all other privacy and data protection laws of any other country, including, without limitation, the Health Insurance Portability & Accountability Act of 1996 (HIPAA) in the US, and any other applicable data protection laws in any jurisdiction.

 

  ii) “EU Data Protection Laws” means the General Data Protection Regulation (EU) 2016/679 or GDPR, as applicable, and/or any EU or Member State law or regulation that may amend, replace, complement or supersede the GDPR from time to time.

 

  iii) “GDPR” means EU General Data Protection Regulation 2016/679.

 

  iv) “Personal Data” means Personal Data as defined in the EU Data Privacy Directive, and any other information or data that relates to a legal or natural person and that is subject to any Data Protection Laws.

 

  v) “Subprocessor” means a Processor processing personal data on behalf of another Processor, which gives it instructions on behalf of a Controller or of another Processor.

 

  vi) The terms “Processing”, “Controller”, “Processor”, “Data Subject”, “Data Concerning Health”, “Personal Data Breach” and “Supervisory Authority” shall have the definitions provided by the GDPR.

 

  b) In addition to the confidentiality obligations set forth in Section (11) above, if, in connection with the performance of Services hereunder, Vendor receives, observes or otherwise comes into possession of any Personal Data the provisions of this Section (12) shall apply. In the event of a conflict between the terms and conditions of this Section (12) and any other terms in this Agreement, the terms and conditions of this Section (12) shall control.

 

  c) The Parties recognize and agree that, in the context of performance of the Services, Precision is a data Processor, acting on behalf and instructions of the Precision Client, and Vendor is a sub-Processor, acting on behalf and instructions of Precision.

 

  d) Precision hereby authorizes Vendor to Process Personal Data for the sole purpose of performance of the Services. Vendor shall: (i) Process Personal Data only on behalf and for the purposes of, and only as instructed by Precision in writing, including as instructed in the applicable SOW, and in compliance with all Data Privacy Laws; (ii) provide adequate technical and organizational measures to prevent unauthorized processing and accidental loss of such information; (iii) not export, transfer, store, or remotely access Personal Data that is not subject to EU Data Privacy Laws in a manner that will make such Personal Data subject to EU Data Privacy laws , (iv) not subcontract the processing of data without Precision’s express written consent, which consent may be withheld in Precision’s sole and absolute discretion; (v) assist Precision in all reasonable respects, through appropriate technical and organizational measures, in fulfilling its obligation to comply with requests relating to the exercise of rights by the Personal Data subjects, (vi) immediately notify Precision in writing, of any known or suspected Personal Data Breach, which notice shall describe the nature of the breach, the probable consequences and the measures taken or to be taken by Vendor to remedy the breach of Personal Data, and (g) upon termination or expiration of this Agreement or the applicable SOW , at Precision’s option, return all Personal Data to Precision or its designee, or delete it and provide Precision with a certificate of destruction. In addition, Vendor shall not export, transfer, store, remotely access Personal Data, or permit any of the latter in/from a country which is not part of the European Economic Area and does not benefit from an adequacy recognition decision of the European Commission pursuant to Article 45 of the GDPR, without Precision’s express written consent. Such export, transfer, storage, remote access or the permission thereof must in any case be secured through the provision of appropriate guarantees, which may consist in (i) applicable standard data protection clauses pursuant to Article 46.2 c) or d) of the GDPR, (ii) binding corporate rules pursuant to Article 46.2 b) of the GDPR, or (iii) any other instrument recognized by the GDPR and approved by the European Commission or a Supervisory Authority. At Precision’s request, Vendor shall provide a comprehensive and up to date list of the countries in which Personal Data is stored and/or from which it is remotely accessed.

 

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  e) Without limiting Vendor’s obligations as set forth above, Vendor shall implement administrative, physical, and technical safeguards to protect Personal Data from unauthorized access, acquisition, or disclosure, destruction, alteration, accidental loss, misuse, or damage that are no less rigorous than accepted industry practices, and shall ensure that all such safeguards, including the manner in which Personal Data is created, collected, accessed, received, used, stored, processed, disposed of, and disclosed, comply with applicable Data Privacy Laws, as well as the terms and conditions of this Agreement.

 

  f) Anything in this Agreement to the contrary notwithstanding, Vendor shall not disclose or transfer any Personal Data to any subprocessor or other person or entity without Precision’s prior written consent. Where such consent is given, Vendor shall (i) remain fully liable to Precision for the subprocessor’s or other person or entity’s acts and omissions with respect to such Personal Data; and (ii) ensure that the subprocessor’s or other person or entity’s Processing is carried out under a written contract imposing on the subprocessor, or other person or entity the same obligations as are imposed on the Vendor under this Agreement; (iii) ensure compliance of the Processing with applicable Data Protection Laws; and (iv) ensure that all subprocessors or other persons or entities offer adequate guarantees with regard to applicable obligations in terms of security of the Processing and of confidentiality of Personal Data.

 

  g) In the event of an actual or suspected Personal Data Breach, Vendor shall fully cooperate with Precision and the applicable Precision Client in their handling of the matter, including, without limitation: (i) assisting with any investigation; (ii) providing Precision and the applicable Precision Client with physical access to the facilities and operations affected; (iii) facilitating interviews with Vendor’s employees and others involved in the matter; and (iv) making available all relevant records, logs, files, data reporting, and other materials required to comply with applicable law, regulation, industry standards, or as otherwise required by Precision.

 

  h) Vendor shall be responsible for all expenses incurred by Precision, its Affiliates and Precision Clients as a result of a breach of this Section (12), including, without limitation: (i) expenses to provide notice of an Data Breach to affected individuals; (ii) expenses to investigate or remediate a Personal Data Breach or failure to comply with Data Privacy Laws; (iii) expenses to provide credit monitoring services to individuals on an opt-in basis if requested by a regulator; and (iv) expenses to respond to or address any investigation by regulators or law enforcement.

 

  i) Upon Precision’s request, Vendor will grant Precision, the applicable Precision Client, and their designees permission to perform an assessment, audit, examination, and/or review of all controls in Vendor’s physical and/or technical environment in relation to Personal Data being handled and/or Services being provided pursuant to this Agreement. Vendor shall fully cooperate with such assessment by providing access to knowledgeable personnel, physical premises, documentation, infrastructure, and application software that processes, stores, or transports Personal Data for Precision pursuant to this Agreement. In addition, upon Precision’s written request, Vendor shall provide Precision with the results of any audit by or on behalf of Vendor performed that assesses the effectiveness of Vendor’s information security program as relevant to the security and confidentiality of Personal Data shared during the course of this Agreement.

 

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(13) Terms of payment.

 

  a) Precision will compensate Vendor in accordance with the terms of the applicable SOW for work satisfactorily performed and will reimburse Vendor for certain expenses incurred by Vendor identified as reimbursable or pass-through expenses in the applicable SOW (“Pass-Through Costs”). Notwithstanding the foregoing, Precision shall have no obligation to make any payments in excess of the maximum cumulative total specified in the applicable SOW.

 

  b) Vendor shall submit invoices to Precision in accordance with the payment schedule set forth in the applicable SOW. Each invoice must be sufficiently detailed to identify the nature, timing and extent of the Services. Pass-Through Costs must be identified and itemized separately, and invoices for Pass-Through Costs must include original receipts documenting the expense. Vendor may invoice only for Pass-Through Costs actually incurred, with no mark-up in cost or administrative fee. Vendor shall submit final invoices within sixty (60) days after the earlier to occur of (i) termination or expiration of the applicable SOW, or (ii) completion of the Services to be provided under such SOW. Precision shall have no obligation to pay invoices received later than sixty (60) days after such termination or expiration or completion of the Services.

 

  c) Unless otherwise provided in the SOW, properly submitted invoices for Services satisfactorily performed and Pass-Through Costs properly incurred shall be due and payable within sixty (60) days after Precision’s receipt of the applicable invoice. If any portion of an invoice is disputed, Precision shall pay the undisputed amounts as set forth above and the parties shall use good faith efforts to reconcile the disputed amount as soon as practicable.

 

(14) Audits and inspections. During the term of this Agreement and for a period of three (3) years after its expiration or termination, and upon reasonable notice, Vendor will permit Precision, its Precision Clients, or their agents to inspect Vendor facilities and audit records during normal business hours, including accounting records, relating to Services. Vendor will make available all such records and will provide reasonable assistance in the inspection or audit. All records relating to this Agreement, including but not limited to Vendor’s invoices, will be maintained for a period of three (3) years following termination of expiration of this Agreement unless a longer period is specified in the applicable SOW. To the extent any such audit reveals any overpayments by Precision, Vendor will promptly refund the amount of such overpayment to Precision and if any discrepancy is 5% or more in Precision’s favor, Vendor shall reimburse Precision for all of the reasonable costs of the audit.

 

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(15) Term and Termination.

 

  a) The term of this Agreement (the “Term”) shall commence on the Effective Date hereof, and continue until terminated in accordance with the terms of this Section (15).

 

  b) Precision may terminate this Agreement or any SOW, without cause, upon ten (10) days’ prior written notice to the Vendor or immediately upon written notice in the event a Precision Client terminates the applicable Prime Contract. Precision shall be obligated to compensate Vendor only for Services satisfactorily provided and reimbursable expenses properly incurred up to the date of termination of the SOW or Agreement (as the case may be).

 

  c) Either Party may terminate this Agreement and/or any SOW issued hereunder, upon written notice to the other, with immediate effect and, in the case of a termination by Precision, with no liability or obligation to make any further payment to Vendor, if the other Party: (i) is in material breach of the terms of this Agreement and fails to cure such breach within thirty (30) days of its receipt of written notice from non-breaching Party specifying the nature of the breach; or (ii) becomes insolvent, is dissolved or liquidated, makes a general assignment for the benefit of its creditors, or files or has filed against it a petition in bankruptcy or has a receiver appointed for a substantial part of its assets.

 

  d) Vendor may terminate this Agreement without cause upon thirty (30) days prior written notice to Precision, provided, however, that if at the time of such notice, one or more SOWs remain in effect, this Agreement shall remain in effect with respect to such SOWs only, through the satisfactory completion of the Services described therein.

 

  e) Upon receipt by Vendor of any notice of termination of an SOW or his Agreement, Vendor shall (i) immediately cease performing any further work under the applicable SOW(s) and shall cease incurring additional expenses in connection therewith, (ii) promptly return or destroy all Confidential Information of Precision at Precision’s direction and (iii) immediately deliver all Work Product (including all work in progress) to Precision in the format requested by Precision

 

(16) Indemnification; Insurance.

 

  a) Vendor shall indemnify and hold harmless Precision and Precision Affiliates, Precision Clients and their Affiliates, and any of their respective directors, officers, shareholders, employees, agents, representatives, subcontractors, successors and assigns (the “Precision Indemnified Parties”) from any and against all losses, damages, costs and expenses (including, without limitation, the Indemnified Parties’ reasonable attorneys’ fees and other costs of legal defense, whether direct or indirect) (“Losses”) incurred by any Precision Indemnified Parties as a result of any claim, demand, action or proceeding by any third party (each, a “Claim”) relating to or arising out of (i) any breach of any of Vendor’s representations, warranties and obligations hereunder; (ii) any actual or alleged infringement or misappropriation of any patent, copyright, trademark, trade secret, or other proprietary right by any Work Product; or (iii) any negligent acts or omissions of Vendor and its employees, agents and contractors.

 

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  b) Precision shall indemnify and hold harmless Vendor and Vendor’s Affiliates, and any of their respective directors, officers, shareholders, employees, agents, representatives, subcontractors, successors and assigns (the “Vendor Indemnified Parties”) from any and against all Losses, incurred by any Vendor Indemnified Parties as a result of any Claim relating to or arising out of (i) any material breach of any of Precision’s obligations hereunder; or (ii) any grossly negligent acts or omissions of Precision.

 

  c) The indemnifying party shall be entitled, at its option, to control the defense of any claim on which it is liable, provided that the indemnifying party shall act reasonably and in good faith with respect to all matters relating to the settlement or disposition of the claim as the disposition of the claim relates to the indemnified party. The indemnifying party may not, without indemnified party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, settle or compromise any Claim or consent to the entry of any judgment regarding which indemnification is being sought hereunder unless such settlement, compromise or consent includes an unconditional release of the indemnified party from all liability arising out of such claim; does not contain any admission or statement suggesting any wrongdoing or liability on behalf of Indemnified Party; and does not contain any equitable order, judgment or term (other than the fact of payment or the amount of such payment) that in any manner affects, restrains or interferes with the business of indemnified party or any of its Affiliates.

 

  d) The indemnified parties shall cooperate in the investigation, defense and settlement of any Claim and shall provide prompt notice of any such Claim or reasonably expected Claim to the indemnifying party. An indemnified party shall have the right to retain its own separate legal counsel at its own expense.

 

  e) If the Indemnifying Party fails or wrongfully refuses to defend or settle any Claims, then the Indemnified Party shall, upon written notice to the Indemnifying Party, have the right to defend or settle (and control the defense of) such Claims. In such case, the Indemnifying Party shall cooperate, at its own expense, with the Indemnified Party and its counsel in the defense and settlement of such Claims, and shall pay, as they become due, all costs, damages, and reasonable outside legal fees incurred therefore.

 

  f) At all times during the term of this Agreement and for a period of three years after its expiration or termination, Vendor shall maintain, at Vendor’s own expense, insurance coverage at such level and terms and with such insurers as are acceptable to Precision in its reasonable discretion, and satisfying any specific requirements identified in the applicable SOW. Vendor shall, on request, supply to Precision copies of such insurance policies, certificates of insurance and evidence that the relevant premiums have been paid. Vendor shall provide Precision with not less than thirty days prior written notice of cancellation or material change in coverage under such insurance policies.

 

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(17) Waiver of Damages. Neither Party, together with their Affiliates and its and their respective directors, officers, employees, agents or advisors, shall have any liability of any type (including, but not limited to, contract, negligence, and tort liability), for any special, incidental, indirect or consequential damages, including, but not limited to the loss of opportunity, loss of use, or loss of revenue or profit, in connection with or arising out of this Agreement, even any such person shall have been advised of the possibility of such damages, except as may otherwise arise under applicable law, provided, however that the foregoing waiver of liability shall not apply to liability arising from a Party’s indemnification obligations under Section (17) hereof, or a for a Party’s breach of its obligations under Sections (11) or (12) hereof.

 

(18) Publication. Vendor may not publish the results of the Services provided hereunder or use the name of Precision or any Precision Clients in any advertising or sales promotional material or in any publication without the express prior written consent of Precision, which consent may be withheld in Precision’s sole and absolute discretion. Neither Vendor nor its employees, agents or subcontractors, shall post any content to any social media platform that identifies or references Precision or any Precision Clients, nor the Services without the prior written consent of Precision.

 

(19) Assignment and Subcontracting. Vendor shall not subcontract or delegate any of its duties nor assign or otherwise transfer any of its rights under this Agreement to a third party without the specific prior written consent of Precision, which consent may be withheld in Precision’s sole and absolute discretion. If Precision consents to any such subcontract or delegation to a third party, Vendor shall ensure that the third party meets the performance standards described in this Agreement and complies with all of the applicable terms of this Agreement, and Vendor shall be responsible for any failure by such third party to comply with any of the terms and conditions of this Agreement.

 

(20) Injunctive Relief. Each Party agrees that a breach of the provisions of Sections (10), (11) or (12) of this Agreement may result in irreparable harm to the other Party for which money damages would be inadequate. Consequently, in the event of such a breach or threatened breach by a Party, the other Party shall be entitled, without the requirement of posting bond or other security, to seek equitable relief, including injunctive relief and specific performance in addition to other remedies available to such other Party at law or in equity.

 

(21) Third Party Beneficiaries. The Parties acknowledge and agree that each Precision Client is an intended third party beneficiary under this Agreement as it relates the SOW for the Study for which it is a Precision Client. Except for the rights of Precision Indemnified Parties and Vendor Indemnified Parties as set forth in Section (17) above, the rights of Precision Affiliates under Section (4) hereof, and the rights of the Precision Client as an intended third party beneficiary of this Agreement, or as expressly set forth in an SOW, there shall be no third party beneficiaries of this Agreement.

 

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(22) Survival. The rights and obligations of the parties hereto, which by their intent or meaning have validity beyond the termination or expiration of this Agreement, including, but not limited the provisions of Sections (4), 7(e), 7(f), (10) through (12), and (14) through (30) hereof shall survive the termination or expiration of this Agreement.

 

(23) Counterparts. This Agreement and each SOW issued hereunder may be executed in any number of counterparts, each of which when executed, shall be an original, and all counterparts together shall constitute one and the same instrument.

 

(24) Entire Agreement; No Modification. This Agreement, including the applicable SOW hereunder, represents the entire agreement between the parties with regard to the subject matter hereof and supersedes all prior negotiations, representations or agreements, written or oral, regarding such subject matter. No modification of this Agreement or any SOW hereunder shall be effective unless in writing and signed by each of the parties hereto, and no waiver of any right set forth herein shall be effective unless in writing and signed by the party against whom enforcement of the waiver is sought.

 

(25) Notices. Except as otherwise provided, all communications and notices required under this Agreement will be in writing and will be either delivered personally (as evidenced by a signed receipt), or by courier, recognized overnight express carrier, or certified mail, return receipt requested, to the addresses set out above and, in the case of Precision, to the attention of Co-President, or to such other address as is notified in writing by one party to the other from time to time.

 

(26) Remedy. Failure to exercise, or any delay in exercising, any right or remedy provided under this Agreement or by law shall not constitute a waiver of that (or any other) right or remedy, nor shall it preclude or restrict any further exercise of that (or any other) right or remedy.

 

(27) Miscellaneous. Unless the context otherwise requires, a reference to one gender shall include reference to other genders and words in the singular include the plural and vice versa.

 

(28) Governing law and jurisdiction. This Agreement shall be shall be construed by and enforced in accordance with the laws of the State of Delaware, without regard to its conflict of law provisions. All parties agree to submit to the personal jurisdiction of the State of Delaware and further agree that any cause of action arising under this Agreement must be brought in either federal or state court in the State of Delaware.

 

(29) Enforceability. In the event any provision of this Agreement is held to be unenforceable or invalid by a court of competent jurisdiction, the validity and enforceability of the enforceable portion or any such provision and/or the remaining provisions will not be affected thereby.

 

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(30) Non-Solicitation. Vendor hereby agrees to not, directly or indirectly, solicit for employment or offer employment, employ, whether as an employee or independent contractor, or offer other forms of compensation to Precision’s and its Affiliates’ employees or contractors, provided however that the general advertisement for employees or the general solicitation of employees by a recruiter shall not be deemed a violation of this Section 30. This non-solicitation clause shall remain in effect for the entire Term of this Agreement and for a period of twelve (12) months after this Agreement has expired or been terminated.

 

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed as of the Effective Date hereof.

 

PRECISIONvalue (Chicago), LLC   SYRAHEALTH
     

By:

                    

By:

                
Name:      Name:  
Title:     Title:  
Date:     Date:  

 

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Exhibit A

 

STATEMENT OF WORK #

 

This Statement of Work (“SOW”) effective as of October 4th, 2021 (the “Effective Date”) is issued pursuant to the Vendor Master Services Agreement (the “Agreement”) dated as of the 29th day of September 2021, between PRECISIONvalue (Chicago), LLC (“Precision”) and SyraHealth (“Vendor”) and incorporates all of the terms and conditions therein.

 

Pursuant to the Agreement, Vendor has agreed to perform certain services in accordance with written Statements of Work, such as this one, entered into from time-to-time.

 

The parties hereby agree as follows:

 

  1. Term. The term of this SOW will commence as of the Effective Date and continue until completion of the Services, including receipt of all deliverables identified below.

 

  2. Services and Deliverables. Vendor shall perform the following services for Precision with respect to ad hoc medical writing requests, including, but not limited to: (the “Project”):

 

  a. Content development and updates

 

  b. Reference and submission management

 

Project Schedule Timeline: Individual timelines will be communicated with project requests. Vendor will have 1 business day to respond on whether project requests can be accommodated.

 

  3. Standards and Procedures. Vendor will provide the Services described in this SOW in compliance with the following: successful completion of requests utilizing SocialBridge and/or email, whichever is appropriate

 

  4. Fees and Expenses. Precision shall compensate Vendor for Services satisfactorily performed at an hourly rate of $75 for work completed by a Scientific Associate and $100 for work completed by a Medical Director. All hours must be submitted via Replicon on a weekly basis. Any charges incurred by the Vendor for the purchase of references not provided by Precision will be reimbursed by Precision; however, Vendor to confirm with Ami Gopalan via email prior to purchasing any references.

 

  5. Payment Schedule:

 

Invoices should be submitted via email to Ami Gopalan (ami.gopalan@precisionvh.com) at the end of each calendar month. Approved invoices shall be paid within thirty (30) days of receipt.

 

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  6. Additional Terms and Conditions.

 

  7. Counterparts: This SOW may be executed in two or more counterparts, each of which is deemed an original but all of which will constitute one and the same document

 

Accepted and Agreed to as of the date written above.

 

PRECISIONvalue (Chicago), LLC   SYRAHEALTH
     
By: /s/ Kelly Wilder   By: /s/ Deepika Vuppalanchi
Name: Kelly Wilder   Name: Deepika Vuppalanchi
Title: Co- President   Title: CEO
Date: 10-7-21   Date: October 6th, 2021

 

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Exhibit 10.15

 

COMMERCIAL LEASE AGREEMENT

 

This Commercial Lease Agreement (this “Agreement”) is made this 1st day of July, 2021, by and between STVentures LLC, an entity located at 1119 Keystone Way, Carmel, IN 46032 (“Landlord”) and SYRA Health Corp, an entity located at 1119 Keystone Way, Suite 201, Carmel, IN 46032 (“Tenant”). In consideration of the mutual covenants herein contained, the parties agree as follows:

 

1.Demised Premises. The premises leased shall consist of an office space in the building complex (the “Real Property”) located at 1119 Keystone Way, Suite 201, Carmel, IN 46032 (the “Demised Premises”), Depicted and shown in Exhibit A attached hereto and made part of.

 

A)Size of Premises. The Demised Premises consists of approximately Two Thousand Nine Hundred and Seventy-six (2976) square feet. The square footage of the Demised Premises shall be determined by measuring from the outside of all exterior walls to the centerline of any demising walls. Landlord’s architect or building contractor may measure the Demised Premises to make a final determination of the size.

 

B)Reserved Uses. Landlord reserves to itself the use of the roof, exterior walls, and the area above and below the Demised Premises, together with the right to install, maintain, use, repair, and replace pipes, ducts, conduits, wires and structural elements leading through the Demised Premises and which serve either the Demised Premises or other parts of the building or complex.

 

C)Common Area. Landlord grants to Tenant the non-exclusive right to use, in common with all other tenants or occupants of the Real Property, the Common Area of the Real Property. The term “Common Area” shall mean all areas and improvements in the Real Property, which are not leased or held for lease to tenants. The Common Area shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right from time-to-time to change the sizes, locations, shapes, and arrangements of the Common Area; restrict parking by Tenant and other tenants to designated areas; and do and perform such other acts in and to the Common Area and adopt, modify, and enforce such rules and requirements as Landlord in its sole discretion deems advisable. Landlord shall maintain the Common Area in good repair and reasonably clear of debris.

 

D)Parking Spaces. Landlord agrees that Tenant, including its guests, employees, agents, and customers, has the right to use any parking space(s) located in the building parking lot on a reasonable non-exclusive first-come, first serve basis. Tenant accepts and understands that parking privileges granted are personal to the Tenant and such parking privileges may not be assigned or sublet. Tenant will not pay Landlord a fee for the use of such parking privileges.

 

E)Storage Facilities. This Agreement and the Demised Premises does not include the use of any storage facilities on the Real Property.

 

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2.Agreement to Lease. Landlord agrees to lease to Tenant and Tenant agrees to lease from Landlord, the Demised Premises according to the terms and conditions of this Agreement.

 

3.Term of Lease. The term of this Agreement is for 36 months

 

Commencement Date: The later of substantial completion of the demised premises or 1st July, 2021 (“Commencement Date”)

 

Expiration Date: Thirty-Six (36) months from the commencement date as further set forth in Section 5

 

4.Rental Terms. With respect to the terms of the rental:

 

A)Base Rent. Tenant shall pay to Landlord, from the Commencement Date and throughout the term of this Agreement, payable on a monthly basis (“Base Rent”) as listed below. Base Rent is due no later than the 1st day of the payment period. Base Rent is payable by Drop it off upstairs, or as otherwise agreed upon by the parties.

 

Months of Term  Base Annual Rent   PSF   Monthly Installment 
Months 1-36  $63,948.00   $21.50   $5,332.00 

 

B)Operating Expense. Landlord shall pay all Operating Expense on the Real Property. “Operating Expense” means the total cost and expense incurred in operating, managing, insuring, equipping, lighting, repairing, maintaining and policing the Real Property, including the exterior of the Real Property and the common areas, and specifically including, without limitation, items of expense for or related to: insurance premiums and deductibles, management, bookkeeping.

 

C)Real Estate Taxes. Landlord shall pay all real estate taxes and assessments levied against all or any part of the Demised Premises, the Real Property, and the improvements thereon.

 

D)Payment of Rent. Base Rent and Operating Expense under this Agreement may collectively be refer red to as “Rent” or “Rents.” All Rents shall be made payable to Landlord and delivered to the address stated above or to another address as Landlord may designate upon reasonable notice to Tenant. Landlord agrees, on request, to provide statements to Tenant as to the manner of computation of any and all charges due from Tenant under the terms of this Agreement, and an itemization of the various costs included therein.

 

E)Partial Payments. Any partial payments shall be applied to the earliest installment due, and no endorsement or statement on any check or any letter accompanying any check or payment as to same shall be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such installment and any other amounts then due or to pursue any other remedy of Landlord set forth in this Agreement.

 

F)Past Due Payments. If any amount due under this Agreement remains unpaid five (5) days after it is due, a late charge equal to $100.00 per day (“Late Charge”) shall be paid by Tenant to Landlord until such time as Tenant is current on all amounts due Landlord (including all Late Charges). In addition, all service charges from Tenant’s financial institution due to non-sufficient funds shall be paid by Tenant.

 

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G)Security Deposit.

 

Security Deposit: $0

 

Rental Advance: $0

 

Tenant shall, at the time of executing this Agreement, deposit with Landlord as a security deposit, which amount shall serve as security for the full performance of the obligations and covenants of Tenant under this Agreement. Such deposit shall not accrue interest for Tenant, shall not be considered a Rental payment, final or otherwise, and shall not be considered to limit or relieve Tenant from any obligation or liability to Landlord. In the event of a default by Tenant under the terms of this Agreement, Landlord may apply such deposit toward the cure of such default without notice to Tenant. Upon complete performance by Tenant of all its obligations under or with respect to this Agreement, any remaining portion of such deposit to which Tenant is entitled shall be refunded to Tenant. Landlord may transfer the security deposit to any purchaser of Landlord’s interest in the Demised Premises, in which event Landlord shall be discharged from any further liability with respect to such deposit and Tenant will look solely to the purchaser of Landlord’s interest for any return of said deposit.

 

H)Additional Rent. Any amount required to be paid by Tenant, hereunder (in addition to Base Rent) and any charges or expenses incurred by Landlord on behalf of Tenant under the terms of this Lease shall be considered “Additional Rent” payable in the same manner and upon the same terms and conditions as the Base Rent reserved hereunder, except as set forth herein to the contrary. Any failure on the part of Tenant to pay such Additional Rent when and as the same shall become due shall entitle Landlord to the remedies available to it for non-payment of Base Rent.

 

In addition to the base rent payable by the Tenant under the provisions of Section 4(A), hereof, Tenant shall pay to Landlord, as Additional Rent, Tenant’s proportionate share of Excess Operating Expenses and Proportionate Share of Excess Real Estate Taxes. The Term Excess Real Estate Taxes and Operating Expenses for an applicable lease year shall mean the amount of Real Estate and Operating Expenses respectively payable during such applicable Lease Year for the Building (and the Land of which it is part of) in excess of the amount of Real Estate Taxes and Operating for the Building and Land Payable for the base year for Real Estate Taxes.

 

I)Holding Over. If Tenant remains in possession of the Demised Premises after the expiration of the initial Lease Term or any renewal Term without the execution of a new lease, it shall be deemed to be a tenant from month-to-month, subject to all conditions, provisions and obligations of this Agreement insofar as the same are applicable to a month-to-month tenancy except that the Base Rent shall be 200 times the Base Rent applicable immediately prior to the expiration of the Term.

 

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5.Term and Possession.

 

A)Term. Subject to and upon the terms and conditions set forth herein, this lease shall continue in force for the term beginning on the Commencement Date and ending on the Expiration Date. In the event that the demised premises should not be ready for occupancy on the Commencement Date for any reason, including holding over by prior tenant or the failure to complete Landlords’ Work in the preparation of the demised premises for occupancy, Landlord shall not be liable for any claims, damages or liabilities in connection therewith or by any reason thereof, and the Term of the lease shall be for the same Term as set forth in this Section, but the Commencement Date shall be effective only from the time that the Landlord’s Work, if any, in preparation of the Demised Premises for occupancy by Tenant has been substantially completed in accordance with the terms and conditions set forth herein. Should the Term of this Lease commence on a date other that specified in this Section, Landlord and Tenant will, at the request of either, execute a declaration specifying the Commencement Date and Expiration date for this Lease. If, as a result of the Commencement Date being other than the first day of the month, this Lease would expire on a day other that the last day of a month, the Term shall be extended through the last day of the month.

 

B)Preparation of Demised Premises. Landlord agrees to perform and complete the work required of Landlord (Landlord’s Work) for preparation of the Demised Premises for the occupancy by Tenant as set forth in the Description of Landlord’s Work attached hereof as Exhibit C as a “turn-key” tenant improvement package. Tenant will be responsible for any cost and expense associated with any change orders or additional improvements requested by Tenant. Except for the obligations to be performed by Landlord, Tenant accepts the Demised Premises in its “AS-IS” conditions

 

C)Tenant’s Acceptance of the Demised Premises. Upon delivery of exclusive possession of the Demised Premises to the Tenant as herein provided, Tenant upon request shall execute a letter of understanding acknowledging the (a) Commencement Date and Expiration date of this Lease, and (b) that Tenant has accepted the Demised premises for occupancy and that the condition of the Demised Premises, including the Landlord’s Work constructed thereon, was at the time satisfactory and in conformity with the provisions of this Lease except for any defects or omissions listed. Such letter of understanding will become part of this Agreement. If the Tenant takes possession of and occupies the Demised Premises, Tenant shall be deemed to have accepted the Demised Premises in the manner described in this section, even though the letter of understanding may not have been executed by Tenant.

 

6.Use, Occupancy and Condition of Premises. With respect to use and occupancy:

 

A)Use and Occupancy. Tenant shall use and occupy the Demised Premises for the commercial purpose of general office and related activities. The Demised Premises shall be used for no other purpose without the advance written consent of Landlord. Tenant shall operate the Demised Premises in a clean and dignified manner and in compliance with all applicable laws, regulations, rules, and ordinances. As agreed by both parties, Landlord shall provide janitorial services and shared costs will be included in the Operating Expense. Tenant shall use the Demised Premises for no unlawful purpose or act; shall commit or permit no waste or damage to the Demised Premises; shall, at Tenant’s expense, comply with and obey all applicable laws, regulations, or orders of any governmental authority or agency; shall not do or permit anything to be done in or about the Demised Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Real Property; and shall comply with all the rules and requirements promulgated by Landlord with respect to the Real Property, as the same may be amended from time to time. Tenant agrees as follows:

 

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I.All loading and unloading, delivery and shipping of goods shall be conducted in such areas and through the entrances designated by Landlord.

 

II.No window coverings, such as curtains, blinds or shades, shall be placed on the windows of Demised Premises unless approved by Landlord.

 

III.No smoking in the Demised Premises or within twenty (20) feet or any doorway.

 

IV.All garbage and refuse shall be kept in the size and kind of container, and in a location approved by Landlord. Tenant shall not burn any trash or garbage in or about the Real Property.

 

V.No aerial, loudspeaker, satellite dish, sound amplifier, equipment, displays, or advertising shall be erected on the roof or exterior walls of the Demised Premises, or on other areas of the Real Property without the prior written consent of Landlord.

 

VI.No loudspeaker, television, phonograph, juke-box, radio, or other device shall be used in a manner so as to be heard other than by persons who are within the Demised Premises without the prior written consent of Landlord.

 

VII.No activity will take place on the Demised Premises or common areas which shall cause any odor which can be smelled other than by persons who are within the Demised Premises.

 

VIII.Tenant shall keep the Demised Premises at a temperature sufficiently high to prevent freezing of water in pipes and fixtures.

 

IX.Tenant shall not permit or place any obstructions or merchandise in any common areas, including but not limited to, corridors, all sidewalks in front of, on the side of, or in the back of the Demised Premises.

 

X.The plumbing facilities in the Demised Premises shall not be used for any purpose other than that for which they are constructed, and no foreign substance of any kind shall be thrown therein, and the expense of any breakage, stoppage, or damage resulting from a violation of this provision shall be borne by Tenant. Tenant shall be responsible for the proper and lawful disposal of all cooking grease used within the Demised Premises.

 

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XI.Tenant shall keep all windows, window sills, window frames and exterior signs of the Demised Premises clean.

 

XII.No merchandise shall be stored in the Demised Premises except that which Tenant is selling in the normal course of business in, at, or from the Demised Premises.

 

XIII.No auctions or tent sales shall be held within the Demised Premises or on or with in any portion of the Real Property, except with the prior written consent of Landlord.

 

XIV.Landlord shall have the right to prohibit the continued use by Tenant of any unethical or unfair method of business operation, advertising or interior display if, in Landlord’s opinion, the continued use thereof would impair the reputation of the Real Property as a first class facility or is otherwise out of harmony with the general character thereof, and upon notice from Landlord shall forthwith refrain from or discontinue such activities.

 

XV.Tenant shall keep the Demised Premises (including without limitation, exterior and interior portions of all windows, doors and all other glass) in a neat, clean and sanitary condition, free of all insects, rodents, vermin and pests of every type and kind.

 

XVI.Tenant shall not use the Demised Premises for any purpose or business which is noxious or unreasonably offensive because of the emission of noise, smoke, dust or odors.

 

XVII.Tenant shall keep the entry ways and sidewalk/walkway in front of the Demised Premise clear of all debris, trash and litter, and shall keep the same swept, maintained and snow and ice removed therefrom.

 

B)Environmental Restrictions. Tenant shall not use the Demised Premises for any activities involving, directly or indirectly, the use, generation, treatment, storage or disposal of any hazardous or toxic chemical, material, substance or waste (“Hazardous Material”), and that the Demised Premises will be used only in compliance with any and all environmental laws, rules and regulations applicable thereto. Landlord shall have the right, but not the duty, to inspect the Demised Premises and conduct tests thereon should Landlord have a reasonable belief there is Hazardous Material on the Demised Premises. In the event tests indicate the presence of such Hazardous Material, an d Tenant has not removed the Hazardous Material on demand, Landlord shall have the right to immediately enter the Demised Premises to remedy any contamination found thereon. In exercising its rights herein, Landlord shall use reasonable efforts to minimize interference with Tenant’s business, but such entry shall not constitute an eviction of Tenant, in whole or in part, and Landlord shall not be liable for any interference, loss, or damage to Tenant’s property or business caused thereby, provided such contamination is not caused by or the result of Landlord’s actions, or the actions. If any lender or governmental agency shall ever require testing to ascertain whether there has been a release of Hazardous Material, then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand as additional Rent if such requirement arose because of Tenant’s storage or use of Hazardous Material on the Demised Premises. Tenant shall execute affidavits, representations and the like from time to time, at Landlord’s reasonable request, concerning Tenant’s best actual knowledge and belief regarding the presence of any Hazardous Material on the Demised Premises or Tenant’s intent to store or use Hazardous Material on the Demised Premises.

 

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C)Condition and Acceptance of Premises. Tenant accepts the Demised Premises in their current condition and acknowledges that the Demised Premises is in good order and repair, unless otherwise indicated herein. By occupying the Demised Premises, Tenant shall be conclusively deemed to have accepted the Demised Premises as being in the condition required by this Agreement. If requested by Landlord, Tenant will sign a statement confirming the Commencement Date and ratifying acceptance of the Demised Premises. In addition, Tenant shall have a five (5) day waiting period to discover any defects and shall notify Landlord immediately of the same.

 

7.Property in Demised Premises. With respect to the property:

 

A)Risk and Loss of Tenant’s Personal Property. All of Tenant’s personal property which may at any time be in the Demised Premises shall be at Tenant’s sole risk, or at the risk of those claiming under Tenant. Landlord shall not be liable for any damage to said property or loss of business suffered by Tenant which may be caused by water from any source whatsoever including the bursting, overflowing, or leaking of sewer or steam pipes or from the heating or plumbing fixtures or from electric wires or from gas or odor or leaking of the fire suppression system.

 

B)Fixtures and Furnishings Provided by Landlord. Landlord shall provide the following fixtures and furnishings

 

C)Personal Property Taxes of Tenant. Landlord shall pay before delinquency all taxes assessed against Landlord’s fixtures, furnishings, equipment and stock-in-trade placed in or on the Demised Premises.

 

8.Repairs and Maintenance. With respect to repair and maintenance obligations:

 

A)Landlord’s Obligation to Repair and Maintain. Landlord shall be responsible for repairing and maintaining the Demised Premises in good condition and for making such modification or replacements thereof as may be necessary or required by law or ordinance, specifically for the following:

 

○Foundation and structural components of the building

 

○Exterior walls but excluding (windows, doors, window and door frames, plate glass)

 

○Roof, gutters and downspouts

 

○Parking lot

 

○Driveway

 

○Sidewalks

 

However, Tenant shall reimburse Landlord for any such maintenance, repairs, or replacements made necessary by any acts of Tenant. Landlord reserves and at all times shall have the right to enter the Demised Premises in any emergency and also during regular business hours upon advance written notice to inspect the same, and to repair the Demised Premises and any portion of the Real Property or Common Area, without abatement of Rent.

 

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B)Tenant’s Obligation to Repair and Maintain. All maintenance, repairs, or replacements relating to the Demised Premises which are not the obligation of Landlord shall be the obligation of Tenant and shall be made by Tenant at Tenant’s sole cost and expense. Tenant shall keep and maintain the Demised Premises in good repair and order at all times. Tenant shall be responsible for the maintenance, repair and replacement of the following:

 

C)Remodeling. Tenant shall not do the following:

 

○Paint, decorate, or in any way change the exterior (or the appearance) of the Demised Premises without prior written consent of Landlord.

 

○Remodel, make additions, alterations or structural changes to the interior of the Demised Premises without prior written consent of Landlord, which consent will not be unreasonably withheld; however, the Tenant is permitted to paint and decorate the interior of the Demised Premises without prior consent of Landlord.

 

○Enter upon the roof or install or place any equipment, lines, wires, displays, advertising or anything else whatsoever thereon without the prior written consent of Landlord, which consent may be denied, conditioned or withheld at Landlord’s sole discretion.

 

D)No Liens Permitted. No person shall ever be entitled to any lien, directly or indirectly, derived through or under Tenant, or through or under any act or omission of Tenant, upon the Demised Premises, or any improvements now or hereafter situated thereon, or upon any insurance policies taken out upon the Demised Premises, or the proceeds thereof, for or on account of any labor or materials furnished to the Demised Premises, or for or on account of any matter or thing whatsoever; and nothing in this Agreement contained shall be construed to constitute a consent by Landlord to the creation of any lien. In the event that any such lien shall be filed, Tenant shall cause such lien to be released within Fifteen (15) days after actual notice of the filing thereof, or shall within such time certify to Landlord that Tenant has a valid defense to such claim and such lien and furnish to Landlord a bond, satisfactory to Landlord, indemnifying Landlord against the foreclosure of such lien. In addition to any other remedy herein granted, upon failure of Tenant to discharge such lien or to post a bond indemnifying Landlord against foreclosure of any such lien as above provided, Landlord, after notice to Tenant, may discharge such lien, and all expenditures and costs incurred thereby, with interest thereon, shall be payable as further Rent hereunder at the next Rent payment date.

 

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9.Insurance and Indemnification. With respect to insurance and indemnification:

 

A)Tenant’s Public Liability and Property Damage Insurance. Tenant shall purchase and maintain public liability and property damage insurance insuring against loss, cost and expense by reason of injury to or the death of persons or damage to or the destruction of property arising out of or in connection with the occupancy or use by Tenant, its employees, agents and assigns, of the Demised Premises and/or the Common Area, such insurance to include Landlord as an additional Insured, to be carried with an insurer and to have limits of liability of not less than $2,000,000.00 per occurrence on a combined single limit basis and a deductible no greater than $5,000.00.

 

B)Certificate of Insurance. Tenant shall furnish to Landlord a certificate of insurance evidencing such coverage which provides that such policies may not be canceled on less than five (5) days prior written notice to Landlord. Should Tenant fail to carry the insurance required herein and furnish Landlord with the policies or certificates of insurance after a request to do so, Landlord shall have the right to obtain such insurance and collect the cost thereof from Tenant as additional Rent.

 

C)Landlord’s Insurance. Landlord shall keep the Real Property (but not the contents thereof or any personal property or trade or business fixtures of Tenant) insured against loss or damage by fire and other perils normally covered by standard all-risk insurance. Landlord may also maintain public liability, property damage, loss of rent, and such other coverage related to the Real Property as Landlord deems appropriate. All premiums for such insurance maintained by Landlord shall be considered Operating Expenses.

 

D)Mutual Waiver of Subrogation. If either party suffers loss or damage which is caused by the other party, but which is covered by the injured party’s insurance, the injured party waives any claim it might have against the other party to the extent that it is compensated by the insurance required under this Agreement; and each party agrees to obtain from its insurer a provision and acknowledgement of this waiver and an agreement that the insurance carrier will not be subrogated to the rights of the injured party to the extent that these rights have been waived above.

 

E)Mutual Hold Harmless. It is agreed that Tenant shall defend, hold harmless and indemnify Landlord, its officers, agents and employees from any and all claims for injuries to persons or damage to the Demised Premises which result from the negligent acts or omissions of Tenant, its officers, agents or employees, in the performance of this Agreement. It is further agreed that Landlord shall defend, hold harmless and indemnify Tenant, its officers, agents and/or employees from any and all claims for injuries to persons and/or damage to the Demised Premises which result from the negligent acts or omissions of Landlord, its officers, agents and/or employees, in the performance of this Agreement. In the event of the concurrent negligence of Tenant and Landlord, then the liability for any and all claims for injuries or damages which arise out of the performance of the terms and conditions of this Agreement shall be apportioned in accordance with the law of the state in which the Real Property is located.

 

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10.Signs. With respect to signs:

 

A)Exterior Sign. Tenant can install a sign acceptable to Landlord on the front of the Demised Premises, hereinafter referred to as “Exterior Sign” prior to opening for business. Tenant shall be solely responsible for the cost of fabrication, installation, and maintenance of the Exterior Sign. Landlord shall pre-approve signage package to be attached to the Lease for the duration of the Lease and all renewals thereof.

 

B)Other Signs. All signs, banners, lettering, advertising, lighting, or any other things of any kind visible from the exterior of the Demised Premises installed or affixed by Tenant shall be first approved in writing by Landlord and the location and method of installation of the same shall be approved by Landlord in its sole discretion. Landlord agrees that such approval shall not be unreasonable withheld.

 

11.Utility Services. Commencing on the date on which Landlord delivers possession of the Demised Premises to Tenant, Tenant shall make payments for the following utilities based upon or in connection with the Demised Premises.

 

○Telephone

 

○Internet

 

In turn, Landlord will be responsible for making payments for the following utilities:

 

○Water

 

○Gas

 

○Heat

 

○Light

 

○Power

 

○Sewage Disposal

 

12.Access, Surrender, and Assignment. With respect to access, surrender, and assignment:

 

A)Access. Tenant shall permit Landlord to inspect or examine the Demised Premises during business hours upon advanced written notice or at any time without notice in the event of an emergency, and shall permit Landlord to enter and make such repairs, alterations, improvements, or additions in the Demised Premises or the Real Property of which the Demised Premises is a part, that Landlord may deem necessary.

 

B)Surrender. Tenant shall deliver and surrender to Landlord possession of the Demised Premises upon expiration of this Agreement, or upon earlier termination as herein provided, in as good condition and repair as the same shall be on the Commencement Date.

 

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C)Removal and Restoration. Any and all trade fixtures and equipment installed by Tenant may be removed by Tenant at the termination of this Agreement, provided that Tenant shall not be in default in the performance of any of Tenant’s obligations hereunder and provided that Tenant shall repair any and all damage caused to the Demised Premises by the removal of any such trade fixtures and equipment. Any property not so removed at the expiration of the Term hereof shall be deemed to have been abandoned by Tenant and may be retained or disposed by Landlord. Tenant shall not remove any leasehold improvements or non-trade fixtures and shall surrender the Demised Premises upon termination of the tenancy created by this Agreement in the same condition as the Demised Premises were required to have been in on the Commencement Date, ordinary wear and tear and damage by fire or other insured casualty excepted.

 

D)Assignment and Subletting. Tenant will not assign this Agreement as to any portion or all of the Demised Premises or make or permit any total or partial sublease or other transfer of any portion or all of the Demised Premises.

 

13.Damage to Premises. With respect to damage to the Premises:

 

A)Substantial Damage. In the event the Demised Premises or the Real Property of which the Demised Premises constitute a part shall be damaged or destroyed by fire or other casualty to the extent that the cost of repairing or replacing the same will equal or exceed Fifty percent (50%) of the then replacement value thereof, then the parties may, at their option, within Thirty (30) days after the occurrence of such casualty, terminate this Agreement upon written notice.

 

B)Partial Damage. In the event the Demised Premises or the Real Property of which the Demised Premises constitute a part shall be partially damaged or destroyed by fire or other casualty to the extent that the cost of repairing or replacing the same will be less than Twenty percent (20 %) of the then replacement value thereof, or in the event Landlord does not elect to terminate this Agreement as a result of substantial damage, then Landlord shall repair the damage with reasonable dispatch after notice of such casualty; provided, however, the Landlord’s obligation to repair or restore shall not be limited to restoring the structural portions of the Demised Premises and shall include repairs or the restoration of any of Tenant’s fixtures, improvements or other alterations made by Tenant in or upon the Demised Premises. Notwithstanding anything provided herein to the contrary, the Landlord’s obligation to repair or rebuild shall be limited to the amount of the fire insurance proceeds received by Landlord (less any costs incurred by Landlord in collecting the same) as a result of any such casualty. In the event the fire insurance proceeds received by Landlord (less any costs incurred by Landlord in collecting the same) are insufficient to rebuild the Demised Premises and/or the Real Property, then Landlord shall have the option to terminate the Lease upon notice to Tenant within ten (10) days after Landlord’s receipt of the entire net insurance proceeds payable with respect to such fire or casualty.

 

C)Rents Upon Damage or Destruction. In the event this Agreement is terminated in the manner set forth above, the Rents shall be apportioned to the time of such casualty. In the event this Agreement is not terminated and Landlord elects to restore or repair the Demised Premises, then the Rent payable by Tenant shall be equitably abated based on the square footage in the Demised Premises which are useable, until such time as the damage to the Demised Premises has been repaired; provided, however, in no event shall there be any abatement of the payment of any Operating Costs.

 

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14.Eminent Domain. With respect to eminent domain:

 

A)Condemnation of Demised Premises. If the whole or any substantial part of the Demised Premises shall be taken or acquired by any public or quasi-public authority under the power or threat of eminent domain, for other than a temporary period, the Lease Term shall cease as of the day possession shall be taken by such public or quasi-public authority, and Tenant shall pay Rent up to that date with an appropriate refund by Landlord of any rent which may have been paid in advance for any period subsequent to the date possession is taken. In the event that during the term of this Agreement the Demised Premises, or any part thereof, or more than 100% of the Real Property or of the Common Area is taken by condemnation or right of eminent domain, or by private purchase in lieu thereof, this Agreement and the term hereby granted shall be terminable at Landlord’s sole option and if Landlord so terminates then this Agreement shall expire on the date when possession shall be taken by the condemn or and the Base Rent herein reserved shall be apportioned and paid in full to that date and all prepaid Base Rent shall forthwith be repaid by Landlord to Tenant. In the event Landlord does not elect to cancel or terminate this Agreement as provided above, then Landlord shall rebuild and restore the Demised Premises as nearly as possible to their condition immediately prior to any such taking and this Agreement shall continue in full force and effect except that, during such restoration, the Base Rent payable pursuant to the terms of this Agreement shall be equitably apportioned in the proportion that the square footage of the part of the Demised Premises so taken bears to the total square footage of the Demised Premises immediately prior to such taking; provided, however, in no event shall there be any abatement of the payment of any Operating Expenses, provided further, however, the Landlord’s obligations to restore or rebuild shall be limited to an amount which does not exceed the proceeds obtained from such taking (less expenses incurred in collecting the same). Notwithstanding the foregoing, in the event the net condemnation award received by Landlord is insufficient to restore or rebuild the structural portions of the Demised Premises the Landlord shall have the option within thirty (30) days after Landlord’s receipt of the net condemnation, to cancel and terminate this Agreement, and Tenant shall be limited to consequential damages only.

 

B)Condemnation Award. All compensation awarded or paid upon any total or partial taking of the Demised Premises shall belong to and be the property of the Landlord. Nothing herein shall prevent Tenant from pursuing a separate award from the condemning authority for its moving expenses or for the taking of its personal property, as long as Tenant’s award does not reduce Landlord’s award from the condemning authority.

 

15.Insolvency and Bankruptcy. The appointment of a receiver to take possession of all or substantially all of the assets of Tenant or any of the persons constituting Tenant, or an assignment by Tenant or any of the persons constituting Tenant for benefit of creditors or any action taken or suffered by Tenant or any of the persons constituting Tenant under any insolvency, bankruptcy, or reorganization act, shall constitute a breach of this Agreement by Tenant. In no event shall this Agreement be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event shall this Agreement or any rights or privileges hereunder be an asset of Tenant or any of the persons constituting Tenant under any bankruptcy, insolvency, or reorganization proceedings.

 

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16.Default. With respect to default:

 

A)Rights in Event of Default of Tenant. If Tenant shall abandon or vacate the Leased Premises or fail to pay Rent at the time prescribed in this Agreement, or if after Ten (10) days written notice from Landlord, Tenant shall fail to cure any other default in the performance of its obligations under this Agreement (unless Tenant is then proceeding in good faith to cure such default and continues to do so until the default is cured), then, in addition to any other rights or remedies Landlord may have by law or otherwise, Landlord shall have the right to re-enter and take possession of the Demised Premises without legal process and remove all persons and property therefrom. Should Landlord elect to re-enter as herein provided, or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may terminate Tenant’s rights under this Agreement, re-let the Demised Premises or any part thereof for such term and at such rent and upon such other terms and conditions as Landlord in the exercise of Landlord’s sole discretion may deem advisable, with the right to make alterations and repairs to the Demised Premises. Upon each such re-letting, Tenant immediately shall be liable for payment to Landlord of any indebtedness of Tenant (other than Rent due hereunder), the cost and expense of such reletting, and of such alterations and repairs incurred by Landlord, and the amount, if any, by which the Rent reserved in this Agreement, which are Tenant’s responsibility under the provisions of this Agreement for the period of such re-letting, exceeds the amount agreed to be paid as rent by the new tenant for the Demised Premises for such period of such re-letting.

 

B)Costs and Payment of Rents. Should Tenant at any time be in default under this Agreement, Tenant shall be liable for all costs Landlord may incur on account of such default, including the cost of recovering the Demised Premises, any and all attorney fees and court costs relating thereto. In addition, should Landlord at any time terminate this Agreement and Tenant’s rights under this Agreement for any default, in addition to any other remedy Landlord may have, Landlord may recover from Tenant all damages Landlord may incur by reason of such default, and including the Rent reserved and charged in this Agreement for the remainder of the Term discounted to present value, less the present rental value of the Demised Premises for the rest of the Term (discounted in the same manner), all of which amounts shall be immediately due and payable with attorney fees from Tenant to Landlord and without relief from valuation, and Landlord shall have no obligation to re-let. Tenant’s liability for the default damages and/or re-letting costs shall survive any termination of this Agreement.

 

C)Right of Removal of Tenant’s Property. Landlord shall have the right to remove all or any part of Tenant’s property from the Demised Premises. Any property removed may be either: (a) Stored in any public warehouse or elsewhere at the cost of, and for the account of, Tenant and Landlord shall not be responsible for the care or safekeeping thereof; or (b) sold at a private or public sale and the proceeds of such sale, after sale expenses, shall be used to offset any Rent due to Landlord. Tenant hereby waives any and all loss, destruction and/or damage or injury which may be occasioned by any of the aforesaid acts.

 

D)Default of Landlord. Landlord shall in no event be charged with default in the performance of its obligation under this Agreement unless and until Landlord shall have received written notice from Tenant specifying wherein Landlord has failed to perform any obligation hereunder, and Landlord shall have failed to perform such obligation, or remedy such default, within thirty (30) days of such notice from Tenant (or shall then have failed in good faith to start and be diligently pursuing the cure of any such default which reasonably takes longer than sixty (60) days to cure).

 

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17.Quiet Enjoyment. Landlord agrees that if Tenant pays the Rent and other charges herein provided and shall perform all of the covenants and agreements herein stipulated to be performed on Tenant’s part, then Tenant shall, at all times during said Term, have the peaceable and quiet enjoyment and possession of the Demised Premises without any manner of hindrance from Landlord or any persons lawfully claiming through Landlord, except as to such portion of the Demised Premises or Real Property as shall be taken under the power of eminent domain or which may be claimed by any mortgagee of the Demised Premises of the Real Property.

 

18.Miscellaneous.

 

A)Waivers. No waiver of any condition or covenant in this Agreement by either party shall be deemed to imply or constitute a further waiver of the same or any other condition or covenant of this Agreement.

 

B)Subordination. Tenant agrees, at the request of Landlord, to subordinate this Agreement to any mortgage placed upon the Demised Premises or the Real Property or any one or more of them by Landlord provided that the holder of such mortgage enters into an agreement with Tenant, binding upon the successors and assigns of the parties thereto, by the terms of which such holder agrees not to disturb the possession, peaceable and quiet enjoyment and other rights of Tenant under this Agreement. In addition, so long as Tenant continues to perform its obligations hereunder, in the event of acquisition of title by said holder through foreclosure proceedings or otherwise holder agrees to accept Tenant as tenant of the Demised Premises under the terms and conditions of this Agreement and to perform the Landlord’s obligations hereunder (but only while owner of the Demised Premises), and Tenant agrees to recognize such holder or any other person acquiring title to the Demised Premises as Landlord. The parties agree to execute and deliver any appropriate instruments necessary to carry out the agreements contained herein.

 

C)Notices and Certificates. All notices given under this Agreement must be in writing. A notice is effective upon receipt and shall be delivered in person, by overnight courier service, via certified or registered mail, or by first class U.S. mail, postage prepaid, to Landlord and Tenant at the address as specified above, or to such other addresses which a party may designate in writing delivered to the other party for such purpose. Date of service of a notice served by mail shall be one business day following the date on which such notice is deposited in a post office box of the United States Postal Service.

 

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D)Relationship of Parties. Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent, or of partnership, or of joint venture, between the parties hereto.

 

E)Governing Law. The terms of this Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, not including its conflicts of law provisions.

 

F)Dispute Resolution. Any dispute arising from this Agreement shall be resolved through mediation.

 

G)Force Majeure. In the event that either party shall be delayed or hindered in or prevented from doing or performing any act or thing required in this Agreement by reason of strikes, lock-outs, casualties, acts of God, labor troubles, inability to procure materials, failure of power, governmental laws or regulations, riot, insurrection, war or other causes beyond the reasonable control of such party, then such party shall not be liable or responsible for any such delays and the doing or performing of such act or thing shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay.

 

H)Complete Agreement. This Agreement contains a complete expression of the agreement between the parties and there are no promises, representations or inducements except such as are herein provided.

 

I)Successors in Interest. The covenants, agreements, terms, conditions and warranties of this Agreement shall be binding upon and inure to the benefit of Landlord and Tenant and their respective heirs, executors, administrators, successors and assigns, but shall create no rights in any other person except as may be specifically provided for herein.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives, as of the first date written above.

 

St Ventures LLC   /s/ Hari Allam   Hari Allam Owner
Landlord Name   Representative Signature   Representative Name and Title

 

SYRA Health Corp   /s/ Deepika Vuppalanchi   Deepika Vuppalanchi, CEO
Tenant Name   Representative Signature   Representative Name and Title

 

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Exhibit A
Floor Plan of Demised Premises

 

 

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Exhibit C
Description of Landlord’s Work
(New and Existing Construction)

 

  Scope Category   Details   Estimate
1. As is condition   n/a   $0
2.          
3.          

 

PLEASE RETURN WITH YOUR SIGNED LEASE PROPOSAL

 

By:

V. Deepika  

Name: 

Deepika Vuppalanchi  

Title:

CEO  

Date:

6/16/2021  

 

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GENERAL INSTRUCTIONS

 

WHAT IS A COMMERCIAL LEASE AGREEMENT?

 

A Commercial Lease Agreement is a formal document between a landlord and a tenant to rent business property. If the tenant plans to operate a company on the premises, a Commercial Lease Agreement allows both parties to formalize their leasing relationship through a legally recognized document.

 

Often times, the property leased can be a simple office, an entire building, a retail store, a new restaurant, or even a large warehouse for industrial purposes like a manufacturing factory or self-storage facilities. If the property leased is part of an entire building, the landlord can address special concerns and duties about common areas like parking spaces or lobby.

 

WHEN IS IT NEEDED?

 

If you’re a small business owner needing office space or wanting to rent out spaces in your building, a Commercial Lease Agreement is needed to memorialize everyone’s obligations and clarify expectations. When negotiating this kind of agreement, both the landlord and tenant should clarify any concerns they may have about how the space will be used and what is needed for business operations.

 

OTHER NAMES

 

As a reference, a Commercial Lease Agreement can also go by the following names:

 

Business Lease; Industrial Lease; Lease Agreement for Office Space; Office Space Agreement; Property Lease Agreement; Real Estate Lease; Standard Commercial Lease

WHAT SHOULD BE INCLUDED

 

A simple Commercial Lease Agreement will identify the following basic elements:

 

● Landlord: the party renting out the commercial property for money

 

● Tenant: the party operating a business and paying for the leased property

 

● Term: the number of years or months the physical space will be needed

 

● Demised Premise: space actually being rented out by the Tenant like a store in the mall, and whether you have access to services like parking, cleaning, security, snow removal/landscaping, and heating/air conditioning

 

● Real Property: the entire property owned by the Landlord like a shopping mall and includes shared common areas like walkways and parking lots that will be used by other tenants

 

● Base Rent: the starting cost of leasing the space on a monthly or annual basis

 

● Operating Expenses: Landlords may ask Tenants to share in the cost of operating the entire building and maintaining common places like real property taxes, shared utilities, collective advertising costs

 

● Security Deposit: money given to Landlords to demonstrate Tenants good faith efforts to not break the lease early or irreparably damage the property

 

● Property Use and Occupancy Details: both parties can clearly describe what is and is not allowed in the space rented and in common areas

 

● Improvements: if the Tenant plans on operating a restaurant in the Demised Premises, both parties should clarify who is responsible for paying and overseeing the construction project

 

 

 

 

Exhibit 10.16

 

 

COMMERCIAL LEASE ADDENDUM

 

 

 

This Addendum to the Commercial Lease Agreement (this “Agreement”) is made this 1st day of May, 2022, by and between STVentures LLC, an entity located at 1119 Keystone Way, Carmel, IN 46032 (“Landlord”) and Syra Health Corp, an entity located at 1119 Keystone Way, Suite 201, Carmel, IN 46032 (“Tenant”). In consideration of the mutual covenants herein contained, the parties agree as follows:

 

1.Demised Premises. The premises leased shall consist of an office space in the building complex (the “Real Property”) located at 1119 Keystone Way Suite 201, Carmel, IN 46032 (the “Demised Premises”), Depicted and shown in Exhibit A-1 attached hereto and made part of.

 

A)Size of Premises. The Demised Premises consists of approximately Five Thousand Nine Hundred and Seventy Eight (5978) square feet. The square footage of the Demised Premises shall be determined by measuring from the outside of all exterior walls to the centerline of any demising walls. Landlord’s architect or building contractor may measure the Demised Premises to make a final determination of the size.

 

2.Term of Lease. The term of this Agreement is for Twenty six (26) months

 

Commencement Date: The later of substantial completion of the demised premises or 1st May, 2022 (“Commencement Date”) to 30th June, 2024

 

Expiration Date; Twenty Six (26) months from the commencement date as further set forth in Section 5 of Commercial lease Agreement.

 

3.Rental Terms. With respect to the terms of the rental:

 

A)Base Rent. Tenant shall pay to Landlord, from the Commencement Date and throughout the term of this Agreement, payable on a monthly basis (“Base Rent”) as listed below. Base Rent is due no later than the 1st day of the payment period. Base Rent is payable by Drop it off upstairs, or as otherwise agreed upon by the parties.

 

Months of Term  Base Annual Rent   PSF   Monthly Installment 
Month 1 - 26  $128,527   $21.50   $10,710.58 

 

All other terms and conditions of the Commercial lease agreement will remain in full force and effect unless otherwise agreed upon in writing by the parties.

 

INITIAL VD DATE _____

Addendum

1119 Keystone Way, Carmel, IN 46032

 

 
 

 

 

IN WITNESS WHEREOF, the parties have caused this Addendum to be executed by their duly authorized representatives, as of the first date written above.

 

ST Ventures LLC   /s/ Hari Allam   Hari Allam – Owner
Landlord Name   Representative Signature   Representative Name and Title
         
Syra Health Corp   /s/ Deepika Vuppalanchi   Deepika Vuppalanchi – CEO
Tenant Name   Representative Signature   Representative Name and Title

 

INITIAL VD DATE _____

Addendum

1119 Keystone Way, Carmel, IN 46032

 

 
 

 

 

 

INITIAL VD DATE _____

Addendum

1119 Keystone Way, Carmel, IN 46032

 

Commercial Lease Agreement

 

 

 

 

Exhibit 10.17

 

[*] CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

 

THE SECURITIES TO BE ISSUED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

 

SUBSCRIPTION AGREEMENT

 

Syra Health Corp.

1119 Keystone Way N., #201

Carmel, IN 46032

 

Ladies and Gentlemen:

 

Subscription. I (sometimes referred to herein as the “Investor” or “Subscriber” or “Purchaser”) hereby subscribe for and agree to purchase the Securities (as defined below) for the purchase price (the “Purchase Price”) set forth on the signature page hereto of Syra Health Corp., a Delaware corporation (the “Company”), on the terms and conditions described herein, in the Form of Note (as defined herein), as attached hereto as Exhibit A, and Exhibit B hereto (collectively, the “Offering Documents”). Terms not defined herein are as defined in the Offering Documents. The Company seeks to raise $3,000,000 (the “Offering Amount”) in this Offering (as defined herein). The minimum amount of investment required from any one subscriber to participate in this Offering is $25,000, subject to lesser amounts at the Company’s discretion. All references to $ means United States dollars.

 

1. Description of Securities; Description of Company; Lock-Up.

 

a. Description of Securities. The Company is offering (the “Offering”) to the Investor convertible promissory notes of the Company (“Note” or the “Notes”) which Notes are convertible into shares (“Conversion Shares” and together with the Notes, the “Securities”) of the Company’s Class A common stock, par value $0.001 per share (the “Class A Common Stock”), pursuant to the terms and conditions set forth in the Notes.

 

b. Risks Related to the Investment in the Securities. Investing in the Securities involves a high degree of risk. Before investing, Investors should carefully consider the description of our business, as set forth in Exhibit C, together with the other information contained in Offering Documents.

 

c. Lock-Up. In connection with this Offering, the Investor agrees to the following lock-up agreement with respect to the Notes and the Conversion Shares:

 

i. From and after the date hereof and until the 90th day after the date the Company’s Shares are first listed for trading on a national securities exchange (such first trading day, the “Lock-Up Trigger Date”), the Investor agrees not to sell, transfer or otherwise dispose of the Notes and the Conversion Shares.

 

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2. Purchase.

 

a.I hereby agree to tender to the Company, by check or wire transfer of immediately available funds (to a bank account and related wire instructions to be provided to me on my request) made payable to “Syra Health Corp.” for such amount of Notes indicated on the signature page hereto, an executed copy of this Subscription Agreement and an executed copy of my Investor Questionnaire attached as Exhibit B hereto.

 

b.This Offering will continue until the earlier of (a) the sale of the Offering Amount in the Offering or (b) February 28, 2023, subject to the right of the Company, in its sole discretion, to extend such date until March 31, 2023, without further notice to or consent by the Investor (the “Termination Date”). Upon the earlier of a Closing (defined below) on my subscription or completion of the Offering, I will be notified promptly by the Company as to whether my subscription has been accepted by the Company.

 

3. Acceptance or Rejection of Subscription.

 

a.I understand and agree that the Company reserves the right to reject this subscription for the Securities, in whole or in part, for any reason and at any time prior to the Closing (defined below) of my subscription.

 

b.In the event the Company rejects this subscription, my subscription payment will be promptly returned to me without interest or deduction and this Subscription Agreement shall be of no force or effect. In the event my subscription is accepted and the Offering is completed, the subscription funds submitted by me shall be released to the Company.

 

4. Closing. The closing (each a closing “Closing,” and collectively, the “Closings”) of this Offering may occur at any time and from time to time on or before the Termination Date. Closings will be held as funds are received up to the earlier to occur of receipt of the Offering Amount or the Termination Date. The Securities subscribed for herein shall not be deemed issued to or owned by me until one copy of this Subscription Agreement has been executed by me and countersigned by the Company and the Closing with respect to such Securities has occurred.

 

5. Disclosure. Because this Offering is limited to accredited investors as defined in Section 2(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act and applicable state securities laws, the Securities are being sold without registration under the Securities Act. I acknowledge receipt of the Offering Documents and represent that I have carefully reviewed and understand the Offering Documents, including all exhibits attached hereto. I have received all information and materials regarding the Company that I have requested. I fully understand that the Company has a limited financial and operating history and that the Securities are speculative investments which involve a high degree of risk, including the potential loss of my entire investment. I fully understand the nature of the risks involved in purchasing the Securities and I am qualified to make such investment based on my knowledge of and experience in investing in securities of this type. I have carefully considered the potential risks relating to the Company and purchase of its Securities and have, in particular, reviewed each of the risks set forth in the Offering Documents. Both my advisors and I have had the opportunity to ask questions of and receive answers from representatives of the Company or persons acting on its behalf concerning the Company and the terms and conditions of a proposed investment in the Company and my advisors and I have also had the opportunity to obtain additional information necessary to verify the accuracy of information furnished about the Company. Accordingly, I have independently evaluated the risks of purchasing the Securities.

 

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6. Investor Representations and Warranties. I acknowledge, represent and warrant to, and agree with, the Company as follows:

 

a.I am aware that my investment involves a high degree of risk as disclosed in the Offering Documents and have carefully read the Offering Documents, and I understand that by signing this Subscription Agreement I am agreeing to be bound by all of the terms and conditions of the Offering Documents.

 

b.I acknowledge and am aware that there is no assurance as to the future performance of the Company.

 

c.I acknowledge that there may be certain adverse tax consequences to me in connection with my purchase of Securities, and the Company has advised me to seek the advice of experts in such areas prior to making this investment.

 

d.I am purchasing the Securities for my own account for investment purposes only and not with a view to or for sale in connection with the distribution of the Securities, nor with any present intention of selling or otherwise disposing of all or any part of the foregoing Securities. I agree that I must bear the entire economic risk of my investment for an indefinite period of time because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under applicable securities laws of certain states or an exemption from such registration is available. I hereby authorize the Company to place a restrictive legend on the Securities that are issued to me.

 

e.I recognize that the Securities, as an investment, involve a high degree of risk including, but not limited to, the risk of economic losses from operations of the Company and the total loss of my investment. I believe that the investment in the Securities is suitable for me based upon my investment objectives and financial needs, and I have adequate means for providing for my current financial needs and contingencies and have no need for liquidity with respect to my investment in the Company.

 

f.I have been given access to full and complete information regarding the Company and have utilized such access to my satisfaction for the purpose of obtaining information in addition to, or verifying information included in, the Offering Documents, and I have either met with or been given reasonable opportunity to meet with officers of the Company for the purpose of asking questions of, and receiving answers from, such officers concerning the terms and conditions of the offering of the Securities and the business and operations of the Company and to obtain any additional information, to the extent reasonably available.

 

g.I have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities and have obtained, in my judgment, sufficient information from the Company to evaluate the merits and risks of an investment in the Company and the Securities. I have not utilized any person as my purchaser representative as defined in Regulation D under the Securities Act in connection with evaluating such merits and risks.

 

h.I have relied solely upon my own investigation in making a decision to invest in the Company.

 

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i.I have received no representation or warranty from the Company or any of its officers, directors, employees or agents in respect of my investment in the Company and I have received no information (written or otherwise) from them relating to the Company or its business other than as set forth in the Offering Documents. I am not participating in the Offering as a result of or subsequent to: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

 

j.I have had full opportunity to ask questions and to receive satisfactory answers concerning the Offering and other matters pertaining to my investment and all such questions have been answered to my full satisfaction.

 

k.I have been provided an opportunity to obtain any additional information concerning the Offering and the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense.

 

l.I am an “accredited investor” as defined in Section 2(15) of the Securities Act and in Rule 501 promulgated thereunder and have attached the completed Accredited Investor Questionnaire to indicate my “accredited investor” status. I can bear the entire economic risk of the investment in the Securities for an indefinite period of time and I am knowledgeable about and experienced in making investments in the equity securities of non-publicly traded companies, including early stage companies. I am not acting as an underwriter or a conduit for sale to the public or to others of unregistered securities, directly or indirectly, on behalf of the Company or any person with respect to such securities.

 

m.I understand that (1) the Securities have not been registered under the Securities Act, or the securities laws of certain states, in reliance on specific exemptions from registration, (2) no securities administrator of any state or the federal government has recommended or endorsed this Offering or made any finding or determination relating to the fairness of an investment in the Company, and (3) the Company is relying on my representations and agreements for the purpose of determining whether this transaction meets the requirements of certain exemptions from registration afforded by the Securities Act and certain state securities laws.

 

n.I understand that since neither the offer nor sale of the Securities has been registered under the Securities Act or the securities laws of any state, the Securities may not be sold, assigned, pledged or otherwise disposed of unless they are so registered or an exemption from such registration is available.

 

o.I have had the opportunity to seek independent advice from my professional advisors relating to the suitability of an investment in the Company in view of my overall financial needs and with respect to the legal and tax implications of such investment.

 

p.If the Investor is a corporation, company, trust, employee benefit plan, individual retirement account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to become an Investor in the Company and the person signing this Subscription Agreement on behalf of such entity has been duly authorized by such entity to do so.

 

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q.The information contained in my Investor Questionnaire, as well as any information which I have furnished to the Company with respect to my financial position and business experience, is correct and complete as of the date of this Subscription Agreement and, if there should be any material change in such information prior to the Closing of the Offering, I will furnish such revised or corrected information to the Company. I hereby acknowledge and am aware that except for any rescission rights that may be provided under applicable laws, I am not entitled to cancel, terminate or revoke this subscription and any agreements made in connection herewith shall survive my death or disability.

 

7. Representations and Warranties of the Company. The Company hereby represents and warrants to the Subscriber, as of the date hereof and on each Closing Date, the following:

 

a.Organization and Qualification. The Company is a corporation or other business entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which 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 have a material adverse effect on the assets, business, financial condition, results of operations or future prospects of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).

 

b.Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, and each of the other agreements and documents that are exhibits hereto or thereto or are contemplated hereby or thereby or necessary or desirable to effect the transactions contemplated hereby or thereby (the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof, (ii) the execution and delivery by the Company of each of the Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities have been, or will be at the time of execution of such Transaction Document, duly authorized by the Company’s Board of Directors, and no further consent or authorization is, or will be at the time of execution of such Transaction Document, required by the Company, its respective Board of Directors or its stockholders, (iii) each of the Transaction Documents will be duly executed and delivered by the Company, (iv) the Transaction Documents when executed and delivered by the Company and each other party thereto will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.

 

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c.Capitalization. As of January 20, 2023, the authorized capital stock of the Company consists of 100,000,000 shares of Class A Common Stock , 5,000,000 shares of Class B Common Stock, par value $0.001 per share (the “Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”), and 1,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”). As of January 20, 2023, the Company has 1,000,000 shares of Class B Common Stock issued and outstanding and 4,282,500 shares of Class A Common Stock issued and outstanding on a “fully diluted” basis, and no shares of Preferred Stock issued and outstanding. Each share of Class B Common Stock has 16.5 votes per share and is convertible by the holder into 10 shares of Class A Common Stock. All of the outstanding shares of Common Stock of the stock of the Company subsidiaries have been or will be, as of the Initial Closing, duly authorized, validly issued and are fully paid and nonassessable. No shares of capital stock of the Company or any of its subsidiaries will be subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) as of January 20, 2023, there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act, and (iii) there are no securities or instruments of the Company or any of its subsidiaries containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price under such securities, that will be triggered by the issuance of the Securities as described in this Agreement. Upon request, the Company will make available to the Subscriber true and correct copies of the Company’s Certificate of Incorporation, as may be amended or amended and restated from time to time and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s By-laws, as may be amended or amended and restated from time to time and as in effect on the date hereof (the “By-laws”), and the terms of all securities exercisable or convertible for Common Stock and the material rights of the holders thereof in respect thereto other than stock options issued to officers, directors, employees and consultants.

 

d.Subsidiaries. The Company has no direct or indirect subsidiaries. If the Company has no subsidiaries, all other references to the subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

e.Issuance of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and nonassessable, and are free and clear of all taxes, liens and charges with respect to the issue thereof.

 

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f.No Conflicts. The execution, delivery and performance of each of the Transaction Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation or the By-laws (or equivalent constitutive document) of the Company or any of its subsidiaries or (ii) violate or conflict with, or result in a breach of any provision 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, any agreement, indenture or instrument to which the Company or any subsidiary is a party, except for those which would not reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws and regulations) applicable to the Company or any subsidiary or by which any property or asset of the Company or any subsidiary is bound or affected except for those which could not reasonably be expected to have a Material Adverse Effect. Except those which could not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under its constitutive documents. Except those which could not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or any subsidiary. The business of the Company and its subsidiaries is not being conducted, and shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity, except for any violation which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws, neither the Company nor any of its subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the other Transaction Documents in accordance with the terms hereof or thereof. Neither the execution and delivery by the Company of the Transaction Documents, nor the consummation by the Company of the transactions contemplated hereby or thereby, will require any notice, consent or waiver under any contract or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of their assets is subject, except for any notice, consent or waiver the absence of which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and would not adversely affect the consummation of the transactions contemplated hereby or thereby. All consents, authorizations, orders, filings and registrations which the Company or any of its subsidiaries is required to obtain pursuant to this Section 7(f) have been or will be obtained or effected on or prior to the Closing.

 

g.Absence of Litigation. Except as set forth in the Disclosure Schedule attached hereto, there is no action, suit, claim, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation before or by any court, public board, governmental or administrative agency, self-regulatory organization, arbitrator, regulatory authority, stock market, stock exchange or trading facility (an “Action”) now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, wherein an unfavorable decision, ruling or finding would (i) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under this Agreement or any of the other Transaction Documents, or (ii) have a Material Adverse Effect.

 

h.Acknowledgment Regarding Subscriber’s Purchase of the Securities. The Company acknowledges and agrees that each Subscriber 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. The Company further acknowledges that each Subscriber is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by such Subscriber or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Subscriber’s purchase of the Securities.

 

7

 

 

i.No General Solicitation. Neither the Company, nor any of its “affiliates” (as defined in Rule 144 under the Securities Act), nor, to the knowledge of the Company, 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.

 

j.No Integrated Offering. Neither the Company, nor any of its affiliates, nor to the knowledge of the Company, any person acting on its or 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 Securities under the Securities Act or cause this Offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act.

 

k.Employee Relations. Neither the Company nor any subsidiary is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. Neither the Company nor any subsidiary is party to any collective bargaining agreement. The Company’s and/or its subsidiaries’ employees are not members of any union, and the Company believes that its and its subsidiaries’ relationship with their respective employees is good.

 

k.Permits. The Company has all authorizations, approvals, clearances, licenses, permits, certificates or exemptions (including manufacturing approvals and authorizations, pricing and reimbursement approvals, labeling approvals, registration notifications or their foreign equivalent) issued by any regulatory authority or governmental agency (collectively, “Permits”) required to conduct their respective businesses as currently conducted except to the extent that the failure to have such Permits would not have a Material Adverse Effect. The Company has fulfilled and performed in all material respects their obligations under each Permit, and, as of the date hereof, to the knowledge of the Company, no event has occurred or condition or state of facts exists which would constitute a breach or default or would cause revocation or termination of any such Permit except to the extent that such breach, default, revocation or termination would not have a Material Adverse Effect.

 

l.Title. The Company has good and marketable title to all of its real and personal property and assets, free and clear of any material restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance which would have a Material Adverse Effect. With respect to properties and assets it leases, the Company is in material compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances which would have a Material Adverse Effect.

 

m.Rights of First Refusal. The Company is not obligated to offer the Securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.

 

n.Intentionally Omitted.

 

o.Brokers’ Fees. The Company does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

p.Intentionally Omitted.

 

8

 

 

q.Investment Company. The Company is not required to be registered as, and is not an affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

r.Reliance. The Company acknowledges that the Purchaser is relying on the representations and warranties made by the Company hereunder and that such representations and warranties are a material inducement to the Purchaser purchasing the Notes. The Company further acknowledges that without such representations and warranties of the Company made hereunder, the Purchaser would not enter into this Agreement.

 

8. Indemnification. I hereby agree to indemnify and hold harmless the Company and its officers, directors, shareholders, employees, agents, advisors and counsel, against any and all losses, claims, demands, liabilities and expenses (including reasonable legal or other expenses, including reasonable attorneys’ fees) incurred by each such person in connection with defending or investigating any such claims or liabilities, whether or not resulting in any liability to such person, to which any such indemnified party may become subject under the Securities Act, under any other statute, at common law or otherwise, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact made by me and contained in this Subscription Agreement or my Investor Questionnaire, or (b) arise out of or are based upon any breach by me of any representation, warranty, or agreement made by me contained herein or therein.

 

9. Severability. In the event any parts of this Subscription Agreement are found to be void, the remaining provisions of this Subscription Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

 

10. Choice of Law and Jurisdiction. This Subscription Agreement shall be governed by the laws of the State of Delaware as applied to contracts entered into and to be performed entirely within the State of Delaware. Any action arising out of this Subscription Agreement shall be brought exclusively in a court of competent jurisdiction in New Castle County, Delaware, and the parties hereby irrevocably waive any objections they may have to venue in New Castle County, Delaware.

 

11. Counterparts. This Subscription Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Subscription Agreement may be by actual or facsimile signature.

 

12. Benefit. This Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto.

 

13. Notices and Addresses. All notices, offers, acceptance and any other acts under this Subscription Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addresses in person, by Federal Express or similar courier delivery, as follows:

 

  Investor:  
    At the address designated on the signature
page of this Subscription Agreement.
     
  The Company:  
    Syra Health Corp.
    1119 Keystone Way N., #201
    Carmel, IN 46032

 

or to such other address as any of them, by notice to the others may designate from time to time. The transmission confirmation receipt from the sender’s facsimile machine shall be conclusive evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing.

 

9

 

 

14. Entire Agreement. This Subscription Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. This Subscription Agreement may not be changed, waived, discharged, or terminated orally but, rather, only by a statement in writing signed by the party or parties against which enforcement or the change, waiver, discharge or termination is sought.

 

15. Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Subscription Agreement.

 

16. Survival of Representations, Warranties and Agreements. The representations, warranties and agreements contained herein shall survive the delivery of, and the payment for, the Securities.

 

17. Acceptance of Subscription. The Company may accept this Subscription Agreement at any time for all or any portion of the Securities subscribed for by executing a copy hereof as provided and notifying me within a reasonable time thereafter.

 

RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

FOR FLORIDA RESIDENTS: THE SECURITIES OFFERED HEREBY WILL BE SOLD, AND ACQUIRED, IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. PURSUANT TO SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, WHEN SALES ARE MADE TO FIVE (5) OR MORE PERSONS (EXCLUDING ACCREDITED INVESTORS) IN THE STATE OF FLORIDA, ANY SALE IN THE STATE OF FLORIDA MADE PURSUANT TO SECTION 517.061(11) OF SUCH ACT IS VOIDABLE BY THE PURCHASER IN SUCH SALE (WITHOUT INCURRING ANY LIABILITY TO THE COMPANY OR TO ANY OTHER PERSON OR ENTITY) EITHER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. TO VOID HIS OR HER PURCHASE, THE PURCHASER NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS INDICATED HEREIN. ANY SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THREE (3) DAY PERIOD. IT IS PRUDENT TO SEND ANY SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO HAVE EVIDENCE OF THE TIME THAT IT WAS MAILED. SHOULD A PURCHASER MAKE THIS REQUEST ORALLY, THAT PURCHASER MUST ASK FOR WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED. IF NOTICE IS NOT RECEIVED WITHIN THE TIME LIMIT SPECIFIED HEREIN, THE FOREGOING RIGHT TO VOID THE PURCHASE SHALL BE NULL AND VOID.

 

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THE AGGREGATE AMOUNT SUBSCRIBED FOR HEREBY IS:

 

$______________ aggregate principal amount of Notes
 
Manner in Which Title is to be Held. (check one)
 
— Individual Ownership   — Community Property
— Joint Tenant with Right of Survivorship (both parties must sign)
— Partnership   — Tenants in common
— Corporation Trust   — IRA or Keogh
— Other (please indicate)    

 

INDIVIDUAL INVESTORS   ENTITY INVESTORS
    Name of entity, if any
     
Signature (Individual)      
       
  By:
    *Signature
    Its:
Signature (Joint)   Title:
(all record holders must sign)      
       
     
Name(s) Typed or Printed     Name Typed or Printed
       
Address to Which Correspondence Should be Directed     Address to Which Correspondence
Should be Directed
       
     
       
City, State and Zip Code     City, State and Zip Code
       
       
Tax Identification or
Social Security Number
    Tax Identification or
Social Security Number
       
Brokerage Name and Account Number     Brokerage Name and Account Number

 

11

 

 

* If Securities are being subscribed for by any entity, the Certificate of Signatory on the next page must also be completed

 

The foregoing subscription is accepted and the Company hereby agrees to be bound by its terms as of the date set forth below.

 

  Syra Health Corp.
     
Dated:                , 202__ By:
  Name: Deepika Vuppalanchi
  Its: CEO

 

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CERTIFICATE OF SIGNATORY

 

(To be completed if Securities are being subscribed for by an entity)

 

I, _____________________________________________, the __________________________________________
(name of signatory) (title)

 

of ______________________________________________ (“Entity”), a ________________________________
(name of entity) (type of entity)

 

Organized under the laws of ______________, hereby certify that I am empowered and duly authorized by the Entity to execute the Subscription Agreement and to purchase the Securities, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand this ______ day of ____________, 202__.

 

   
  (Signature)

 

13

 

 

Exhibit A

 

Form of Note

 

See Exhibit 10.18

 

14

 

 

Exhibit B

 

SYRA HEALTH CORP.

(the “Company”)

 

INSTRUCTIONS FOR COMPLETION OF

INVESTOR REPRESENTATION

AND SUITABILITY QUESTIONNAIRE

 

Item I: Name and address information must be provided. Securities will be issued in the name(s) set forth in this Item and delivered to the address set forth in this Item. If two people are subscribing jointly, both people must provide their names and social security numbers. A telephone number must also be provided.

 

Item II: If the securities are to be held in a different name than the investor and sent to a different address (i.e., an IRA or other account held at a brokerage firm), this Item must be completed. If the securities are to be issued and delivered directly to the entity listed in Item I, this Item need not be completed.

 

Item III: This Item needs to be read by the investor, but nothing needs to be written here. The Securities are suitable for investment only by prospective investors who are “Accredited Investors.”

 

Item IV: A. Only complete this Item by checking the appropriate line if you are an individual investor.

 

B. Only complete this Item if you are an entity investor.

 

C. Only complete this Item if you are a trust investor.

 

Item V: This Item needs to be read by the investor, but nothing needs to be written here.

 

Item VI: The USA Freedom Act requires us to collect information on the sources of funds. Please complete section 1, add the documents requested in section 2 only if funds did not come from an approved country (U.S. is approved), and complete section 3.

 

Item VII: You must thoroughly complete the Suitability Questionnaire, in order for the Company and the Managing Dealer to make a determination whether this is a suitable investment for you.

 

Item VIII: You and must sign and date here.

 

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INSTRUCTIONS FOR PAYMENT

 

Review and complete the Investor Representation & Suitability Questionnaire and deliver it to the email or address below along with payment for your investment.

 

Email:  
Subject: Syra Health Corp. – [Investor Name]
   
Address: 1119 Keystone Way, #201,Carmel, IN 46032

 

WIRE INSTRUCTIONS

 

Account Name: [*]
Company Address: [*]
Bank Name: [*]
Account Number: [*]
Wire/ABA routing  
Number: [*]
   
REF / Notes: Syra Health Corp. – [Investor Name]

 

If you need assistance, please contact:

 

Gowri Ratan

Phone: (317) 939-4437

 

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INVESTOR REPRESENTATION & SUITABILITY QUESTIONNAIRE

 

Please read all instructions of this Investor Representation and Suitability Questionnaire (this “Questionnaire”) carefully before filling out this Questionnaire. This is a legally binding document. If you need assistance, please call _______ or by email at _________.

 
I. ACCOUNT REGISTRATION
 
  ☐ Individual Account ☐ Trust ☐ Corporation, Partnership,
  ☐ Joint Registration ☐ Individual Retirement   LLC, Pension or Profit-
* If no box below is checked, we will issue the     Account (IRA)   Sharing Plan. Association,
securities as JTWROS.     or other Entity
       
    ☐ Joint Tenants with Rights of Survivorship *      
    ☐ Tenants in Common      
    ☐ Tenants in Entirety      
    ☐ Community Property      
           
PLEASE PUT A CHECK NEXT TO EACH SOCIAL SECURITY NUMBER OR TAX ID NUMBER THAT IS RESPONSIBLE FOR TAXES. WE WILL REPORT THIS NUMBER TO THE IRS.

 

        ☐  
Name of INVESTOR (Individual, Entity, Custodian, Trust or Beneficiary)   Date of Birth   Soc. Sec. / Tax ID #
           
        ☐   
Name of SIGNER (Signer for Entity, Trust. Name of IRA Participant)   Date of Birth     Soc. Sec. / Tax ID #
           
        ☐   
Name of JOINT INVESTOR or CO- TRUSTEE (if applicable)   Date of Birth     Soc. Sec. / Tax ID #

 

Marital Status (please check one): ☐ Single ☐ Married ☐ Other

 

$______________________Total Investment Amount

 

  HOME ADDRESS ☐ USE THIS ADDRESS FOR MAILING

 

Street Address   Apt / Suite / Unit #

 

City   State   Zip
         
Home Phone   Fax   Email

 

  BUSINESS ADDRESS ☐ USE THIS ADDRESS FOR MAILING

 

Street Address   Apt / Suite / Unit #

 

City   State   Zip
         
Business Phone   Fax   Email

 

 

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II. ALTERNATIVE DISTRIBUTION INFORMATION

 

To direct distributions to a party other than the registered owner, complete the information below. YOU MUST COMPLETE THIS ITEM IF THIS IS AN IRA INVESTMENT.

 

Name of Firm (Bank or Brokerage): ___________________________________________________________________

 

Account Name: _____________________________________ Account #: ______________________________

 

Address: __________________________________________________________________________

 

III. INVESTOR REPRESENTATIONS & AUTHORIZATIONS

 

You as an individual or you on behalf of the subscribing entity are being asked to complete this Investor Representation and Suitability Questionnaire so a determination can be made as to whether or not you are qualified to purchase securities under applicable federal and state securities laws. Your answers to the questions contained herein must be true and correct in all respects, and a false representation by you may constitute a violation of law for which a claim for damages may be made against you.

 

Your answers will be kept strictly confidential; however, by signing this Questionnaire, you will be authorizing release of this Questionnaire to make certain that the offer and sale of the securities will not result in a violation of the Securities Act of 1933, as amended (the “Act”), or of the securities laws of any state.

 

This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy securities or any other security. All questions must be answered. If the appropriate answer is “None” or “Not Applicable,” please state so. Please print or type your answers to all questions and attach additional sheets if necessary to complete your answers to any item. Please initial any correction.

 

 

INDIVIDUAL SUBSCRIBERS:

 

If the securities subscribed for are to be owned by more than one person, you and the other co-subscriber must each complete separate Questionnaires (except if the co-subscriber is your spouse or spousal equivalent) and sign the Signature Page annexed hereto. If your spouse or spousal equivalent is a co-subscriber, you must indicate their name and social security number.

 

CORPORATIONS, PARTNERSHIPS, PENSION PLANS AND TRUSTS:

 

The information requested herein relates to the subscribing entity and not to you personally (unless otherwise determined in the Item IV. Accredited Investor Status). 

 

 

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IV. ACCREDITED INVESTOR STATUS

 

TO BE AN ACCREDITED INVESTOR, YOU MUST MEET ONE OF THE FOLLOWING TESTS, PLEASE CHECK THE APPROPRIATE SPACES BELOW.

 

A. INDIVIDUAL ACCOUNTS:

 

I certify that I am an “accredited investor” because:

 

(a) ___ I had an individual income of more than $200,000 in each of the two most recent calendar years, and I reasonably expect to have an individual income in excess of $200,000 in the current calendar year; or my spouse or spousal equivalent and I had joint income in excess of $300,000 in each of the two most recent calendar years, and we reasonably expect to have a joint income in excess of $300,000 in the current calendar year (please complete “Item V. Income Statement”); or

 

(b) I have an individual net worth, or my spouse or spousal equivalent and I have a joint net worth, in excess of $1,000,000 (excluding my (our) primary residence); or

 

(c) I hold in good standing the FINRA Series 7, Series 65, or Series 82 licenses, and/or other such certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the SEC may designate from time to time by order; or

 

(d) I am a knowledgeable employee of the fund. (This should only be answered with respect to investments in a private fund); or

 

(e) I am a director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer.

 

For purposes of this Questionnaire “individual income” means “adjusted gross income” as reported for Federal income tax purposes, exclusive of any income attributable to a spouse or spousal equivalent or to property owned by a spouse or spousal equivalent, and increased by the following amounts:

 

(i) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as amended, (the “Code”); (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of form 1040); (iii) any deduction claimed for depletion under Section 611 et seq. of the Code; and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Sections 1202 of the Code as it was in effect prior to enactment of the Tax Reform Act of 1986.

 

For purposes of this Questionnaire, “joint income” means “adjusted gross income” as reported for federal income tax purposes, including any income attributable to a spouse or spousal equivalent or to property owned by a spouse or spousal equivalent and increased by the following amounts:

 

(i) the amount of any interest income received which is tax-exempt under Section 103 of the Code; (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of Form 1040); (iii) any deduction claimed for depletion under Section 611 et seq. of the Code; and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Code as it was in effect prior to enactment of the Tax Reform Act of 1986.

 

 

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For the purposes of this Questionnaire, “net worth” means (except as otherwise specifically defined) the excess of total assets at fair market value over total liabilities, excluding your primary residence and the related amount of indebtedness secured by the primary residence up to its fair market value; provided, however, that indebtedness secured by the primary residence should be considered a liability and deducted from net worth to the extent that (i) the amount of such indebtedness outstanding at the time of completion of this Questionnaire exceeds the amount outstanding 60 calendar days before such time, other than as a result of the acquisition of the primary residence; and (ii) the amount of the indebtedness exceeds the estimated fair market value of the primary residence at the time of completion of this Questionnaire.

 

For the purposes of this Questionnaire, “spousal equivalent” means a cohabitant occupying a relationship generally equivalent to that of a spouse or spousal equivalent.

 

B. CORPORATIONS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES, EMPLOYEE BENEFIT PLANS, OR OTHER ENTITIES (Please provide a copy of the Corporate Resolution authorizing this investment, Partnership Agreement, Limited Liability Company Operating Agreement, Employee Benefit Plan, or other entity documentation as applicable.)

 

Has the subscribing entity been formed for the specific purpose of investing in the securities? ☐ Yes ☐ No

 

If your answer to the question above is “No,” CHECK whichever of the following statements (a-e) is applicable to the subscribing entity. If your answer to the question above is “Yes,” the subscribing entity must be able to certify to statement (c) below in order to qualify as an “accredited investor.”

 

The undersigned certifies that:

 

(a) ___ the undersigned entity is an “accredited investor,” because it is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), provided that the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, and the plan fiduciary is a bank, savings and loan association, insurance company or registered investment adviser; or

 

(b) ___ the undersigned entity is an “accredited investor,” because it is an employee benefit plan within the meaning of ERISA, Title I that has total assets in excess of $5,000,000; or

 

(c) ___ Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended; or

 

(d) ___ the undersigned entity is an “accredited investor because it is an entity whose shareholders, partners, beneficiaries or equity owners are all accredited investors (If you are checking this option, please submit a list of all owners; EACH owner of the entity must complete Item IV and, complete Item V, if applicable, and Item VI. Make copies of this Item IV, Item VI (and V if applicable) to do this and note each owner’s name on each copy); I am one of its equity owners; and I meet at least one of the conditions described below (Please also CHECK the appropriate space below):

 

☐ I had an individual income of more than $200,000 in each of the two most recent calendar years, and I reasonably expect to have an individual income in excess of $200,000 in the current calendar year; or my spouse or spousal equivalent and I had joint income in excess of $300,000 in each of the two most recent calendar years, and we reasonably expect to have a joint income in excess of $300,000 in the current calendar year (please complete “Item V. Income Statement”); or

 

☐ I have an individual net worth, or my spouse or spousal equivalent and I have a joint net worth, in excess of $1,000,000 (excluding my (our) primary residence); or

 

 

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☐ I hold in good standing the FINRA Series 7, Series 65, or Series 82 licenses, and/or other such certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the SEC may designate from time to time by order; or

 

☐I am a knowledgeable employee of the fund; or

 

☐ I am a director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer.

 

(e) __ the undersigned entity is an “accredited investor,” because it is a self-directed employee benefit plan; I solely make its investment decisions; and I meet at least one of the conditions described below (Please also CHECK the appropriate space below):

 

☐ I had an individual income of more than $200,000 in each of the two most recent calendar years, and I reasonably expect to have an individual income in excess of $200,000 in the current calendar year; or my spouse or spousal equivalent and I had joint income in excess of $300,000 in each of the two most recent calendar years, and we reasonably expect to have a joint income in excess of $300,000 in the current calendar year (please complete “Item V. Income Statement”); or

 

☐ I have an individual net worth, or my spouse or spousal equivalent and I have a joint net worth, in excess of $1,000,000 (excluding my (our) primary residence); or

 

☐ I hold in good standing the FINRA Series 7, Series 65, or Series 82 licenses, and/or other such certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the SEC may designate from time to time by order; or

 

☐ I am a knowledgeable employee of the fund; or

 

☐ I am a director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer.

 

or

 

(f) ___ the undersigned entity is an “accredited investor,” because it is an organization described in section 501(c)3 of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or

 

(g) ___ the undersigned entity is an “accredited investor,” because it is a limited liability company, SEC or state -registered Investment Adviser, Exempt Reporting Adviser, or a rural business investment company (RBIC) with $5,000,000 in assets; or

 

(h) ___ the undersigned entity is an “accredited investor,” because it is an Indian tribe, governmental body, fund, or any entity organized under the laws of foreign countries, that own “investments,” as defined in Rule 2a51-1(b) under the Investment Company Act, in excess of $5,000,000 and that was not formed for the specific purpose of investing in the securities offered; or

 

(i) ___ the undersigned entity is an “accredited investor,” because it is a family office with at least $5,000,000 in assets under management and their “family clients,” as each term is defined under the Investment Advisers Act.

 

 

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C. TRUST ACCOUNTS (Please provide a complete copy of the Trust document.)

 

Has the subscribing entity been formed for the specific purpose of investing in the securities? ☐ Yes ☐ No

 

If your answer to the question above is “No,” CHECK whichever of the following statements (a-c) is applicable to the subscribing entity. If your answer to the question above is “Yes,” the subscribing entity must be able to certify to the statement (c) below in order to qualify as an “accredited investor.”

 

The undersigned trustee certifies that the trust is an “accredited investor” because:

 

(a) ___ the trust has total assets in excess of $5,000,000 and the investment decision has been made by a “sophisticated person,” as described in Rule 506(b)(ii) promulgated under the Act; or

 

(b) ___ the trustee making the investment decision on its behalf is a bank (as defined in Section 3(a)(2) of the Act), a saving and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, acting in its fiduciary capacity; or

 

(c) ___ the grantor(s) of the trust may revoke the trust at any time and regain title to the trust assets and has (have) retained sole investment control over the assets of the trust and the (each) grantor(s) meets at least one of the conditions described below. Each grantor must also INITIAL the appropriate space below.

 

☐ I had an individual income of more than $200,000 in each of the two most recent calendar years, and I reasonably expect to have an individual income in excess of $200,000 in the current calendar year; or my spouse or spousal equivalent and I had joint income in excess of $300,000 in each of the two most recent calendar years, and we reasonably expect to have a joint income in excess of $300,000 in the current calendar year (please complete “Item V. Income Statement”); or

 

☐ I have an individual net worth, or my spouse or spousal equivalent and I have a joint net worth, in excess of $1,000,000 (excluding my (our) primary residence); or

 

☐ I hold in good standing the FINRA Series 7, Series 65, or Series 82 licenses, and/or other such certain professional certifications, designations or credentials or other credentials issued by an accredited educational institution, which the SEC may designate from time to time by order; or

 

☐ I am a knowledgeable employee of the fund; or

 

☐ I am a director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer.

 

 

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V. CERTIFICATIONS

 

I understand that investment in the securities is an illiquid investment. In particular, I recognize that I must bear the economic risk of investment in the securities for an indefinite period of time since the securities have not been registered under the Act and therefore cannot be sold unless either they are subsequently registered under the Act or an exemption from such registration is available and a favorable opinion of counsel for the Company to that effect is obtained if requested by the Company. I consent to the affixing by the Company of such legends on certificates representing the securities as any applicable federal or state securities law may require from time to time.

 
I represent and warrant to the Company that: (i) all information provided in this Questionnaire is complete, true and correct; (ii) I and my investment managers, if any, have carefully reviewed and understand the risks of, and other considerations relating to, a purchase of these securities; (iii) I and my investment managers, if any, have been afforded the opportunity to obtain all information necessary to verify the accuracy of any representations or information in the transaction documents for this offering and other information provided to the undersigned and have had all inquiries to the Company answered, and have been furnished all requested materials relating to the Company and the offering and sale of the securities; (iv) I have such knowledge and experience in financial and investment matters, either alone or with my investment managers, that I am capable of evaluating the merits and risks of this investment; (v) neither I nor my investment managers, if any, have been furnished any offering literature by the Company or any of its affiliates, associates or agents other than the transaction documents, the term sheet, and the investor presentation provided to the undersigned by the Company related to this investment (collectively, the “Offering Materials”) relating to this investment, and the documents referenced therein; and (vi) I am acquiring the securities for which I am subscribing for my own account, as principal, for investment and not with a view to the resale or distribution of all or any part of the securities. By my completion of this Questionnaire and execution of other transaction documents, I confirm and agree that I have reviewed and understand the provisions of each such transaction document and, should my subscription be accepted by the Company, agree to be bound thereby.

 

The undersigned, if a corporation, partnership, trust or other form of business entity: (i) is authorized and otherwise duly qualified to purchase and hold the securities; (ii) has obtained such additional tax and other advice that it has deemed necessary; (iii) has its principal place of business at its address set forth in this Questionnaire; and (iv) has not been formed for the specific purpose of acquiring the securities (although this may not necessarily disqualify the subscriber as a purchaser). The persons completing this Questionnaire and executing all other documents related to the offering, represent that they are duly authorized to complete or execute all such documents on behalf of the entity. (If the undersigned is one of the aforementioned entities, it agrees to supply any additional written information that may be required.

 

All of the information which I have furnished to the Company, and which is set forth in this Questionnaire is correct and complete as of the date of this Questionnaire. If any material change in this information should occur prior to my subscription being accepted, I will immediately furnish the revised or corrected information. I further agree to be bound by all of the terms and conditions of the Offering Materials. I am the only person with a direct or indirect interest in the securities subscribed for hereby.

 

I agree to indemnify and hold harmless the Company and its Officers, Directors, employees, affiliates, and agents as well as the brokerage firm through which I am subscribing (if any) and all of its officers, directors, employees, affiliates, and agents from and against all damages, losses, costs and expenses (including reasonable attorneys’ fees) they may incur by reason of the failure of the undersigned to fulfill any of the terms or conditions set forth in the transaction documents. This subscription is not transferable or assignable by me without the written consent of the Company. If more than one person is completing this Questionnaire, the obligations of each shall be joint and several, and the representations contained in this Questionnaire shall be deemed to be made by, and be binding upon, each of these persons and his or her heirs, executors, administrators, successors, and assigns. This subscription, upon acceptance by the Company, shall be binding upon my heirs, executors, administrators, successors, and assigns.

 

This Questionnaire and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed, and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law.

 

Under penalties of perjury, by signing below I certify that (i) my taxpayer identification number shown in this Questionnaire is correct; and (ii) I am not subject to backup withholding because: (a) I have not been notified that I am subject to backup withholding as a result of a failure to report all interest and dividends; or (b) the Internal Revenue Service has notified me that I am no longer subject to backup withholding. (If you have been notified that you are subject to backup withholding and the Internal Revenue Service has not advised you that backup withholding has been terminated, strike out item (ii)).

 

 

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VI. INFORMATION REQUIRED BY FEDERAL LAW

 

 

The USA Freedom Act requires us to obtain the following information from you to detect and prevent misuse of the world financial system.

 

1. In the space provided below, please provide details of where monies were transferred from to the Company in relation to your subscription for the securities.

 

Country   Name of Bank / Financial Institution   Name of Account Holder   Account Number
             

 

If the country from which the monies were transferred appears in the Approved Country List below, please skip to section 3. If the country does not appear, please go to section 2.

 

Argentina   Australia   Austria Belgium   Brazil
Canada   Denmark   Finland   France   Germany
Greece   Gulf Cooperation Council   Hong Kong       Ireland
Italy   Japan   The Netherlands (including the Netherlands Antilles and Aruba)   Luxembourg   Mexico
New Zealand   Norway   Portugal       Singapore
South Africa   Spain   Sweden   Switzerland   Turkey
United Kingdom   United States            

 

2.If subscription monies were transferred to the Company from any country other than on the “Approved Country List” (see above), please provide the following documentation to the Company (all copies should be in English and certified as being “true and correct copies of the original” by a notary public of the jurisdiction of which you are resident).

 

(a)For Individuals:

 

(i)evidence of name, signature, date of birth and photographic identification;
(ii)evidence of permanent address; and
(iii)where possible, a reference from a bank with whom the individual maintains a current relationship and has maintained such relationship for at least two years.

 

(b)For Companies:

 

(i)a copy of its certificate of incorporation and any change of name certificate;
(ii)a certificate of good standing;
(iii)a register or other acceptable list of directors and officers;
(iv)a properly authorized mandate of the company to subscribe in the form, for example, of a certified resolution which includes naming authorized signatories;
(v)a description of the nature of the business of the company;
(vi)identification, as described above for individuals, for at least two directors and authorized signatories;
(vii)a register of members or list of shareholders holding a controlling interest; and
(viii)identification, as described above, for individuals who are beneficial owners of corporate shareholders which hold 10% or more of the capital share of the company.

 

(c)For Partnerships and Unincorporated Businesses:

 

(i)a copy of any certificate of registration and a certificate of good standing, if registered;
(ii)identification, as described above, for individuals and, where relevant, companies constituting a majority of the partners, owners or managers and authorized signatories;
(iii)a copy of the mandate from the partnership or business authorizing the subscription in the form, for example, of a certified resolution which includes naming authorized signatories; and
(iv)a copy of constitutional documents (formation and partnership agreements).

 

 

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(d)For Trusts:

 

(i)identification, as described above, for individuals or companies (as the case may be) in respect of the trustees;
(ii)identification, as described above for individuals, of beneficiaries, any person on whose instructions or in accordance with those wishes the trustee/nominee is prepared or accustomed to act and the settlor of the trust; and
(iii)evidence of the nature of the duties or capacity of the trustee.

 

3.The Company is also required to verify the source of funds. To this end, summarize the underlying source of the funds remitted to us (for example, where subscription monies were the profits of business (and if so, please specify type of business), investment income, savings, etc.).

 

Source of Funds:    
    
    

 

VII. SUITABILITY QUESTIONNAIRE

 

 

This is a speculative investment (Each responding individual must complete his/her own Suitability Questionnaire)

 

Name of Individual Investor OR Name of Person Answering Questions on behalf of an Entity/Trust/IRA Investor:

 

 

 

  A. Please provide the below Identification information:

 

ID Number:    

Place of Issuance:    

Issue Date:    

Expiration Date:    

 

Are you a U.S. Citizen? ☐ Yes ☐ No  

 

Please provide a copy of the photo page of your government-issued identification.

 

B.Please provide your present employment status. If currently retired or unemployed, please provide your last/most recent employment history:

 

Current Employment Status Latest Role/Occupation Latest Employer Name
     

 

 

 

C.Please provide the following information concerning your financial experience:

 

C-1. Risk Tolerance (select one):

 

☐ Speculative – You are willing to accept substantial risk. May endure extensive volatility and very limited or no liquidity. You value the potential for maximizing long-term returns over principal preservation.

☐ Aggressive – You are willing to accept considerable risk. You may endure high volatility and limited or very limited liquidity. You value long-term appreciation over principal preservation.

☐ Moderate – You are willing to accept limited risk. You may endure some volatility and illiquidity. You value enhancing returns and principal preservation equally. You are willing to risk losing a substantial amount of your investment.

☐ Conservative – You are willing to accept low risk for greater stability and liquidity. You value minimizing risk and maximizing principal preservation.

 

 

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C-2. What is your primary investment objective? (select one):

 

☐ Investment speculation

☐ Steadily accumulate wealth over the long term

☐ Partially fund my retirement

☐ Other

 

C-3. What are your time horizon and liquidity needs?

 

(a) Time Horizon (select one): (b) Liquidity Needs (select one):
       
☐ 10 years or more   ☐ Low
☐ 5 –10 years   ☐ Medium
☐ 2 – 5 years   ☐ High
☐ Under 2 years  

 

C-4.How much investment experience do you have? (select one):

 

☐ Extensive

☐ Substantial

☐ Moderate

☐ Limited

☐ None

 

C-5. Please state the approximate number and total dollar amount of your prior investments in restricted securities (e.g., private placements):

 

No. of Investments: _________________ Total Amount: _________________

 

C-6. Please indicate your Annual Income and Net Worth:

 

(a) Annual Income (b) Net Worth (c) Liquid Net Worth

☐ Under $25,000 ☐ Under $25,000 ☐ Under $25,000
☐ $25,000 – $50,000 ☐ $25,000 – $50,000 ☐ $25,000 – $50,000
☐ $50,000 – $75,000 ☐ $50,000 – $75,000 ☐ $50,000 – $75,000
☐ $75,000 – $100,000 ☐ $75,000 – $100,000 ☐ $75,000 – $100,000
☐ $100,000 – $200,000 ☐ $100,000 – $150,000 ☐ $100,000 – $150,000
☐ $200,000 – $300,000 ☐ $150,000 – $200,000 ☐ $150,000 – $200,000
☐ $300,000 – $500,000 ☐ $200,000 – $250,000 ☐ $200,000 – $250,000
☐ $500,000 – $1,200,000 ☐ $250,000 – $500,000 ☐ $250,000 – $500,000
☐ Over $1,200,000 ☐ $500,000 – $1,000,000 ☐ $500,000 – $1,000,000
☐ $1,000,000 – $5,000,000 ☐ $1,000,000 – $5,000,000  
☐ Over $5,000,000 ☐ Over $5,000,000  

 

C-7. Please provide in the space below any additional information which would indicate that you have sufficient knowledge and experience in financial and business matters so that you are capable of evaluating the merits and risks of investing in restricted securities of private or thinly traded enterprise.

 

 

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D.Please provide the following information concerning your industry and other affiliations.

 

D-1. Are you, your spouse or spousal equivalent, or any other immediate family members, including parents, in-laws, and siblings that are dependents, an officer, director or greater than ten percent (10%) shareholder of the Company offering securities?

☐ Yes ☐ No  

 

D-2. Are you, your spouse or spousal equivalent, or any other immediate family members, including parents, in-laws, and siblings that are dependents, employed by or associated with the securities industry (for example, investment advisor, sole proprietor, partner, officer, director, branch manager or broker at a broker-dealer firm or municipal securities dealer) or a financial regulatory agency, such as FINRA or the New York Stock Exchange?

☐ Yes ☐ No  

 

If yes, please provide the name and contact information for such firm.

 

 
 

 

D-3. Are you a senior military, governmental or political official in a non-US country?

☐ Yes ☐ No  

 

If yes, please provide the name of the country.

 

 

 

E.Trusted Contact. If you are over 65 years old, please provide the name and contact phone number of a trusted contact:

 

Name   Relationship   Contact Number
         

 

 

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VIII. SIGNATURES

 

 

This Questionnaire contains various statements and representations by subscribers and should be carefully reviewed in its entirety before executing this signature page. I hereby certify that I have reviewed and am familiar with the instructions of this Questionnaire.

 

☐ (check if applicable) I hereby certify that I previously invested in the Company and that, unless otherwise indicated in this Questionnaire, the information I provided in the Questionnaire dated for my previous investment continues to be true and correct and is incorporated by reference into this Questionnaire.

 

Dated:    

 

Print name of individual subscriber, custodian, person,   Signature of individual subscriber, authorized
corporation, trust:   Trustee:
     
 
     
Print name of co-subscriber, authorized person,   Signature of co-subscriber, authorized person,
co-trustee if required by trust instrument:   co-trustee if required by trust instrument:
     
 

 

Investment Authorization. The undersigned corporation, partnership, limited liability company, benefit plan, or IRA has all requisite authority to acquire the securities hereby subscribed for and to complete the Questionnaire, and further, the undersigned officer, partner, manager, or fiduciary of the subscribing entity has been duly authorized by all requisite action on the part of such entity to execute these documents on its behalf. Such authorization has not been revoked and is still in full force and effect.

 

Check Box: ☐ Yes ☐ No ☐ Not Applicable

 

CAPACITY CLAIMED BY SIGNER: (select one)

 

☐ Individual(s)   ☐ Attorney-In-Fact
☐ Partner(s)   ☐ Trustee(s)
☐ Corporate Officer:     ☐ Other:              

 

Title Title

 

 

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Exhibit C

 

RISK FACTORS

 

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below as well as the other information included in the Transaction Documents, before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial.

 

Risks Related to Our Financial Position and Need for Additional Capital

 

Although we have generated approximately $1.3 million of revenues as of December 31, 2021, our future profitability is uncertain.

 

Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the development and expansion of a business enterprise. Our net losses for the year ended December 31, 2021 and the period from November 20, 2020 (inception) through December 31, 2020 were $109,499 and $4,267, and our accumulated deficit as of December 31, 2021 was $114,666. If we are unable to achieve and maintain profitability, we may be unable to continue our operations.

 

Even if this offering is successful, we will require substantial additional funding. If we are unable to raise capital on favorable terms when needed, we could be forced to curtail, delay or discontinue our business.

 

Since our inception, we have not generated sufficient revenues from our operations to continue to fund the development and expansion of our business. To date, we have funded a significant portion of our operations through the sale of our equity securities. As of December 31, 2021, we had cash of $100,012. Although we expect that the net proceeds from this offering and our existing cash will be sufficient to fund our current operations, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through equity or debt financings or other third-party funding or a combination of these approaches. Raising funds may present challenges including, but not limited to, as a result of the ongoing Coronavirus (“COVID-19”) pandemic. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or based upon specific strategic considerations.

 

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products and services. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders. The sale of additional equity or convertible securities may dilute our stockholders. In addition, the future issuance of shares of Class B common stock may be dilutive to the holders of Class A common stock, particularly with respect to their voting power. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to make certain dividends, incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

 

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue our operations or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

 

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Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

 

Our financial statements as of December 31, 2021 have been prepared under the assumption that we will continue as a going concern for the next twelve months. Our independent registered public accounting firm included in its opinion for the year ended December 31, 2021 an explanatory paragraph referring to our recurring losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, reduce expenditures and generate significant revenue. Our financial statements as of December 31, 2021 did not include any adjustments that might result from the outcome of this uncertainty. The reaction of investors to the inclusion of a going concern statement by our auditors, and our potential inability to continue as a going concern, in future years could materially adversely affect the price of our securities and our ability to raise new capital.

 

Risks Related to Our Business and Industry

 

We face significant competition, which may harm our business, results of operations or financial condition.

 

We face substantial competition in the healthcare services markets. Our key competitors include, among others, healthcare consulting service providers, healthcare payment accuracy companies and providers of other data products and data analytics solutions, including healthcare risk adjustment, quality, economic statistics and other data. We also compete with certain of our customers that internally provide some of the same solutions that we offer. The increasing standardization of certain healthcare services has made it easier for companies to enter these markets with competitive products and services. We cannot fully anticipate whether or when companies in adjacent or other product or service areas may launch competitive products and/or services, and any such entry may lead to obsolescence of our products and/or services or loss of market share or erosion of the prices for our solutions, or both. The extent of this competition may vary by the size of companies, geographical coverage and scope and breadth of products and services offered. Furthermore, some of our competitors are significantly larger and have greater financial or other resources than we do. The vigorous competition we face requires us to provide high quality, innovative products at a competitive price. We cannot guarantee that we will be able to upgrade our existing solutions, or introduce new solutions at the same rate as our competitors, or at all, nor can we guarantee that such upgrades or new solutions will achieve market acceptance over or among competitive offerings, or at all. Therefore, these competitive pressures could have a material adverse impact on our business, results of operations or financial condition.

 

If we are unable to retain our existing customers or attract new customers, our business, financial condition or results of operations could suffer.

 

Our success depends substantially upon the retention of our existing customers and attracting new customers. We may not be able to retain our existing customers or attract new customers if we are unable to provide solutions or services that our existing or prospective customers believe enable them to achieve improved efficiencies and cost-effectiveness. Our success in retaining and attracting customers will also depend, in part, on our ability to be responsive to pricing pressures and changing business models. To remain competitive in the healthcare services markets, we must continuously upgrade our existing solutions, and develop and introduce new solutions on a timely basis. Future advances in the healthcare services market could lead to new products or services that are competitive with our solutions, resulting in pricing pressure or rendering our solutions obsolete or not competitive. We also may not be able to retain or attract customers if our solutions contain errors or otherwise fail to perform properly, if our pricing structure is not competitive or if we are unable to renegotiate our customer contracts upon expiration. If we are unable to maintain our customer retention rates, or if we are unable to attract new customers, our business, results of operations or financial condition could be adversely impacted.

 

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Our business strategy and future success depend on our ability to cross-sell our solutions.

 

Our ability to generate revenue and growth partly depends on our ability to cross-sell our solutions to our existing customers and new customers. We may not be successful in cross-selling our solutions because our customers may find our additional solutions unnecessary, unattractive or cost-ineffective. Our failure to sell additional solutions to our existing and new customers could negatively affect our ability to grow our business.

 

If we are unable to successfully expand our sales force productivity, sales of our solutions and the growth of our business and financial performance could be harmed.

 

We continue to invest significantly in our sales force to obtain new customers and increase sales to existing customers. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth and profitably will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our sales efforts. A portion of our current sales personnel are new to our company. New hires require significant training and may require a lengthy onboarding process before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to recruit, train and retain a sufficient number of productive sales personnel, sales of our solutions and the growth of our business could be harmed. Additionally, if our efforts to improve sales force productivity do not result in increased revenue, our operating results could be negatively impacted due to increased operating expenses associated with these efforts.

 

An economic downturn or volatility could have a material adverse impact on our business, results of operations or financial condition.

 

The United States and world economies have experienced significant economic uncertainty and volatility during recent years. A weakening of economic conditions could lead to reductions in demand for our solutions. As a result of volatile or uncertain economic conditions, we may experience the negative effects of increased financial pressures on our customers. For instance, our business could be negatively impacted by increased competitive pricing pressure and a decline in our customers’ creditworthiness, which could result in us incurring increased bad debt expense. Additionally, volatile or uncertain economic conditions in the United States and other parts of world could lead our state and government customers to terminate, or elect not to renew, existing contracts with us, or not enter into new contracts with us. Furthermore, demand for staffing services is sensitive to changes in economic activity. Many healthcare facilities utilize temporary healthcare professionals to accommodate an increase in hospital admissions. Conversely, when hospital admissions decrease in economic downturns or periods of high inflation, due to reduced consumer spending, the demand for staffing healthcare professionals typically declines. In times of economic downturn and inflation, permanent full-time and part-time healthcare facility staff are generally inclined to work more hours and overtime, resulting in fewer available vacancies and less demand for our services. If we are not able to timely and appropriately adapt to changes resulting from a weak economic environment, it could have a material adverse impact on our business, results of operations or financial condition.

 

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The novel coronavirus (“COVID-19”) pandemic has adversely impacted and could continue to adversely impact the business, results of operations, financial condition, liquidity and cash flows of us and our clients.

 

The COVID-19 pandemic and efforts to control its spread have had a significant, ongoing impact on our operations and the operations of our healthcare clients. The magnitude and duration of the disruption and resulting decline in business activity will largely depend on future developments which are highly uncertain and cannot be predicted. Because our hospital and other health care provider clients have understandably prioritized their resources, capacity and staff as the COVID-19 outbreak continues to strain their organizations, we expect that our business will continue to be adversely affected, including by negatively impacting the demand and timing for implementing our solutions and the timing of payment for our services. For example, the COVID-19 pandemic negatively impacted revenue for the year ended December 31, 2021, as we saw reduced revenue from expected sales of our professional staffing services. We are unable to predict the continuing magnitude of any such effect.

 

As a result of the COVID-19 pandemic, we previously instituted a work-from-home policy for some of our employees and had limited employee travel to essential travel only, which restricted some sales, marketing and other important business activities. In addition, concerns over the economic impact of the COVID-19 pandemic have caused continued volatility in financial and other capital markets which has adversely impacted and may continue to adversely impact our stock price and our ability to access capital markets. The extent to which the COVID-19 pandemic will continue to impact our results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including the duration and severity of the pandemic, additional “waves” of outbreaks and variants of the virus, the impact of the pandemic on economic activity, and the actions taken by health authorities and policy makers to contain its impacts on public health and the global economy. The COVID-19 pandemic may also have the effect of heightening many of the other risks described herein, such as those relating to our products and services, sales cycles, the retention of key employees and financial performance.

 

Our ability to generate revenue could suffer if we do not continue to update and improve our existing solutions and develop new ones.

 

We must continually improve our existing solutions in a timely manner and introduce new and valuable solutions in order to respond to regulatory developments and customer demands and, thereby, retain existing customers and attract new ones. For example, from time to time, government agencies may alter format and data code requirements applicable to electronic transactions. In addition, our customers may request that our solutions be customized to satisfy particular needs. We may not be successful in responding to regulatory developments or changing customer needs. In addition, these regulatory or customer-imposed requirements may impact the profitability of particular solutions and customer engagements. If we do not respond successfully to regulatory changes, as well as evolving industry standards and customer demands, our solutions may become obsolete. If we lower our prices on some of our solutions, we will need to increase our margins on other solutions in order to maintain our overall profitability.

 

Achieving market acceptance of new or updated solutions is necessary in order for them to become profitable and will likely require significant efforts and expenditures.

 

Our future financial results will depend in part on whether our new or updated solutions receive sufficient customer acceptance. Achieving market acceptance for new or updated solutions may require substantial marketing efforts and expenditure of significant funds to create awareness and demand by our existing or prospective customers. Failure to achieve broad penetration in target markets with respect to new or updated solutions could have a material adverse impact on our business, results of operations or financial condition.

 

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Our business would be adversely affected if we cannot obtain, process or distribute data we require to provide our solutions.

 

Our business relies on our ability to obtain, process, monetize and distribute data in the healthcare industry in a manner that complies with applicable law, regulation and contractual and restrictions. Our failure to obtain and distribute such data in a compliant manner could have a harmful effect on our ability to use and disclose such data which in turn could impair our ability to share such data with our customers or incorporate it into our services and offerings. In addition to complying with requirements in obtaining the data, the use, processing and distribution of such data may require us to obtain consent from third parties or follow additional laws, regulations or contractual restrictions that apply to the healthcare industry. Moreover, we may be subject to claims or liability for use or disclosure of information. Any such claims or liabilities and other failures to comply with applicable requirements could subject us to unexpected costs and adversely affect our operating results.

 

Poor service, system errors or failures of our solutions to conform to specifications could cause unforeseen liabilities or injury, harm our reputation and have a material adverse impact on our business, results of operations or financial condition.

 

Some of our solutions are intended to provide information to healthcare professionals in the course of delivering patient care. Although our contracts may disclaim liability for medical decisions and responsibility for patient care, if use of or inability to use our solutions leads to faulty clinical decisions or injury to patients, such disclaimers may be unenforceable and we could be subject to claims or litigation by healthcare professionals, their patients or our customers. Further, negative publicity regarding our services, whether accurate or inaccurate, could harm our reputation, decrease demand for our services, lead to withdrawals of our services or impair our ability to successfully launch and market our services in the future.

 

We attempt to limit, by contract, our liability for damages arising from our negligence, errors, mistakes or security breaches. However, contractual limitations on liability may not be accepted by our customers, may not be enforceable or may otherwise not provide sufficient protection to us from liability for damages. We maintain liability insurance coverage, including coverage for cyber-liability. It is possible, however, that claims could be denied or exceed the amount of our applicable insurance coverage, if any, or that this coverage may not continue to be available on acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them could be expensive and time consuming and could divert management’s attention away from our operations. In addition, negative publicity caused by these events may negatively impact our customer relationships, market acceptance of our solutions or may harm our reputation and our business.

 

Disruptions in service or damages to our data or systems failures, could have a material adverse impact on our business, results of operations or financial condition.

 

Our business operations depend on our ability to maintain and protect our network and computer systems, some of which are outsourced to certain third-party hosting providers. Our operations are vulnerable to interruption and/or damage from a number of sources, many of which are beyond our control, including, without limitation: (1) power loss and telecommunications failures; (2) fire, flood, hurricane and other natural disasters; (3) software and hardware errors, failures or crashes; and (4) cyber and ransomware attacks, computer viruses, hacking, break-ins, sabotage, intentional acts of vandalism and other similar disruptive problems. The occurrence of any of these events could result in interruptions, delays or cessations in service to users of our solutions, which could impair or prohibit our ability to provide our solutions, reduce the attractiveness of our solutions to our customers and could have a material adverse impact on our business, results of operations or financial condition. If customers’ access to our solutions is interrupted, we could be in breach of our agreements with customers and/or exposed to significant claims. Any significant instances of system downtime could negatively affect our reputation and ability to provide our services, which could have a material adverse impact on our business, results of operations or financial condition.

 

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Breaches and failures of IT systems and the sensitive information we transmit, use and store, expose us to potential liability and reputational harm.

 

Our business relies on information systems to obtain, process, analyze, and manage data. To the extent IT systems are not successfully implemented or fail, our business and results of operations may be adversely affected. Further, our business relies to a significant degree upon the secure transmission, use and storage of sensitive information, including protected health information and other personally identifiable information, financial information and other confidential information and data within these systems.

 

To protect this information, we seek to implement commercially reasonable security measures and maintain information security policies and procedures informed by requirements under applicable law and recommended practices, in each case, as applicable to the data collected, hosted and processed. Despite our security management efforts our is vulnerable to unauthorized access to data and/or breaches of confidential information due to criminal conduct, physical break-ins, hackers, employee or insider malfeasance and/or improper employee or contractor access, computer viruses, programming errors, denial-of-service attacks, ransomware events, phishing schemes, fraud, terrorist attacks, human error or other breaches by insiders or third parties or similar disruptive problems. It is not possible to prevent all security threats to our data. Techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time. Further, defects in the design or manufacture of applications we develop or procure from third parties could compromise our data. These events, including unauthorized access, misappropriation, disclosure or loss of sensitive information (including financial or personal health information) or a significant disruption of our network, expose us to risks including risks to our ability to provide our solutions, management distraction and the obligation to devote significant financial and other resources to mitigate such problems and increases to our future information security costs. Moreover, unauthorized access, use or disclosure of certain sensitive information in our possession or our failure to satisfy legal requirements, including requirements relating to safeguarding protected health information under the Health Insurance Portability and Accountability Act or state data privacy laws could result in civil and criminal liability and regulatory action, which could result in potential fines and penalties, as well as costs relating to investigation of an incident or breach, corrective actions, required notifications to regulatory agencies and customers, credit monitoring services and other necessary expenses. In addition, actual or perceived breaches of our security management efforts can cause existing customers to terminate their relationship with us and deter existing or prospective customers from using or purchasing our solutions in the future. These events can have a material adverse impact on our business, results of operations, financial condition and reputation.

 

Because our products and services involve the storage, use and transmission of personal information of consumers, we may be the target of attempted cyber and other security threats by outside third parties, including technically sophisticated and well-resourced bad actors attempting to access or steal the data we store. Vendor, insider or employee cyber and security threats also occur and are a significant concern for all companies, including ours. Recently, there have been a number of high profile security breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. These breaches have resulted in lawsuits and governmental enforcement actions that have sought or obtained significant fines and penalties, and have required companies to enter into agreements with government regulators that impose ongoing obligations and requirements, including internal and external (third party) monitorships for five years or more. While we maintain liability insurance coverage including coverage for cyber-liability, claims may not be covered or could exceed the amount of our applicable insurance coverage, if any, or such coverage may not continue to be available on acceptable terms or in sufficient amounts.

 

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We rely on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems in providing certain of our solutions to our customers, and any failure or interruption in the services provided by these third parties or our own systems could expose us to litigation and negatively impact our relationships with customers, adversely affecting our brand and our business.

 

Our ability to deliver our solutions is dependent on the development and maintenance of the infrastructure of the Internet and other telecommunications services by third parties. This includes maintenance of a reliable network connection with the necessary speed, data capacity and security. As a result, our information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems in order to keep pace with continuing changes in information technology, emerging cybersecurity risks and threats, evolving industry and regulatory standards and changing preferences of our customers.

 

We may experience interruptions in these systems, including server failures that temporarily slow down the performance of our solutions. We rely on internal systems as well as vendors, including bandwidth and telecommunications equipment providers, to provide our solutions. We do not maintain redundant systems or facilities for some of these services. Interruptions in these systems, whether due to system failures, computer viruses, physical or electronic break-ins or other catastrophic events, could affect the security or availability of our solutions and prevent or inhibit the ability of our customers to access our solutions.

 

If a catastrophic event were to occur with respect to one or more of these systems or facilities, we may experience an extended period of system unavailability, which could result in substantial costs to remedy those problems or negatively impact our relationship with our customers, results of operations and financial condition.

 

Failure by our customers to obtain proper permissions or provide us with accurate and appropriate information may result in claims against us or may limit or prevent our use of information, which could harm our business. Additionally, privacy concerns relating to our business could damage our reputation and deter current and potential customers from using our solutions.

 

To the extent we are not otherwise permitted to use and/or disclose customer information, we require our customers to provide necessary notices and obtain necessary permissions for the use and disclosure of such information. If they do not provide necessary notices or obtain necessary permissions, then our use and disclosure of information that we receive from them or on their behalf may be limited or prohibited by federal or state privacy or other laws. Such failures by our customers could impair our functions, processes and databases that reflect, contain or are based upon such information. Furthermore, such failures by our customers could interfere with or prevent creation or use of analyses or other data-driven activities that benefit us, or make our solutions less useful. Accordingly, we may be subject to claims or liability for inaccurate data. These claims or liabilities could damage our reputation, subject us to unexpected costs and could have a material adverse impact on our business, results of operations or financial condition.

 

Additionally, in recent years, consumer advocates, media and elected officials increasingly and publicly have criticized companies in data focused industries regarding the collection, storage and use of personal data. Concerns about our practices with regard to the collection, use, disclosure or security of personal information or other privacy related matters, even if unfounded, could damage our reputation and adversely affect our business, results of operations or financial condition.

 

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It is difficult to predict the sales cycle and implementation schedule for our products and services.

 

The duration of the sales cycle and implementation schedule for our products and services depends on a number of factors, including the nature and size of the potential client and the extent of the commitment being made by the potential client, all of which may be difficult to predict. Our sales and marketing efforts with respect to hospitals and large health organizations generally involve a lengthy sales cycle due to these organizations’ complex decision-making processes. Additionally, in light of increased government involvement in healthcare and related changes in the operating environment for healthcare organizations, our current and potential clients may react by reducing or deferring investments, including their purchases of our solutions or services. If clients take longer than we expect to decide whether to purchase our solutions, our revenues could decrease, which could materially and adversely impact our business, financial condition and operating results.

 

Our independent content providers may fail to perform adequately or comply with laws, regulations or contractual covenants.

 

We depend on some independent content providers for the development of health education and other scientific content resources. Our ability to rely on these services could be impaired as a result of the failure of such providers to comply with applicable laws, regulations and contractual covenants or as a result of events affecting such providers, such as power loss, telecommunication failures, software or hardware errors, computer viruses and similar disruptive problems, fire, flood and natural disasters. Any such failure or event could adversely affect our relationships with our clients and damage our reputation. This could materially and adversely impact our business, financial condition and operating results. We may have no means of replacing content providers on a timely basis, or at all, if they are inadequate or in the event of a service interruption. We depend on our content providers to deliver high quality content from reliable sources and to continually upgrade their content in response to demand and evolving regulations. If these parties fail to develop and maintain high quality, attractive content, the value of our brand and our business, financial condition and operating results could be materially and adversely impacted.

 

We may be liable for use of content we provide.

 

If any of the content that we provide to our customers, including content we generate as a result of our grant writing services, is incorrect or incomplete, it may give rise to claims against us. While we maintain insurance coverage in an amount that we believe is sufficient for our business, we cannot provide assurance that this coverage will prove to be adequate or will continue to be available on acceptable terms, if at all. A claim that is brought against us that is uninsured or under-insured could materially and adversely impact our business, financial condition and operating results. Even unsuccessful claims could result in substantial costs and diversion of management and other resources.

 

Our financial results may be adversely affected if we underprice our contracts, overrun our cost estimates or fail to receive approval for or experience delays in documenting change orders.

 

Most of our grant writing service contracts are either fee for service contracts or fixed-fee contracts. Our past financial results have been, and our future financial results may be, adversely impacted if we initially underprice our contracts or otherwise overrun our cost estimates and are unable to successfully negotiate a change order. Change orders typically occur when the scope of work we perform needs to be modified from that originally contemplated by our contract with the client. Where we are not successful in converting out-of-scope work into change orders under our current contracts, we will bear the cost of the additional work. Such underpricing, significant cost overruns or delay in documentation of change orders could have a material adverse effect on our business, results of operations, financial condition or cash flows.

 

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As we develop new services and clients, enter new lines of business, and focus more of our business on providing a full range of talent solutions, the demands on our business and our operating risks may increase.

 

As part of our strategy, we plan to extend our services. As we focus on developing new services, capabilities and clients, and engage in business in new geographic locations, our operations may be exposed to additional as well as enhanced risks. In particular, our growth efforts may place substantial additional demands on our management and other team members, as well as on our information, financial, administrative, compliance and operational systems. We may not be able to manage these demands successfully. Growth may require increased recruiting efforts, increased regulatory and compliance efforts, increased business development, selling, marketing and other actions that are expensive and entail increased risk. We may need to invest more in our people and systems, controls, compliance efforts, policies and procedures than we anticipate. As our business continues to evolve and we provide a wider range of services, we will become increasingly dependent upon our employees. Failure to identify, hire, train and retain talented employees who share our values could have a negative effect on our reputation and our business. The demands that our current and future growth place on our people and systems, controls, compliance efforts, policies and procedures may exceed the benefits of such growth, and our operating results may suffer, at least in the short-term, and perhaps in the long-term.

 

Consolidation in the healthcare industry could adversely impact our business, financial condition and operating results.

 

Many healthcare provider organizations are consolidating to create integrated healthcare delivery systems with greater market power. As provider networks and managed care organizations consolidate, thus decreasing the number of market participants, competition to provide products and services like ours will become more intense, and the importance of establishing and maintaining relationships with key industry participants will increase. These industry participants may try to use their market power to negotiate price reductions for our products and services. Any of these factors could materially and adversely impact our business, financial condition and operating results.

 

If we do not continue to recruit and retain sufficient quality healthcare professionals at reasonable costs, it could increase our operating costs and negatively affect our business and our profitability.

 

We rely significantly on our ability to recruit and retain a sufficient number of healthcare professionals who possess the skills, experience and licenses necessary to meet the requirements of our clients. With rising clinician burnout rates resulting from the COVID-19 pandemic, an ongoing shortage of certain qualified nurses and physicians in many areas of the United States and low unemployment rates for nurses and physicians, competition for the hiring of these professionals remains intense. Our ability to recruit temporary and permanent healthcare professionals may be exacerbated by continued low levels of unemployment.

 

We compete with healthcare staffing companies, recruitment and placement agencies, including online staffing and recruitment agencies, and with hospitals, healthcare facilities and physician practice groups to attract healthcare professionals based on the quantity, diversity and quality of assignments offered, compensation packages, the benefits that we provide and speed and quality of our service.

 

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The costs of recruitment of quality healthcare professionals and providing them with competitive compensation packages may be higher than we anticipate, or we may be unable to pass these costs on to our hospital and healthcare facility clients, which may reduce our profitability. Moreover, if we are unable to recruit temporary and permanent healthcare professionals, our service execution may deteriorate and, as a result, we could lose clients or not meet our service level agreements with these clients that have negative financial repercussions.

 

The ability of our clients to increase the efficiency and effectiveness of their staffing management and recruiting efforts may affect the demand for our services that could negatively affect our business.

 

If our clients are able to increase the effectiveness of their staffing and recruitment functions, their need for our services may decline. With the advent of technology and more sophisticated staffing management and recruitment processes, including internal “travel” and other healthcare staffing models, clients may be able to successfully increase the efficiency and effectiveness of their internal staffing management and recruiting efforts, through more effective planning and analytic tools, internet- or social media-based recruiting or otherwise. Such new technologies and processes could reduce the demand for our services, which could negatively affect our business.

 

Our work with government clients exposes us to additional risks inherent in the government contracting environment.

 

Our clients may include national, provincial, state, local and foreign governmental entities and their agencies. Our government work carries various risks inherent in contracting with government entities. These risks include, but are not limited to, the following:

 

  ● Government entities, particularly in the United States, often reserve the right to audit our contracts and conduct reviews, inquiries and investigations of our business practices and performance with respect to government contracts. If a government client discovers improper conduct during its audits or investigations, we may become subject to various civil and criminal penalties, including those under the civil U.S. False Claims Act, and administrative sanctions, which may include termination of contracts, suspension of payments, fines and civil money penalties, and suspensions or debarment from doing business with other government agencies.

 

  ● U.S. government contracting regulations impose strict compliance and disclosure obligations and our failure to comply with these obligations could be a basis for suspension or debarment, or both, from federal government contracting in addition to breach of the specific contract.

 

  ● Government contracts are subject to heightened reputational and contractual risks compared to contracts with commercial clients and often involve more extensive scrutiny and publicity. Negative publicity, including allegations of improper or illegal activity, poor contract performance, or information security breaches, regardless of accuracy, may adversely affect our reputation.

 

  ● Terms and conditions of government contracts also tend to be more onerous, are often more difficult to negotiate and involve additional costs.

 

  ● Government entities typically fund projects through appropriated monies. The change in presidential administration may affect budget priorities for our ongoing work.

 

  ● Government entities reserve the right to change the scope of or terminate projects at their convenience for lack of approved funding or other reasons, which could limit our recovery of reimbursable expenses or investments. In addition, government contracts may be protested, which could result in administrative procedures and litigation, result in delays in performance and payment, be expensive to defend and be incapable of prompt resolution.

 

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The occurrences or conditions described above could affect not only our business with the particular government entities involved, but also our business with other entities of the same or other governmental bodies or with certain commercial clients and could have a material adverse effect on our business, results of operations and financial condition.

 

We may be a party to legal, regulatory and other proceedings that could result in unexpected adverse outcomes.

 

From time to time, we may be a party to legal and regulatory proceedings and investigations, including matters involving governmental agencies and entities with which we do business and other proceedings and investigations arising in the ordinary course of business. In addition, there are an increasing number of, and we may be subject to, investigations and proceedings in the healthcare industry generally that seek recovery under the Health Insurance Portability and Accountability Act, Anti-Kickback Statute, the False Claims Act, the Civil Money Penalty, the Stark Law, the Sunshine Act, state laws and other statutes and regulations applicable to our business. We also may be subject to legal proceedings under non-healthcare federal, and state laws affecting our business, such as the Telephone Consumer Protection Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Controlling the Assault of Non-Solicited Pornography and Marketing Act, Junk Fax Prevention Act, Foreign Corrupt Practices Act, employment, banking and financial services and USPS laws and regulations. Such proceedings are inherently unpredictable, and the outcome can result in verdicts and/or injunctive relief that may affect how we operate our business or we may enter into settlements of claims for monetary payments. In some cases, substantial non-economic remedies or punitive damages may be sought. Governmental investigations, audits and other reviews could also result in criminal penalties or other sanctions, including restrictions, changes in the way we conduct business or exclusion from participation in government programs. We evaluate our exposure to these legal and regulatory proceedings and intend to establish reserves for the estimated liabilities in accordance with GAAP as necessary. Assessing and predicting the outcome of these matters involves substantial uncertainties. Unexpected outcomes in these legal proceedings, or changes in management’s evaluations or predictions and accompanying changes in established reserves, could have a material adverse impact on our business, results of operations or financial condition.

 

Litigation is costly, time-consuming and disruptive to normal business operations. The defense of these matters could also result in continued diversion of our management’s time and attention away from business operations, which could also harm our business. Even if these matters are resolved in our favor, the uncertainty and expense associated with unresolved legal proceedings could harm our business and reputation.

 

We may be liable for the misdiagnoses, mistreatment, injury or other harm to patients resulting from the use of data that we provide to health care providers, and any resulting claims could negatively impact our operating results and result in a decline in our stock price.

 

We provide, and facilitate providing, information for use by health care providers in treating patients. If this data is incorrect or incomplete, the patient could be misdiagnosed or mistreated resulting in adverse consequences, including death, giving rise to claims against us. In addition, certain of our solutions relate to patient health information, and a court or government agency may take the position that our delivery of this information exposes us to personal injury liability or other liability for wrongful delivery or handling of health care services or erroneous health information. While we maintain liability insurance coverage in an amount that we believe is sufficient for the risks associated with our business, we cannot assure you that this coverage will prove to be adequate or will continue to be available on acceptable terms, if at all. A claim brought against us that is uninsured or under-insured could harm our business, financial condition and results of operations. Even unsuccessful claims could result in substantial costs and diversion of management resources and could cause the trading price of our common stock to decline.

 

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Our success depends in part on our ability to identify, recruit and retain skilled management and technical personnel. If we fail to recruit and retain suitable candidates or if our relationship with our employees changes or deteriorates, there could be a material adverse impact on our business, results of operations or financial condition.

 

We are highly dependent upon our personnel, including Deepika Vuppalanchi, our Chief Executive Officer and member of our board of directors, and Sandeep Allam, our President and Chairman. The loss of Dr. Vuppalanchi’s or Mr. Allam’s services could impede the achievement of our business objectives. We have not obtained, do not own, nor are we the beneficiary of, key-person life insurance. Furthermore, our future success depends upon our continuing ability to identify, attract, hire and retain highly qualified personnel, including skilled management and scientific personnel, all of whom are in high demand and are often subject to competing offers. Competition for qualified personnel in the healthcare services industry is intense, and we may not be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or be able to do so at salary, benefit and other compensation costs that are acceptable to us. A loss of a substantial number of key or qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for expansion of our business, could have a material adverse impact on our business, results of operations or financial condition.

 

Risks Related To Intellectual Property

 

The protection of our intellectual property requires substantial resources and protections of our proprietary rights may not be adequate.

 

We rely upon a combination of trade secret, copyright and trademark laws, patents, license agreements, confidentiality procedures, nondisclosure agreements and technical measures designed to protect the intellectual property used in our business. The steps we have taken to protect and enforce our proprietary rights and intellectual property may not be adequate. For instance, our agreements with employees, consultants and others who develop intellectual property for or on behalf of us could be breached and could result in our trade secrets and confidential information being publicly disclosed. We may not have adequate remedies for any such breach. Third parties also may infringe upon or misappropriate our intellectual property rights. If we believe a third party has misappropriated our intellectual property, litigation may be necessary to enforce and protect those rights, which would divert management resources, could be expensive and may not effectively protect our intellectual property. Even if we establish infringement, a court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. As a result, if we fail to maintain adequate intellectual property protection or if a third party infringes or misappropriates our intellectual property, it may have a material adverse impact on our business, results of operations or financial condition.

 

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Many of our products are based on or incorporate proprietary information. We actively seek to protect our proprietary information, including our trade secrets and proprietary know-how, by generally requiring our employees, consultants, other advisors and other third parties to execute agreements that contain confidentiality provisions. Despite these efforts and precautions, we may be unable to prevent a third party from copying or otherwise obtaining and using our trade secrets or our other intellectual property without authorization and legal remedies may not adequately compensate us for the damages caused by such unauthorized use.

 

In addition, there can be no assurance that our competitors will not independently develop products or services that are equivalent or superior to our solutions.

 

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

 

We have received confidential and proprietary information from third parties. In addition, we may employ individuals who were previously employed at other healthcare services companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers. Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our solutions. We may also be subject to claims that former employees, consultants, independent contractors or other third parties have an ownership interest in our intellectual property. Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information. In addition to paying monetary damages, if we fail in defending against any such claims we may lose our rights therein, which could have a material adverse effect on our business. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.

 

We depend on a small number of large customers and the loss of one or more major customers could have a material adverse effect on our business, financial condition and results of operations.

 

For the year ended December 31, 2021, Indiana Family and Social Services Administration (“IFSSA”) accounted for approximately 98% of revenues and 86% of accounts receivable at December 31, 2021, as due from the combined divisions of the IFSSA, and Precision Value, LLC accounted for approximately 11% of accounts receivable at December 31, 2021. It is possible that any of our large customers could decide to terminate their relationship with us in the future. The loss of one or both of our top customers, or a substantial decrease in demand by any of those customers for our services and solutions, could have a material adverse effect on our business, results of operations and financial condition.

 

Risks Related to Government Regulations

 

We are subject to federal and state healthcare industry regulation including conduct of operations, costs and payment for services and payment for referrals as well as laws regarding government contracting.

 

The healthcare industry is subject to extensive and complex federal and state laws and regulations related to conduct of operations, costs and payment for services and payment for referrals. We provide talent solutions on a contract basis to our clients, who pay us directly. Accordingly, Medicare, Medicaid and insurance reimbursement policy changes generally do not directly impact us. Nevertheless, reimbursement changes in government programs, particularly Medicare and Medicaid, can and do indirectly affect the demand and the prices paid for our services. For example, our clients could receive reduced or no reimbursements because of a change in the rates or conditions set by federal or state governments that would negatively affect the demand and the prices for our services. Moreover, our hospital, healthcare facility and physician practice group clients could suffer civil and criminal penalties, and be excluded from participating in Medicare, Medicaid and other healthcare programs for failure to comply with applicable laws and regulations that may negatively affect our profitability.

 

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A portion of our hospital and healthcare facility clients are state and federal government agencies, where our ability to compete for new contracts and orders, and the profitability of these contracts and orders, may be affected by government legislation, regulation or policy. Additionally, in providing services to state and federal government clients and to clients who participate in state and federal programs, we are also subject to specific laws and regulations, which government agencies have broad latitude to enforce. If we were to be excluded from participation in these programs or should there be regulatory or policy changes or modification of application of existing regulations adverse to us, it would likely materially adversely affect our brand, business, results of operations and cash flows.

 

Risks Related to this Offering and Our Securities

 

No active trading market for our securities currently exists, and an active trading market may not develop.

 

There is no active trading market for our securities. If an active trading market for our securities does not develop following this offering, you may not be able to sell such securities quickly. Our ability to raise capital to continue to fund operations by selling our securities and our ability to acquire other companies or technologies by using our securities as consideration may also be impaired.

 

The dual-class structure of our common stock as contained in our Amended and Restated Certificate of Incorporation (as amended, “Certificate of Incorporation”), has the effect of concentrating voting control with those stockholders who hold our Class B common stock. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval.

 

Our Class B common stock has 16.5 votes per share, and our Class A common stock, which is the stock into which the Notes are convertible, has one vote per share. Because of the 16.5-to-1 voting ratio between our Class B common stock and Class A common stock, the holders of our Class B common stock could control a majority of the combined voting power of our common stock and therefore control all matters submitted to our stockholders for approval until converted by our Class B common stockholders. This concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring stockholder approval. In addition, this concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders. Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions as specified in our Certificate of Incorporation, such as transfers to family members and certain transfers effected for estate planning purposes.

 

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Our principal stockholders will continue to have significant influence over the election of our board of directors and approval of any significant corporate actions, including any sale of the Company.

 

Deepika Vuppalanchi, our Chief Executive Officer, Sandeep Allam, our Chairman and President and Priya Prasad, our Chief Operating Officer, in the aggregate, beneficially own approximately 79% of our Class B common stock. These stockholders currently have, and likely will continue to have, significant influence with respect to the election of our board of directors and approval or disapproval of all significant corporate actions. The concentrated voting power of these stockholders could have the effect of delaying or preventing an acquisition of the Company or another significant corporate transaction.

 

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

 

Our management will have broad discretion in the application of the net proceeds from this offering. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management may not apply our cash from this offering in ways that ultimately increases the value of any investment in our securities or enhances stockholder value. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply our cash in ways that enhance stockholder value, we may fail to achieve expected financial results, which may negatively impact our ability to raise capital, invest in or expand our business, acquire products or licenses, commercialize our products and services, or continue our operations.

 

We do not expect to pay dividends in the foreseeable future after this offering, and you must rely on price appreciation of our securities for return on your investment.

 

We have paid no cash dividends on any class of our stock to date, and we do not anticipate paying cash dividends in the near term. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our stock. Accordingly, investors must be prepared to rely on sales of their securities after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our securities. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.

 

Future sales and issuances of our securities could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.

 

We expect that additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

 

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Anti-takeover provisions contained in our Certificate of Incorporation and our Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

 

Our Certificate of Incorporation, Bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:

 

  ● authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our common stock;
     
  ● limiting the liability of, and providing indemnification to, our directors and officers;

 

  ● limiting the ability of our stockholders to call and bring business before special meetings;
     
  ● requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and
     
  ● controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings.

 

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

 

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.

 

Any provision of our Certificate of Incorporation, Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their securities.

 

Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.

 

Our Certificate of Incorporation requires that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for each of the following:

 

  ● any derivative action or proceeding brought on our behalf;
  ● any action asserting a claim for breach of any fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders;
  ● any action asserting a claim against us or any of our directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or our Bylaws; or
  ● any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine;

 

except for, as to each of the above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction.

 

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The exclusive forum provision is limited to the extent permitted by law, and it will not apply to claims arising under the Securities Act of 1933, as amended (the “Securities Act”), or for any other federal securities laws which provide for exclusive or concurrent federal and state jurisdiction.

 

Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in our securities are deemed to have notice of and consented to this provision.

 

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our Certificate of Incorporation provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States of America. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our Certificate of Incorporation.

 

Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, this provision may limit or discourage a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, and may result in increased costs to our stockholders, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

 

We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.

 

Holders of the Notes will have no rights as a common stockholder until they acquire our Class A common stock.

 

Until holders of the Notes acquire shares of our Class A common stock upon conversion of the Notes, if at all, the holders will have no rights with respect to our Class A common stock issuable upon conversion of the Notes. Upon conversion of the Notes, the holders will be entitled to exercise the rights of a common stockholder as to the security converted only as to matters for which the record date occurs after the conversion.

 

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DISCLOSURE SCHEDULE

 

Section 7(g)

 

[*]

 

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Exhibit 10.18

 

Form of Convertible Promissory Note

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), 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 OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF

 

CONVERTIBLE PROMISSORY NOTE

 

No. CN-[NUMBER] Date of Issuance
$[PRINCIPAL AMOUNT] [DATE]

 

FOR VALUE RECEIVED, Syra Health Corp., a Delaware corporation (the “Company”), hereby promises to pay to the order of [PURCHASER NAME] (the “Holder”), the principal sum of $[_____________PRINCIPAL AMOUNT], together with interest thereon from the date of this Note. Interest will accrue at a simple rate of two percent (2%) per annum. Unless earlier converted into Conversion Shares pursuant to the terms hereof, the principal and accrued interest of this Note will be due and payable by the Company at any time on or after [ ]1 (the “Maturity Date”) at the Company’s election or upon demand by the Requisite Noteholders. “Requisite Noteholders” means the holders of at least a majority-in-interest of the aggregate principal amount of the then outstanding Notes.

 

This Note (this “Note”) is one of a series of notes issued pursuant to that certain Subscription Agreement (the “Subscription Agreement”) by and among the Company and the subscribers named therein, as amended from time to time (collectively, the “Notes”). Capitalized terms not defined herein will have the meanings set forth in the Subscription Agreement.

 

1. Payment. All payments will be made in lawful money of the United States of America at the principal office of the Company, or at such other place as the Holder may from time to time designate in writing to the Company. Payment will be credited first to accrued interest due and payable, with any remainder applied to principal.

 

 

118 months from the date of issuance.

 

 
 

 

2. Prepayment. In the event there shall not have occurred a Next Equity Financing, this Note may be prepaid at any time before the Maturity Date without any penalties.

 

3. Security. This Note is a general unsecured obligation of the Company.

 

4. Priority. This Note is subordinated in right of payment to all current and future indebtedness of the Company for borrowed money (whether or not such indebtedness is secured) to banks, commercial finance lenders or other institutions regularly engaged in the business of lending money (the “Senior Debt”)”). The Company hereby agrees, and by accepting this Note, the Holder hereby acknowledges and agrees, that so long as any Senior Debt is outstanding, upon notice from the holders of such Senior Debt (the “Senior Creditors”) to the Company that an event of default, or any event which the giving of notice or the passage of time or both would constitute an event of default, has occurred under the terms of the Senior Debt (a “Default Notice”), the Company will not make, and the Holder will not receive or retain, any payment under this Note. Nothing in this paragraph will preclude or prohibit the Holder from receiving and retaining any payment hereunder unless and until the Holder has received a Default Notice (which will be effective until waived in writing by the Senior Creditors) or from converting this Note or any amounts due hereunder into Conversion Shares pursuant to the terms hereof. Each of the Notes shall rank equally without preference or priority of any kind over one another, and all payments and recoveries payable on account of principal and interest on the Notes shall be paid and applied ratably and proportionately on the balances of all outstanding Notes on the basis of their original principal amount.

 

5. Conversion of the Notes.

 

5.1 Optional Conversion. Any time prior to the earlier of (i) the Maturity Date and (ii) the effectiveness of a registration statement filed by the Company with the Securities and Exchange Commission with respect to an initial public offering by the Company of its Equity Securities, the holder of the Note may, by written notice to the Company, elect to convert the outstanding principal balance and unpaid accrued interest of each Note subject to the terms and conditions contained herein into Conversion Shares.

 

5.2 Automatic Conversion. The principal balance and unpaid accrued interest on this Note will automatically convert into Conversion Shares upon the initial closing of the Next Equity Financing. The number of Conversion Shares the Company issues upon such conversion will equal the quotient (rounded down to the nearest whole share) obtained by dividing (x) the outstanding principal balance and unpaid accrued interest under this Note on the date of conversion by (y) the applicable Conversion Price. The issuance of Conversion Shares pursuant to the conversion of this Note will be on, and subject to, the same terms and conditions applicable to the Equity Securities issued in the Next Equity Financing.

 

5.3 Corporate Transaction Conversion. If, prior to the Maturity Date, the Notes remain outstanding and have not otherwise converted into Conversion Shares on the terms and subject to the conditions of this Note, then in the event of a Corporate Transaction, the holder of each Note may elect to convert the outstanding principal balance and unpaid accrued interest of each Note, subject to the terms and conditions contained in this Note, into Conversion Shares immediately prior to the closing of such Corporate Transaction.

 

5.4 Mechanics of Conversion.

 

(a) Payment of Interest. Notwithstanding the foregoing, upon the conversion of any one or more Notes, the Company may, at its sole option, elect to pay any unpaid accrued interest on any such Note in cash at the time of conversion.

 

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(b) Conversion Shares. The number of Conversion Shares to be issued upon the conversion of any Note shall be equal to the quotient obtained by dividing (A) the outstanding principal and unpaid accrued interest on such Note (unless the Company elects to repay the interest portion), on the date of conversion, by (B) the applicable Conversion Price.

 

(c) Financing Agreements. Each Holder understands and agrees that the conversion of the Notes into Conversion Shares will require, as a condition to Holder’s receipt of Conversion Shares, such Holder’s execution of certain agreements, in the form reasonably determined by the Company, relating to the receipt of such securities as well as registration, co-sale, rights of first refusal, rights of first offer and voting rights, if any, relating to such securities (including entering into any applicable purchase agreement, financing agreement, stockholders agreement, lock-up agreement or other agreements being entered into in connection with the Next Equity Financing, Corporate Transaction or otherwise), and such Holder covenants and agrees to execute such agreements in a timely manner and without unreasonable delay. The Company shall not be required to issue or deliver the Conversion Shares until the Holder has surrendered the Note to the Company and has signed the requisite documentation in the previous sentence. The conversion of the Notes pursuant to 5.3 or 5.4 may be made contingent upon the closing of the Corporate Transaction or the Next Equity Financing, respectively. Upon the conversion of any Note, the holder of such Note shall have no further rights under such Note, whether or not such Note is surrendered.

 

(d) Termination of Rights. Except for the right to obtain certificates representing the Conversion Shares pursuant to this Note or payment for a fractional share as set forth herein, all rights with respect to each Note shall terminate upon the effective conversion of the entire balance of the Note as provided herein whether or not such Note is surrendered to the Company. Notwithstanding the foregoing, Holder agrees to surrender its Note(s) to the Company (or lost note documentation in the form prescribed by the Company (the “Lost Note Documentation”), where applicable) as soon as practicable after conversion. In any event, Holder shall not be entitled to receive any stock certificates representing the Conversion Shares issuable upon conversion of this Note unless and until Purchaser has surrendered the original of this Note (or Lost Note Documentation where applicable) and the applicable documentation (as provided for above).

 

(e) Certificates. Subject to the provisions set forth in Sections 5.6(c) and 5.6(d) above, as promptly as practicable after the conversion of any Note and the issuance of the Conversion Shares, the Company (at its expense) will issue and deliver to the holder thereof a certificate or certificates evidencing the Conversion Shares (if certificated), or if the Conversion Shares are not certificated, will deliver a true and correct copy of the Company’s share register reflecting the Conversion Shares held by such holder.

 

(f) No Voting or Other Rights. Any Note does not entitle Holder to any voting rights or other rights as a stockholder of the Company, unless and until (and only to the extent that) such Note is actually converted into Conversion Shares accordance with its terms. In the absence of conversion of a Note into Conversion Shares, no provisions of such Note, and no enumeration herein of the rights or privileges of the Holder, shall cause Holder to be a stockholder of the Company for any purpose.

 

(g) No Fractional Conversion Shares. If, after aggregation, the conversion of any Note would result in the issuance of a fractional Conversion Share, the Company shall, in lieu of issuance of any fractional share, round up such fractional share to the next whole share.

 

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6. Restrictions on Transfer. The Holder acknowledges that it has been advised by the Company that this Note has not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), that the Note is being issued, on the basis of the statutory exemption provided by Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions by an issuer not involving any public offering, and that the Company’s reliance upon this statutory exemption is based in part upon the representations made by the Holder in the Subscription Agreement. The Holder acknowledges that he/she/it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities. In particular, the Holder agrees that no sale, assignment, hypothecation or transfer of the Note shall be valid or effective, and the Company shall not be required to give any effect to any such sale, assignment, hypothecation, transfer or other disposition, unless (i) the sale, assignment, hypothecation, transfer or other disposition of the Note is registered under the Securities Act, provided, that the Company has no obligation or intention to so register the Note in connection herewith, or (ii) the Note is sold, assigned, hypothecated, transferred or otherwise disposed of in accordance with all the requirements and limitations of Rule 144 under the Securities Act, or such sale, assignment, or transfer is otherwise exempt from registration under the Securities Act.

 

7. Definitions.

 

7.1 “Conversion Price” means (in each case rounded to the nearest 1/100th of one cent):

 

(a) if this Note is converted pursuant to Section 5.1, $5.00 per share;

 

(b) if this Note is converted pursuant to Section 5.2, the price per share equal to the product of the price per Equity Security sold in the Next Equity Financing multiplied by eighty percent (80%); or

 

(c) if this Note is converted pursuant to Section 5.3, the lesser of (i) the Corporate Transaction Price or (ii) the quotient resulting from dividing (x) the Valuation Cap by (y) the fully diluted capitalization immediately prior to the closing of the Corporate Transaction.

 

7.2 “Conversion Shares” means, collectively, the shares of Equity Securities issuable upon conversion of this Note in accordance with the terms hereof.

 

7.3 “Corporate Transaction” means:

 

(a) the closing of the sale, transfer or other disposition, in a single transaction or series of related transactions, of all or substantially all of the Company’s assets or the exclusive license of all or substantially all of the Company’s material assets;

 

(b) the consummation of a merger or consolidation of the Company with or into another entity (except a merger or consolidation in which the holders of capital stock of the Company immediately prior to such merger or consolidation continue to hold a majority of the outstanding voting securities of the capital stock of the Company or the surviving or acquiring entity immediately following the consummation of such transaction);

 

(c) the closing of the transfer (whether by merger, consolidation or otherwise), in a single transaction or series of related transactions, to a “person” or “group” (within the meaning of Section 13(d) and Section 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Company’s capital stock if, after such closing, such person or group would become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding voting securities of the Company (or the surviving or acquiring entity); or

 

(d) the dissolution, winding up or insolvency of the Company.

 

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For the avoidance of doubt, a transaction will not constitute a “Corporate Transaction” if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately prior to such transaction.

 

7.4 “Corporate Transaction Price” means eighty percent (80%) of the price paid per share of Class A Common Stock in the Corporate Transaction, which shall be calculated by dividing (x) the aggregate consideration payable in such Corporate Transaction by (y) the number of Equity Securities issued and outstanding as of immediately prior to the consummation of the Corporate Transaction on a fully-diluted basis, assuming exercise or conversion of all securities convertible or exercisable for Equity Securities, but excluding any unissued option pool, the Notes, any other convertible notes then outstanding.

 

7.5 “Equity Securities” means (a) shares of Class A common stock of the Company, par value $0.001 per share (“Class A Common Stock”); (b) any securities conferring the right to purchase shares of Class A Common Stock of the Company; or (c) any securities directly or indirectly convertible into, or exchangeable for (with or without additional consideration) shares of Class A Common Stock of the Company. Notwithstanding the foregoing, the following will not be considered “Equity Securities”: any convertible promissory notes (including the Notes) issued by the Company.

 

7.6 “Next Equity Financing” means an initial public offering by the Company of its Equity Securities pursuant to which such Equity Securities are listed on a national securities exchange.

 

7.7 “Valuation Cap” means $35,000,000.

 

8. Amendments and Waivers. The Company’s agreements with each of the Holders are separate agreements, and the sales of the Notes to each of the Holders are separate sales. Notwithstanding the foregoing, any term of the Notes may be amended and the observance of any term of the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Requisite Noteholders. Any waiver or amendment effected in accordance with this Section 8 will be binding upon each holder of a Note purchased under the Subscription Agreement then outstanding and each future holder of all such Notes.

 

9. Choice of Law and Jurisdiction. This Note shall be governed by the laws of the State of Delaware as applied to contracts entered into and to be performed entirely within the State of Delaware. Any action arising out of this Note shall be brought exclusively in a court of competent jurisdiction in New Castle County, Delaware, and the parties hereby irrevocably waive any objections they may have to venue in New Castle County, Delaware.

 

10. Waiver of Jury Trial: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE NOTES AND THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

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11. Notice. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or delivered by electronic or facsimile transmission, to the Company at the address or facsimile number set forth on the signature page hereto or to the Holder at its address or facsimile number set forth in the records of the Company. Any party hereto may by notice so given change its address for future notice hereunder. Notice shall conclusively be deemed to have been given when personally delivered or when deposited in the mail in the manner set forth above and shall be deemed to have been received when delivered or, if notice is given by electronic or facsimile transmission, when delivered with confirmation of receipt.

 

12. Successors and Assigns. Any transfer of this Note may be effected only pursuant to the terms hereof and by surrender of this Note to the Company and reissuance of a new note to the transferee. The Holder and any subsequent holder of this Note receives this Note subject to the foregoing terms and conditions, and agrees to comply with the foregoing terms and conditions for the benefit of the Company and any other Holders (or its respective successors or assigns).

 

13. Officers and Directors not Liable. In no event will any officer or director of the Company be liable for any amounts due and payable pursuant to this Note.

 

14. Limitation on Interest. In no event will any interest charged, collected or reserved under this Note exceed the maximum rate then permitted by applicable law, and if any payment made by the Company under this Note exceeds such maximum rate, then such excess sum will be credited by the Holders as a payment of principal. For avoidance of doubt, other than in an Event of Default, in no event will interest be required to be paid under this Note until the Maturity Date (pursuant to the terms set forth herein) or upon the conversion of this Note to Conversion Shares pursuant to the terms hereof.

 

15. Transfer of Notes. Subject to the transfer restrictions set forth herein, this Note may be transferred only upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Assuming compliance with the previous sentence, this Note shall be reissued to, and registered in the name of, the transferee, or a new Note for like principal amount and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of the Company’s obligation to pay such interest and principal.

 

16. Events of Default. If there shall be any Event of Default (as defined below) hereunder, at the option and upon the declaration of the Requisite Noteholders and upon written notice from the Requisite Noteholders to the Company (which election and notice shall not be required in the case of an Event of Default under subsections (ii) or (iii) below), this Note shall accelerate, and all principal and unpaid accrued interest shall become due and payable. The occurrence of any one or more of the following shall constitute an “Event of Default”:

 

(i) the Company fails to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or any unpaid accrued interest or other amounts due under this Note on the date the same becomes due and payable;

 

6
 

 

(ii) the Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; or

 

(iii) an involuntary petition is filed against the Company (unless such petition is dismissed or discharged within sixty (60) days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee or assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company).

 

Notwithstanding any other provision of this Note, or of the Subscription Agreement, Holder agrees that Holder will exercise Holder’s rights and remedies under this Note and the Subscription Agreement only in concert with all other holders of outstanding Notes as provided in such documents and will not take any action, including commencement or prosecution of litigation or any other proceeding to collect this Note, except as agreed by the Requisite Noteholders.

 

17. Company Waiver; Delays and Omissions. The Company hereby waives demand, notice, presentment, protest and notice of dishonor. It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder, upon any breach or default of the Company under this Note shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.

 

18. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Note to the extent they are held to be unenforceable and the remainder of the Note shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Date of Issuance set out above.

 

  SYRA HEALTH CORP.
   
  By:  
  Name: Deepika Vuppalanchi
  Title: Chief Executive Officer & President
  Address: 1119 Keystone Way N., #201, Carmel, IN 46032
  Email: deepikav@syrahealth.com

 

8
 

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order to Convert the Note)

 

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ shares of Class A Common Stock (“Shares”) of Syra Health Corp. according to the conditions set forth in such Note, as of the date written below.

 

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

 

Date of Conversion: ________________________________________________________________

Applicable Conversion Price: ____________________________________________________

Principal Amount of Note Remaining After Conversion: _______________________________________________

Address: _________________________________________________________________________

  _________________________________________________________________________

SSN or EIN: __________________________________

Tel: ________________________________________

Fax: ________________________________________

Email: _______________________________________

 

Shares are to be registered in the following name: _____________________________________________________

 

Shares are to be sent or delivered to the following account:

 

Account Name: ______________________________________________________________________

Address: ___________________________________________________________________________

 

Signature: __________________________________________________________________________

Name & Title of Signatory: _______________________________________________________________________

 

The Holder hereby represents that as of the date of this Notice of Conversion it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

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Exhibit 10.19

 

 

MODIFICATION OF LOAN AGREEMENT

 

At the request of Syra Health Corp Borrower (s) and by mutual agreement of the parties, the terms of Commercial Loan number 709505950 for $ 1,500,000.00 dated the 7th day of February, 2022, made by the Citizens State Bank of New Castle, Indiana to, or assumed by, the undersigned borrower (s) are hereby modified in the following particulars and the maturity date of the loan is amended to cover any additional or reduced time required by this modification.

 

Extend Maturity 30 days from 03/31/2023 to 04/30/2023 with monthly interest only payments to continue as agreed. This extension is necessary to account for DLC and Board Approval in April.

 

Such modifications shall continue in effect until rescinded by the Bank. In all Other particulars and respects, the terms and conditions of the original Commercial Note Loan are continued in full force and effect.

 

Dated this 8th day of March, 2023

 

/s/ Deepika Vuppalanchi   /s/ Deepika Vuppalanchi
Guarantor   Borrower
     
     
Guarantor   Borrower
     
     

 

Citizens State Bank of New Castle   Citizens State Bank of New Castle
     
/s/ Matthew Patterson    
Officer   Approval

 

 

 

 

Exhibit 10.20

 

 

Employment Agreement

 

THIS EMPLOYMENT AGREEMENT is made on this 29 day of February, 2022, by and between SYRA HEALTH, an Indiana Incorporation having its office at 1119 Keystone Way, Suite 201, Carmel, IN 46032 (“SYRA HEALTH”) and Sandeep Allam an individual residing at _______________ (“Employee.”)

 

WHEREAS, SYRA HEALTH is in a business of providing innovative solutions and services to myriad of industries.; and Whereas, SYRA HEALTH desired to hire Employee to work, and the Employee desires to work for SYRA HEALTH subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual premises and covenants set forth herein, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, SYRA HEALTH and Employee mutually agree as follows:

 

1. Services to be provided: Employee agrees to be employed by SYRA HEALTH to provide the services described on Exhibit A attached hereto. While performing services hereunder, Employee should represent himself or herself as an employee of SYRA HEALTH.

 

2. Compensation: (a) SYRA HEALTH shall compensate Employee for Employee’s services hereunder as described on Exhibit A attached hereto. Employee’s compensation shall be paid in accordance with SYRA HEALTH’s standard payroll practices in effect from time to time.

 

(b) For Employee to be eligible for pay, employee must have worked a minimum of three (3) business days or twenty-four (24) work hours with SYRA HEALTH and those hours should be approved by the client.

 

(c) SYRA HEALTH will withhold any amounts due under Section 2(a) any amounts required by applicable law, including federal, state and local income taxes and federal FICA and Medicare surtax withholdings.

 

(d) As further compensation, Employee shall be entitled to participate in such employee benefit plans as are established by SYRA HEALTH for the benefit of its employees.

 

3. Equipment and Supplies: SYRA HEALTH may provide equipment and supplies necessary for the performance of Employee’s duties hereunder, as deemed necessary by SYRA HEALTH, except as otherwise agreed by SYRA HEALTH and Employee from time to time. Such equipment and supplies shall be used by Employee only to the extent necessary for the performance of Employee’s duties hereunder. Upon termination of this Agreement, Employee shall immediately return all equipment supplied by SYRA HEALTH.

 

4. Probationary Period:

 

An employee’s first ninety (90) days of employment are considered a continuation of the employment selection process. The ninety (90) day probationary period provides the Company an opportunity to observe and evaluate the capacity of the employee, which includes the employee’s ability to satisfactorily perform the essential functions of his or her job; and to observe and evaluate the employee’s work habits and conduct, including attendance and the employee’s relationship with coworkers and superiors.

 

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During this probationary period, the Company may terminate employment immediately, with or without cause and with or without notice. Employee may terminate his or her employment with the Company with a fourteen (14) days’ notice, otherwise employee salary will be deducted in lieu of notice period.

 

This 90 day probationary period is not a term of employment and is not intended, nor does it, impact the at will nature of the relationship between the Company and the employee.

 

5. Term at Termination:

 

(a) The term of this Agreement shall commence on March 1, 2022 with the terms and conditions set forth herein.

 

(b) This Agreement may be terminated:

 

○By SYRA HEALTH, without cause, upon two weeks (14) days’ notice to the other party.

 

○Immediately by SYRA HEALTH, for cause, including, without limitation, to Employee’s failure or refusal to perform Employee’s duties hereunder.

 

○At any time by employee, without cause, upon thirty (30) days’ written notice to the other party o Failure to serve the notice period during probation and after probation, employee salary will be deducted in lieu of notice period.

 

○Upon Employee’s death, as of the date of Employee’s death.

 

(c) SYRA HEALTH shall pay Employee all sums due hereunder as compensation or expense reimbursements within 60 days of Termination Date.

 

(d) There can be instances where SYRA HEALTH clients may abruptly end projects or seek replacement of the employee. When these instances occur, SYRA HEALTH reserves the right to terminate Employees hired/engaged immediately under contract to SYRA HEALTH and working at these SYRA HEALTH Client locations.

 

(e) If the timesheet is not approved by client or the payment is stopped by client then employee salary will not be released for those unapproved hours.

 

6. Manner of Conduct: Employee acknowledges that Employee’s conduct while performing services under this Agreement will reflect directly on SYRA HEALTH and the reputation of SYRA HEALTH’s business, and agrees to conduct himself or herself in such a manner as to foster and support desirable relationships with clients of SYRA HEALTH and to bolster the positive image of SYRA HEALTH’s business. Employee agrees that Employee will observe and comply with the policies and rules of SYRA HEALTH, respecting performance of Employee’s duties hereunder and will carry out and perform orders and directions stated by SYRA HEALTH from time to time.

 

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7. Liability for Employee’s Actions; Indemnification: Employee and SYRA HEALTH expressly agree that SYRA HEALTH shall not be liable for any action or failure to act of Employee which is outside the scope of Employee’s employment hereunder. Employee agrees to indemnify and hold harmless SYRA HEALTH and its shareholders, directors, officers, employees and agents from and against any and all losses, damages, injuries, claims, demands, actions and causes of action, and all expenses, legal or otherwise (including court costs and attorneys’ fees), of any kind and nature arising against any of them as a result of or caused by any action or failure to act of Employee which is outside the scope of Employee’s employment hereunder. The waiver of liability and indemnification contained in this section shall continue in full force and effect notwithstanding the termination of this Agreement, whether by expiration of time, by operation of law or otherwise.

 

8. Restrictive Covenants: Employee acknowledges that SYRA HEALTH has established a reputation for superior performance in its field and a special relationship between itself and its clients. As a result of Employee’s performance of Employee’s duties hereunder, Employee shall receive special introduction to and the opportunity to develop relationships with the clients of SYRA HEALTH. During or after the termination of this Agreement, Employee’s disclosure to third parties of the names of or other significant or relevant information with respect to the clients or prospective clients of SYRA HEALTH, Employee’s ceasing employment with SYRA HEALTH to provide services to a client or prospective client of SYRA HEALTH either as an employee or independent contractor, or the solicitation by Employee, directly or indirectly, of the clients or prospective clients of SYRA HEALTH for the personal benefit of Employee, for the benefit of any third party or for any other reason would have an adverse impact upon the business of SYRA HEALTH. Further, after termination of this Agreement, Employee’s use of the knowledge and/or relationships obtained as a result of Employee’s employment by SYRA HEALTH would have an adverse effect upon the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee agrees as follows:

 

(a) Non-Employment by Clients of SYRA HEALTH: During the term of this Agreement, SYRA HEALTH will expend time, resources and expense to train Employee to provide services to clients of SYRA HEALTH. If Employee were to provide services, directly or indirectly, for a client of SYRA HEALTH (defined below) as an employee or independent contractor, such time, resources and expense would be lost and would have an adverse effect on the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee hereby agrees that during the term of this Agreement and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not provide services, directly or indirectly, to a client of SYRA HEALTH, whether as an employee or as an independent contractor.

 

For purposes hereof, “clients of SYRA HEALTH” shall include: (i) any client to whom SYRA HEALTH has provided services; or (ii) any client for which Employee directly provided services while employed by SYRA HEALTH.

 

(b) Non-Employment by Prospective Clients of SYRA HEALTH: During the term of this Agreement, SYRA HEALTH will expend time, resources and expense to train Employee to provide services to clients of SYRA HEALTH. If Employee were to provide services, directly or indirectly, for a prospective client of SYRA HEALTH (defined below) as an employee or independent contractor, such time, resources and expense would be lost and would have an adverse effect on the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee hereby agrees that during the term of this Agreement and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not provide services, directly or indirectly, to a prospective client of SYRA HEALTH, whether as an employee or as an independent contractor.

 

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For purposes hereof, “prospective clients of SYRA HEALTH” shall include any person to whom or entity to which SYRA HEALTH has directly made a proposal for the sale of services.

 

(c) Non-Disclosure of Compensation: During the term of this Agreement, and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee agrees not to disclose Employee’s compensation to any client of SYRA HEALTH to which Employee was assigned during the six (6) month period immediately preceding the date of expiration or termination of this Agreement.

 

(d) Solicitation by Client of SYRA HEALTH: During the term of this Agreement, in the event Employee is solicited for employment or for engagement as an independent contractor by any client of SYRA HEALTH to which Employee is assigned or has been assigned within the preceding one (1) year, Employee agrees to immediately disclose such communication in writing to SYRA HEALTH.

 

(e) Non-Disclosure of Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not disclose the names of or any other significant or relevant information with respect to the clients of SYRA HEALTH (defined above) to any third party unless such disclosure is in furtherance of the business of SYRA HEALTH or has been consented to in writing by SYRA HEALTH.

 

(f) Non-Disclosure of Prospective Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not disclose the names of or any other significant or relevant information with respect to the prospective clients of SYRA HEALTH (defined above) to any third party unless such disclosure is in furtherance of the business of SYRA HEALTH or has been consented to in writing by SYRA HEALTH.

 

(g) Non-Solicitation of Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit, for Employee’s personal benefit or the benefit of any third party, the clients of SYRA HEALTH (defined above), for the provision of any services offered by SYRA HEALTH to its clients at any time during Employee’s employment by SYRA HEALTH.

 

(h) Non-Solicitation of Prospective Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit, for Employee’s personal benefit or the benefit of any third party, the prospective clients of SYRA HEALTH (defined above), for the provision of any services offered by SYRA HEALTH to its clients at any time during Employee’s employment by SYRA HEALTH.

 

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(i) Non-Solicitation of Employees and Independent Contractors: During the term of this Agreement, Employee will be exposed to and develop relationships with the employees and independent contractors of SYRA HEALTH. The solicitation of such employees of SYRA HEALTH to leave the employment of SYRA HEALTH or of such independent contractors to terminate their engagement by SYRA HEALTH, whether to be employed by, to own or hold any interest in or otherwise be involved with any business which competes with or is similar in nature to the business of SYRA HEALTH, whether as an employee, agent, independent contractor, partner, shareholder, officer, director, member, proprietor or otherwise, would have an adverse impact upon the business of SYRA HEALTH.

 

Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee agrees that:

 

○During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit or otherwise attempt to induce any employee of SYRA HEALTH to leave the employment of SYRA HEALTH for any reason. For purposes hereof, “employee of SYRA HEALTH” shall include any employee employed by SYRA HEALTH at any time during the term of this Agreement.

 

○During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit or otherwise attempt to induce any independent contractor of SYRA HEALTH to terminate such independent contractor’s engagement with SYRA HEALTH for any reason. For purposes hereof, “independent contractor of SYRA HEALTH” shall include any person or entity engaged as an independent contractor by SYRA HEALTH at any time during the term of this Agreement.

 

9. Proprietary Information: During the term of this Agreement, Employee will be exposed to certain confidential and proprietary information belonging to SYRA HEALTH and certain methods of procuring and protecting SYRA HEALTH’s market and its business, including, but not limited to, SYRA HEALTH’s business plans; strategies; concepts; financial records; pricing schedules; operating procedures; client lists and requirements; contracts and agreements with clients; employee and independent contractor lists; employee and independent contractor compensation and billing rates; contracts and agreements with employees; contracts and agreements with independent contractors; identity of subcontractors; and contracts and agreements with subcontractors (the “Proprietary Information”), all of which is confidential and the sole property of SYRA HEALTH. Employee acknowledges that all of the Proprietary Information is the sole and exclusive property of SYRA HEALTH, and Employee agrees to maintain all of the Proprietary Information at all times as secret and confidential. Employee further acknowledges that the Proprietary Information, including any such Proprietary Information used or created by SYRA HEALTH in the future or created by Employee during the term of this Agreement, is a valuable, special and unique asset of SYRA HEALTH and constitutes confidential information in which SYRA HEALTH has a protectable interest. Employee expressly acknowledges that the Proprietary Information constitutes a “trade secret” as defined by the Indiana Uniform Trade Secrets Act, Indiana Code 24-2-3-1. et seq.

 

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Therefore, to avoid disputes in the future and in consideration for entry into this Agreement, Employee agrees that during the term of this Agreement, and at all times thereafter, Employee will maintain the secrecy of the Proprietary Information and will not disclose any of the Proprietary Information to any person, firm, corporation or other entity for any reason or purpose whatsoever except in the usual discharge of Employee’s duties hereunder, and even then, Employee shall limit the access of others to the Proprietary Information to such persons or entities and to such extent as is necessary for Employee to carry out his duties for SYRA HEALTH. During the term of this Agreement, and at all times thereafter, Employee promises and agrees not to use the Proprietary Information for his own benefit or the benefit of any third party.

 

10. Employee Acknowledgment: Employee acknowledges and agrees that the restrictions in Sections 8 and 9 above will not prevent Employee from obtaining gainful employment in the future in Employee’s field of expertise or cause Employee undue hardship. Employee has carefully read and considered the provisions of Sections 8 and 9, and, having done so, agrees that the restrictions set forth therein are fair and reasonable and are reasonably required for the protection of the legitimate interests of SYRA HEALTH. Employee understands that this Agreement places certain restrictions on Employee’s future employment outside SYRA HEALTH.

 

11. Tolling: In the event that Employee violates any of the covenants contained in Sections 8 or 9 of this Agreement, the time period of such covenant shall be tolled so long as such violation continues and during the course of any litigation arising under this Agreement.

 

12. Representations of Employee:

 

(a) Employee represents that Employee is not bound by any existing agreement of any type or nature which restricts Employee from accepting employment with SYRA HEALTH, or from performing the duties required of the position. Employee warrants that Employee has disclosed the existence of and is not restricted by any restrictive covenant or confidentiality agreement of any type of nature from any prior employment. Should a prior SYRA HEALTH assert that Employee is so restricted, Employee shall indemnify, defend and hold harmless SYRA HEALTH from any attorneys’ fees and costs incurred in defending these claims, as well as any and all damages that may be assessed against SYRA HEALTH.

 

(b) Employee warrants that Employee is eligible to legally work in the United States (being a citizen, documented resident alien or possessing other eligibility documentation).

 

13. Remedies: Since it is recognized that irreparable damage could result to SYRA HEALTH from any violation this Agreement, it is expressly agreed that, in addition to any and all other remedies available to it, SYRA HEALTH shall have the remedy of restraining order, injunction and such other equitable relief as may be decreed or issued by a court of competent jurisdiction to enforce the provisions of this Agreement. In the event that SYRA HEALTH takes legal action against Employee to enforce this Agreement, SYRA HEALTH shall be entitled to recover its attorneys’ fees and costs incurred in such action from Employee.

 

14. Employee Obligations: In the event that the Employee shall owe or otherwise be indebted to SYRA HEALTH for any sum of money at the time of expiration or termination of this Agreement, Employee agrees and authorizes SYRA HEALTH to deduct such amounts from any compensation or other funds owed by SYRA HEALTH to Employee hereunder. Employee acknowledges and agrees that this constitutes an assignment of Employee’s wages for purposes of repayment of the amounts owed and that this assignment of wages (but not Employee’s obligation to repay any amounts owed) is revocable at any time upon written notice to SYRA HEALTH; however, any remaining balance owed shall be payable in full immediately upon such revocation at the election of SYRA HEALTH. Employee acknowledges that Employee has delivered a signed copy of this Agreement to SYRA HEALTH on or before employment start date.

 

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15. Intellectual Property: All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Employee during the course of performing work for SYRA HEALTH or its clients shall belong exclusively to SYRA HEALTH and shall to the extent possible, be considered a work made for hire for SYRA HEALTH within the meaning of Title 17 of the United States Code, and Employee hereby assigns all rights to any deliverable that is not considered a work made for hire to SYRA HEALTH. Notwithstanding the foregoing, SYRA HEALTH acknowledges that any deliverable developed by Employee prior to the date of this Agreement or for any other party independent of any work performed by Employee under this Agreement for SYRA HEALTH remains the exclusive property of Employee or its assignee, and Employee hereby grants SYRA HEALTH a non-exclusive, paid up, perpetual, worldwide license to use, and to sublicense to its client to use, any component of such property of Employee that becomes or is part of the deliverable created by Employee hereunder.

 

16. Severability: In the event that any provision of this Agreement shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. In the event that any provision of Section 8 or 9 relating to time period shall be declared by a court of competent jurisdiction to exceed the maximum time period such court deems reasonable and enforceable, said time period shall be deemed to become and thereafter be the maximum time period of restriction that such court deems reasonable and enforceable.

 

17. Waiver: The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be constructed as a waiver of any subsequent breach.

 

18. Assignment: Each of the respective provisions of this Agreement shall be binding upon and shall inure to the benefit of each of the parties and their respective assigns, successors, heirs, shareholders, officers, directors, employees and agents. This Agreement may be transferred and assigned to any successor to all or any part of the business of SYRA HEALTH and shall be fully enforceable against Employee by any such successor. The rights and obligations of Employee under this Agreement are not assignable by Employee without prior written consent of SYRA HEALTH.

 

19. Entire Agreement: This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. This Agreement may be modified or amended only by an agreement in writing signed by or on behalf of the party against whom enforcement of any waiver, change, or modification, extension or discharge is sought.

 

20. Applicable Laws: This Agreement shall be interpreted and enforced in accordance with the laws of the State of Indiana, and the parties hereby consent exclusively to the jurisdiction of the state and local courts of Indiana and waive any objection relating to improper venue or forum non covenants to the conduct of any proceeding in any such court.

 

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21. Survival: Employee and SYRA HEALTH agree that the provisions of Sections 8 and 9 hereof shall survive the termination of this Agreement.

 

22. Consent of SYRA HEALTH: Whenever the term “consent of SYRA HEALTH” is used in this Agreement, it shall be deemed to mean the written consent of an officer of SYRA HEALTH.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year written above.

 

SYRA HEALTH,  
    
Signature:/s/ Deepika Vuppalanchi  
Printed Name:Deepika Vuppalanchi  
Title:CEO  
Date:02 /29/2022  
    
EMPLOYEE:  
    
Signature:/s/ Sandeep Allam  
Printed Name:Sandeep Allam  
Date:02 /29/2022  

 

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Exhibit A (Part 1)

 

1. Services to be Provided: Employee shall provide the following services

 

Line of Business : Technical/Non-Technical

 

Employment Category : Full Time – Salaried/Hourly

 

Employee Classification : Exempt/Non-Exempt

 

Job Title & Responsibilities: Refer Exhibit A (Part 2)

 

2. Compensation: Employee shall be compensated for Employee’s services as follows:

 

a) $214,000.00 (Two Hundred and Fourteen Thousand ONLY) Dollars per Annum.

 

b) SYRA HEALTH runs a semi-monthly payroll Employee will get paid two times in a month that is every 1st and 16th of the month. Every 1st (pay period from 1st to 15th of the previous month) and 16th (pay period from 16th to 30th/31st of previous month) are the pay dates.

 

For example:

 

The First Paycheck for the pay period from 1st January to 15th January is due on the 1st February.

 

The second paycheck for the pay period from 16th January to 31st January is due on the 16th February

 

The Subsequent paychecks will be received by employee semi-monthly.

 

Please note: If the check date falls on a Saturday, Sunday or a national holiday, direct deposits will be posted on the following business day.

 

3. Benefits: Employee is eligible for Benefits under this Employment Agreement Medical/ Vision/ Basic Life/ Dental Insurance:

 

Employee is eligible for the Insurance under this agreement as per the eligibility defined above under employment category.

 

Vacation:

 

(a) Employee shall be entitled to eighty (80) hours of paid vacation during each year of Employee’s employment hereunder.

 

(b) All vacations must be scheduled at least thirty (30) days in advance with SYRA HEALTH.

 

(c) Vacation shall be deemed to have been earned at the rate of 0.833 days per calendar month at the end of business on the last day of each calendar month of Employee’s employment hereunder. Employee can’t use advance vacation hours which have not yet been earned.

 

If Employee’s employment terminates at a time when Employee has used more vacation hours than Employee has earned, Employee shall be required to pay back to SYRA HEALTH any compensation paid to Employee for such excess vacation hours used, and Employee expressly authorizes SYRA HEALTH to withhold any such amounts due from Employee’s final paycheck.

 

Unused vacation time is to be forfeited at the expiration of the year for which it was accrued;

 

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Holiday:

 

Employee shall be entitled to six (6) days of Holidays under this agreement as per the observed days defined in the employee benefit guide.

 

4. Once Employee has signed the applicable Employee Agreement, the individual shall be required to commence performing services. If the individual does not give a minimum of 14 days’ termination notice during probation period and 30 days termination notice after probation period to SYRA

 

HEALTH, other than due to the death or disability of such individual, then SYRA HEALTH shall hold the right to deduct the notice period pay from employee’s salary

 

SYRA HEALTH,  
    
Signature:/s/ Deepika Vuppalanchi  
Printed Name:Deepika Vuppalanchi  
Title:CEO  
Date:02 /29/2022  
    
EMPLOYEE:  
    
Signature:/s/ Sandeep Allam  
Printed Name:Sandeep Allam  
Date:02 /29/2022  

 

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Exhibit A (Part 2)

 

Line of Business : Technical/Non-Technical

Employment Category : Full Time – Salaried/Hourly

Employee Classification : Exempt/Non-Exempt

 

Job Title: President

 

Responsibilities:

 

Provides leadership to the Board of Directors by fulfilling the following duties and responsibilities, designed to lead the board in its governance and oversight responsibilities.

 

be an advisor to the CEO as specified below. Leadership of the Board of Directors

 

● Overall, provides leadership to ensure the Board works effectively and serves as the principal liaison on Board-wide issues between directors and management.

 

● Acts as a liaison between the Board and management, and in consultation with the CEO, to ensure that there is an effective relationship between management personnel and members of the Board.

 

● Develops and shapes agendas and communication materials for Board meetings, with input from the CEO; leads discussions and together with the CEO, keeps Board members focused on the key objectives at hand.

 

● Facilitates communication with shareholders, investors and other stakeholders, and is the Board spokesperson, and will be available to shareholders upon request, to represent the Company.

 

● Collaborates with the Board on executive succession planning and developing bench strength within the organization; the Chair also provides input with respect to the appointment, removal, development, evaluation and succession of executives.

 

● Performs such other duties as the Board may determine from time to time. Advisor to the CEO

 

● Provides counsel to the CEO on a variety of business and policy issues.

 

● Supports the transition of responsibilities for the management of the Company to the CEO by facilitating introductions and establishing relationships with customers, investors and other stakeholders.

 

● Continues to mentor the CEO, and any other senior executives, as necessary.

 

● Leads major project pursuits and continues to play a lead role in estimating, including consideration of the associated risks and pricing.

 

● Assists with merger and acquisition opportunities.

 

● Continues to promote the culture and values of the corporation, including the development and tracking of ESG and Diversity, Equity and Inclusion type goals.

 

SYRA HEALTH,  
    
Signature:/s/ Deepika Vuppalanchi  
Printed Name:Deepika Vuppalanchi  
Title:CEO  
Date:02 /29/2022  
    
EMPLOYEE:  
    
Signature:/s/ Sandeep Allam  
Printed Name:Sandeep Allam  
Date:02 /29/2022  

 

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Exhibit 10.21

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

This First Amendment (this “Amendment”) to the Employment Agreement is dated as of October 18, 2022 and is entered into by and between Syra Health Corp., a Delaware corporation (the “Corporation”), and Sandeep Allam (the “Employee”). All capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Employment Agreement (as defined herein).

 

WHEREAS, on February 29, 2022, the Corporation entered into an employment agreement with the Employee (the “Employment Agreement”); and

 

WHEREAS, the Corporation and the Employee desire to amend the Employment Agreement as set forth herein.

 

NOW THEREFORE, in consideration of the above, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Section 8(c) of the Employment Agreement is amended and restated in its entirety as follows:

 

(c) Intentionally Omitted.

 

2. This Amendment shall be for the benefit of and be binding upon, the parties hereto and their respective successors and assigns. Except as amended hereby, the terms and provisions of the Employment Agreement shall remain in full force and effect, and the Employment Agreement is in all respects ratified and confirmed. On and after the date of this Amendment, each reference in the Employment Agreement to the “Agreement”, “hereinafter”, “herein”, “hereinafter”, “hereunder”, “hereof”, or words of like import shall mean and be a reference to the Employment Agreement as amended by this Amendment. This Amendment shall be construed, enforced, and governed under the internal laws of the State of Indiana, without giving effect to any choice of law provision or rule of any other jurisdiction. This Amendment may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Amendment transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first indicated above.

 

  SYRA HEALTH CORP.
     
  By: /s/ Deepika Vuppalanchi
    Name: Deepika Vuppalanchi
    Title: Chief Executive Officer

 

  EMPLOYEE
   
  /s/ Sandeep Allam
  Sandeep Allam

 

 

 

 

 

Exhibit 10.22

 

 

Employment Agreement

 

THIS EMPLOYMENT AGREEMENT is made on this 29 day of February, 2022, by and between SYRA HEALTH, an Indiana Incorporation having its office at 1119 Keystone Way, Suite 201, Carmel, IN 46032 (“SYRA HEALTH”) and Priya Prasad an individual residing at ____________________________________________ (“Employee.”)

 

WHEREAS, SYRA HEALTH is in a business of providing innovative solutions and services to myriad of industries.; and Whereas, SYRA HEALTH desired to hire Employee to work, and the Employee desires to work for SYRA HEALTH subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual premises and covenants set forth herein, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, SYRA HEALTH and Employee mutually agree as follows:

 

1. Services to be provided: Employee agrees to be employed by SYRA HEALTH to provide the services described on Exhibit A attached hereto. While performing services hereunder, Employee should represent himself or herself as an employee of SYRA HEALTH.

 

2. Compensation: (a) SYRA HEALTH shall compensate Employee for Employee’s services hereunder as described on Exhibit A attached hereto. Employee’s compensation shall be paid in accordance with SYRA HEALTH’s standard payroll practices in effect from time to time.

 

(b) For Employee to be eligible for pay, employee must have worked a minimum of three (3) business days or twenty-four (24) work hours with SYRA HEALTH and those hours should be approved by the client.

 

(c) SYRA HEALTH will withhold any amounts due under Section 2(a) any amounts required by applicable law, including federal, state and local income taxes and federal FICA and Medicare surtax withholdings.

 

(d) As further compensation, Employee shall be entitled to participate in such employee benefit plans as are established by SYRA HEALTH for the benefit of its employees.

 

3. Equipment and Supplies: SYRA HEALTH may provide equipment and supplies necessary for the performance of Employee’s duties hereunder, as deemed necessary by SYRA HEALTH, except as otherwise agreed by SYRA HEALTH and Employee from time to time. Such equipment and supplies shall be used by Employee only to the extent necessary for the performance of Employee’s duties hereunder. Upon termination of this Agreement, Employee shall immediately return all equipment supplied by SYRA HEALTH.

 

4. Probationary Period:

 

An employee’s first ninety (90) days of employment are considered a continuation of the employment selection process. The ninety (90) day probationary period provides the Company an opportunity to observe and evaluate the capacity of the employee, which includes the employee’s ability to satisfactorily perform the essential functions of his or her job; and to observe and evaluate the employee’s work habits and conduct, including attendance and the employee’s relationship with coworkers and superiors.

 

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During this probationary period, the Company may terminate employment immediately, with or without cause and with or without notice. Employee may terminate his or her employment with the notice period.

 

This 90 day probationary period is not a term of employment and is not intended, nor does it, impact the at will nature of the relationship between the Company and the employee.

 

5. Term at Termination:

 

(a) The term of this Agreement shall commence on March 1, 2022 with the terms and conditions set forth herein.

 

(b) This Agreement may be terminated:

 

○By SYRA HEALTH, without cause, upon two weeks (14) days’ notice to the other party.
   
○Immediately by SYRA HEALTH, for cause, including, without limitation, to Employee’s failure or refusal to perform Employee’s duties hereunder.
   
○At any time by employee, without cause, upon thirty (30) days’ written notice to the other party o Failure to serve the notice period during probation and after probation, employee salary will be deducted in lieu of notice period.
   
○Upon Employee’s death, as of the date of Employee’s death.

 

(c) SYRA HEALTH shall pay Employee all sums due hereunder as compensation or expense reimbursements within 60 days of Termination Date.

 

(d) There can be instances where SYRA HEALTH clients may abruptly end projects or seek replacement of the employee. When these instances occur, SYRA HEALTH reserves the right to terminate Employees hired/engaged immediately under contract to SYRA HEALTH and working at these SYRA HEALTH Client locations.

 

(e) If the timesheet is not approved by client or the payment is stopped by client then employee salary will not be released for those unapproved hours.

 

6. Manner of Conduct: Employee acknowledges that Employee’s conduct while performing services under this Agreement will reflect directly on SYRA HEALTH and the reputation of SYRA HEALTH’s business, and agrees to conduct himself or herself in such a manner as to foster and support desirable relationships with clients of SYRA HEALTH and to bolster the positive image of SYRA HEALTH’s business. Employee agrees that Employee will observe and comply with the policies and rules of SYRA HEALTH, respecting performance of Employee’s duties hereunder and will carry out and perform orders and directions stated by SYRA HEALTH from time to time.

 

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7. Liability for Employee’s Actions; Indemnification: Employee and SYRA HEALTH expressly agree that SYRA HEALTH shall not be liable for any action or failure to act of Employee which is outside the scope of Employee’s employment hereunder. Employee agrees to indemnify and hold harmless SYRA HEALTH and its shareholders, directors, officers, employees and agents from and against any and all losses, damages, injuries, claims, demands, actions and causes of action, and all expenses, legal or otherwise (including court costs and attorneys’ fees), of any kind and nature arising against any of them as a result of or caused by any action or failure to act of Employee which is outside the scope of Employee’s employment hereunder. The waiver of liability and indemnification contained in this section shall continue in full force and effect notwithstanding the termination of this Agreement, whether by expiration of time, by operation of law or otherwise.

 

8. Restrictive Covenants: Employee acknowledges that SYRA HEALTH has established a reputation for superior performance in its field and a special relationship between itself and its clients. As a result of Employee’s performance of Employee’s duties hereunder, Employee shall receive special introduction to and the opportunity to develop relationships with the clients of SYRA HEALTH. During or after the termination of this Agreement, Employee’s disclosure to third parties of the names of or other significant or relevant information with respect to the clients or prospective clients of SYRA HEALTH, Employee’s ceasing employment with SYRA HEALTH to provide services to a client or prospective client of SYRA HEALTH either as an employee or independent contractor, or the solicitation by Employee, directly or indirectly, of the clients or prospective clients of SYRA HEALTH for the personal benefit of Employee, for the benefit of any third party or for any other reason would have an adverse impact upon the business of SYRA HEALTH. Further, after termination of this Agreement, Employee’s use of the knowledge and/or relationships obtained as a result of Employee’s employment by SYRA HEALTH would have an adverse effect upon the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee agrees as follows:

 

(a) Non-Employment by Clients of SYRA HEALTH: During the term of this Agreement, SYRA HEALTH will expend time, resources and expense to train Employee to provide services to clients of SYRA HEALTH. If Employee were to provide services, directly or indirectly, for a client of SYRA HEALTH (defined below) as an employee or independent contractor, such time, resources and expense would be lost and would have an adverse effect on the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee hereby agrees that during the term of this Agreement and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not provide services, directly or indirectly, to a client of SYRA HEALTH, whether as an employee or as an independent contractor.

 

For purposes hereof, “clients of SYRA HEALTH” shall include: (i) any client to whom SYRA HEALTH has provided services; or (ii) any client for which Employee directly provided services while employed by SYRA HEALTH.

 

(b) Non-Employment by Prospective Clients of SYRA HEALTH: During the term of this Agreement, SYRA HEALTH will expend time, resources and expense to train Employee to provide services to clients of SYRA HEALTH. If Employee were to provide services, directly or indirectly, for a prospective client of SYRA HEALTH (defined below) as an employee or independent contractor, such time, resources and expense would be lost and would have an adverse effect on the business of SYRA HEALTH. Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee hereby agrees that during the term of this Agreement and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not provide services, directly or indirectly, to a prospective client of SYRA HEALTH, whether as an employee or as an independent contractor.

 

-3-
 

 

 

For purposes hereof, “prospective clients of SYRA HEALTH” shall include any person to whom or entity to which SYRA HEALTH has directly made a proposal for the sale of services.

 

(c) Non-Disclosure of Compensation: During the term of this Agreement, and for a period of one (1) year after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee agrees not to disclose Employee’s compensation to any client of SYRA HEALTH to which Employee was assigned during the six (6) month period immediately preceding the date of expiration or termination of this Agreement.

 

(d) Solicitation by Client of SYRA HEALTH: During the term of this Agreement, in the event Employee is solicited for employment or for engagement as an independent contractor by any client of SYRA HEALTH to which Employee is assigned or has been assigned within the preceding one (1) year, Employee agrees to immediately disclose such communication in writing to SYRA HEALTH.

 

(e) Non-Disclosure of Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not disclose the names of or any other significant or relevant information with respect to the clients of SYRA HEALTH (defined above) to any third party unless such disclosure is in furtherance of the business of SYRA HEALTH or has been consented to in writing by SYRA HEALTH.

 

(f) Non-Disclosure of Prospective Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not disclose the names of or any other significant or relevant information with respect to the prospective clients of SYRA HEALTH (defined above) to any third party unless such disclosure is in furtherance of the business of SYRA HEALTH or has been consented to in writing by SYRA HEALTH.

 

(g) Non-Solicitation of Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit, for Employee’s personal benefit or the benefit of any third party, the clients of SYRA HEALTH (defined above), for the provision of any services offered by SYRA HEALTH to its clients at any time during Employee’s employment by SYRA HEALTH.

 

(h) Non-Solicitation of Prospective Clients: During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit, for Employee’s personal benefit or the benefit of any third party, the prospective clients of SYRA HEALTH (defined above), for the provision of any services offered by SYRA HEALTH to its clients at any time during Employee’s employment by SYRA HEALTH.

 

-4-
 

 

 

(i) Non-Solicitation of Employees and Independent Contractors: During the term of this Agreement, Employee will be exposed to and develop relationships with the employees and independent contractors of SYRA HEALTH. The solicitation of such employees of SYRA HEALTH to leave the employment of SYRA HEALTH or of such independent contractors to terminate their engagement by SYRA HEALTH, whether to be employed by, to own or hold any interest in or otherwise be involved with any business which competes with or is similar in nature to the business of SYRA HEALTH, whether as an employee, agent, independent contractor, partner, shareholder, officer, director, member, proprietor or otherwise, would have an adverse impact upon the business of SYRA HEALTH.

 

Therefore, to avoid disputes in the future, and in consideration for entry into this Agreement, Employee agrees that:

 

○During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit or otherwise attempt to induce any employee of SYRA HEALTH to leave the employment of SYRA HEALTH for any reason. For purposes hereof, “employee of SYRA HEALTH” shall include any employee employed by SYRA HEALTH at any time during the term of this Agreement.
   
○During the term of this Agreement, and for a period of two (2) years after expiration or termination of this Agreement, whether terminated by SYRA HEALTH or by Employee and whether terminated with or without cause, Employee will not solicit or otherwise attempt to induce any independent contractor of SYRA HEALTH to terminate such independent contractor’s engagement with SYRA HEALTH for any reason. For purposes hereof, “independent contractor of SYRA HEALTH” shall include any person or entity engaged as an independent contractor by SYRA HEALTH at any time during the term of this Agreement.

 

9. Proprietary Information: During the term of this Agreement, Employee will be exposed to certain confidential and proprietary information belonging to SYRA HEALTH and certain methods of procuring and protecting SYRA HEALTH’s market and its business, including, but not limited to, SYRA HEALTH’s business plans; strategies; concepts; financial records; pricing schedules; operating procedures; client lists and requirements; contracts and agreements with clients; employee and independent contractor lists; employee and independent contractor compensation and billing rates; contracts and agreements with employees; contracts and agreements with independent contractors; identity of subcontractors; and contracts and agreements with subcontractors (the “Proprietary Information”), all of which is confidential and the sole property of SYRA HEALTH. Employee acknowledges that all of the Proprietary Information is the sole and exclusive property of SYRA HEALTH, and Employee agrees to maintain all of the Proprietary Information at all times as secret and confidential. Employee further acknowledges that the Proprietary Information, including any such Proprietary Information used or created by SYRA HEALTH in the future or created by Employee during the term of this Agreement, is a valuable, special and unique asset of SYRA HEALTH and constitutes confidential information in which SYRA HEALTH has a protectable interest. Employee expressly acknowledges that the Proprietary Information constitutes a “trade secret” as defined by the Indiana Uniform Trade Secrets Act, Indiana Code 24-2-3-1. et seq.

 

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Therefore, to avoid disputes in the future and in consideration for entry into this Agreement, Employee agrees that during the term of this Agreement, and at all times thereafter, Employee will maintain the secrecy of the Proprietary Information and will not disclose any of the Proprietary Information to any person, firm, corporation or other entity for any reason or purpose whatsoever except in the usual discharge of Employee’s duties hereunder, and even then, Employee shall limit the access of others to the Proprietary Information to such persons or entities and to such extent as is necessary for Employee to carry out his duties for SYRA HEALTH. During the term of this Agreement, and at all times thereafter, Employee promises and agrees not to use the Proprietary Information for his own benefit or the benefit of any third party.

 

10. Employee Acknowledgment: Employee acknowledges and agrees that the restrictions in Sections 8 and 9 above will not prevent Employee from obtaining gainful employment in the future in Employee’s field of expertise or cause Employee undue hardship. Employee has carefully read and considered the provisions of Sections 8 and 9, and, having done so, agrees that the restrictions set forth therein are fair and reasonable and are reasonably required for the protection of the legitimate interests of SYRA HEALTH. Employee understands that this Agreement places certain restrictions on Employee’s future employment outside SYRA HEALTH.

 

11. Tolling: In the event that Employee violates any of the covenants contained in Sections 8 or 9 of this Agreement, the time period of such covenant shall be tolled so long as such violation continues and during the course of any litigation arising under this Agreement.

 

12. Representations of Employee:

 

(a) Employee represents that Employee is not bound by any existing agreement of any type or nature which restricts Employee from accepting employment with SYRA HEALTH, or from performing the duties required of the position. Employee warrants that Employee has disclosed the existence of and is not restricted by any restrictive covenant or confidentiality agreement of any type of nature from any prior employment. Should a prior SYRA HEALTH assert that Employee is so restricted, Employee shall indemnify, defend and hold harmless SYRA HEALTH from any attorneys’ fees and costs incurred in defending these claims, as well as any and all damages that may be assessed against SYRA HEALTH.

 

(b) Employee warrants that Employee is eligible to legally work in the United States (being a citizen, documented resident alien or possessing other eligibility documentation).

 

13. Remedies: Since it is recognized that irreparable damage could result to SYRA HEALTH from any violation this Agreement, it is expressly agreed that, in addition to any and all other remedies available to it, SYRA HEALTH shall have the remedy of restraining order, injunction and such other equitable relief as may be decreed or issued by a court of competent jurisdiction to enforce the provisions of this Agreement. In the event that SYRA HEALTH takes legal action against Employee to enforce this Agreement, SYRA HEALTH shall be entitled to recover its attorneys’ fees and costs incurred in such action from Employee.

 

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14. Employee Obligations: In the event that the Employee shall owe or otherwise be indebted to SYRA HEALTH for any sum of money at the time of expiration or termination of this Agreement, Employee agrees and authorizes SYRA HEALTH to deduct such amounts from any compensation or other funds owed by SYRA HEALTH to Employee hereunder. Employee acknowledges and agrees that this constitutes an assignment of Employee’s wages for purposes of repayment of the amounts owed and that this assignment of wages (but not Employee’s obligation to repay any amounts owed) is revocable at any time upon written notice to SYRA HEALTH; however, any remaining balance owed shall be payable in full immediately upon such revocation at the election of SYRA HEALTH. Employee acknowledges that Employee has delivered a signed copy of this Agreement to SYRA HEALTH on or before employment start date.

 

15. Intellectual Property: All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Employee during the course of performing work for SYRA HEALTH or its clients shall belong exclusively to SYRA HEALTH and shall to the extent possible, be considered a work made for hire for SYRA HEALTH within the meaning of Title 17 of the United States Code, and Employee hereby assigns all rights to any deliverable that is not considered a work made for hire to SYRA HEALTH. Notwithstanding the foregoing, SYRA HEALTH acknowledges that any deliverable developed by Employee prior to the date of this Agreement or for any other party independent of any work performed by Employee under this Agreement for SYRA HEALTH remains the exclusive property of Employee or its assignee, and Employee hereby grants SYRA HEALTH a non-exclusive, paid up, perpetual, worldwide license to use, and to sublicense to its client to use, any component of such property of Employee that becomes or is part of the deliverable created by Employee hereunder.

 

16. Severability: In the event that any provision of this Agreement shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. In the event that any provision of Section 8 or 9 relating to time period shall be declared by a court of competent jurisdiction to exceed the maximum time period such court deems reasonable and enforceable, said time period shall be deemed to become and thereafter be the maximum time period of restriction that such court deems reasonable and enforceable.

 

17. Waiver: The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be constructed as a waiver of any subsequent breach.

 

18. Assignment: Each of the respective provisions of this Agreement shall be binding upon and shall inure to the benefit of each of the parties and their respective assigns, successors, heirs, shareholders, officers, directors, employees and agents. This Agreement may be transferred and assigned to any successor to all or any part of the business of SYRA HEALTH and shall be fully enforceable against Employee by any such successor. The rights and obligations of Employee under this Agreement are not assignable by Employee without prior written consent of SYRA HEALTH.

 

19. Entire Agreement: This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. This Agreement may be modified or amended only by an agreement in writing signed by or on behalf of the party against whom enforcement of any waiver, change, or modification, extension or discharge is sought.

 

20. Applicable Laws: This Agreement shall be interpreted and enforced in accordance with the laws of the State of Indiana, and the parties hereby consent exclusively to the jurisdiction of the state and local courts of Indiana and waive any objection relating to improper venue or forum non covenants to the conduct of any proceeding in any such court.

 

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21. Survival: Employee and SYRA HEALTH agree that the provisions of Sections 8 and 9 hereof shall survive the termination of this Agreement.

 

22. Consent of SYRA HEALTH: Whenever the term “consent of SYRA HEALTH” is used in this Agreement, it shall be deemed to mean the written consent of an officer of SYRA HEALTH.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year written above.

 

SYRA HEALTH,  
     
Signature: /s/ Deepika Vuppalanchi  

Printed Name: Deepika Vuppalanchi  
Title: CEO  
Date: 02-29-2022  

 

EMPLOYEE:  
     
Signature: /s/ Priya Prasad  

Printed Name: Priya Prasad  
Date: 02-29-2022  

 

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Exhibit A (Part 1)

 

1. Services to be Provided: Employee shall provide the following services

 

Line of Business : Technical/Non-Technical
Employment Category : Full Time – Salaried/Hourly  
Employee Classification : Exempt/Non-Exempt  

 

Job Title & Responsibilities: Refer Exhibit A (Part 2)

 

2. Compensation: Employee shall be compensated for Employee’s services as follows:

 

a) $110,000.00 Dollars per (One Hundred and Ten Thousand ONLY) Dollars per Annum.

 

b) SYRA HEALTH runs a semi-monthly payroll

 

Employee will get paid two times in a month that is every 1st and 16th of the month. Every 1st (pay period from 1st to 15th of the previous month) and 16th (pay period from 16th to 30th/31st of previous month) are the pay dates.

 

For example:

 

The First Paycheck for the pay period from 1st January to 15th January is due on the 1st February.

 

The second paycheck for the pay period from 16th January to 31st January is due on the 16th February

 

The Subsequent paychecks will be received by employee semi-monthly.

 

Please note: If the check date falls on a Saturday, Sunday or a national holiday, direct deposits will be posted on the following business day.

 

3. Benefits: Employee is eligible for Benefits under this Employment Agreement

 

Medical/ Vision/ Basic Life/ Dental Insurance:

 

Employee is eligible for the Insurance under this agreement as per the eligibility defined above under employment category.

 

Vacation:

 

(a) Employee shall be entitled to eighty (80) hours of paid vacation during each year of Employee’s employment hereunder.

 

(b) All vacations must be scheduled at least thirty (30) days in advance with SYRA HEALTH.

 

(c) Vacation shall be deemed to have been earned at the rate of 0.833 days per calendar month at the end of business on the last day of each calendar month of Employee’s employment hereunder. Employee can’t use advance vacation hours which have not yet been earned.

 

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If Employee’s employment terminates at a time when Employee has used more vacation hours than Employee has earned, Employee shall be required to pay back to SYRA HEALTH any compensation paid to Employee for such excess vacation hours used, and Employee expressly authorizes SYRA HEALTH to withhold any such amounts due from Employee’s final paycheck.

 

Unused vacation time is to be forfeited at the expiration of the year for which it was accrued;

 

Holiday:

 

Employee shall be entitled to six (6) days of Holidays under this agreement as per the observed days defined in the employee benefit guide.

 

4. Once Employee has signed the applicable Employee Agreement, the individual shall be required to commence performing services. If the individual does not give a minimum of 14 days’ termination notice during probation period and 30 days termination notice after probation period to SYRA HEALTH, other than due to the death or disability of such individual, then SYRA HEALTH shall hold the right to deduct the notice period pay from employee’s salary.

 

SYRA HEALTH,  
     
Signature: /s/ Deepika Vuppalanchi  

Printed Name: Deepika Vuppalanchi  
Title: CEO  
Date: 02-29-2022  

 

EMPLOYEE:

 
     
Signature: /s/ Priya Prasad  

Printed Name: Priya Prasad  
Date: 02-29-2022  

 

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Exhibit A (Part 2)

 

Line of Business : Technical/Non-Technical  
Employment Category : Full Time – Salaried/Hourly  
Employee Classification : Exempt/Non-Exempt  

 

Job Title: Chief Operating Officer

 

Responsibilities:

 

- Supervising all daily operations of the company, including IT, marketing and sales

- Preparing and presenting reports to the Chief Executive Officer

- Working closely with the Chief Executive Officer and Chief Financial Officer on all matters related to the business

- Performing employee reviews and developing corrective action plans if needed

- Developing and implementing strategies, procedures and business plans needed to enhance company growth

- Working with the executive team to set company performance goals

- Cultivating and providing opportunities for rising talent within the organization

 

SYRA HEALTH,  
     
Signature: /s/ Deepika Vuppalanchi  

Printed Name: Deepika Vuppalanchi  
Title: CEO  
Date: 02-29-2022  

 

EMPLOYEE:  
     
Signature: /s/ Priya Prasad  

Printed Name: Priya Prasad  
Date: 02-29-2022  

 

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Exhibit 10.23

 

1119 Keystone Way,
Suite 201
Carmel, IN 46032
(317) 922-1112 Tel
(888) 614-5409 Fax

 

May 27, 2022

 

Priya Prasad
25 Magnolia Road
Sharon, MA 02067

 

Subject: Increase in Salary

 

Dear Priya,

 

We are pleased to inform you that you will be receiving an increase in salary based on your request. Effective May 1st, 2022, your salary will increase to $150,000.00 (One Hundred and Fifty Thousand Dollars Only) per Annum, payable as described in the Employment Agreement.

 

We thank you for your ongoing commitment to excellence at Syra Health Corp. and congratulate you on the commitment and outstanding performance you bring to our workplace.


Sincerely,

 

/s/ Deepika Vuppalanchi
Deepika Vuppalanchi

 

1119 Keystone Way, Suite 201, Carmel, IN 46032, Phone: 317.922.1112, Fax: 888-614-5409

 

 

 

 

Exhibit 10.24

 

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Second Amendment (this “Amendment”) to the Employment Agreement is dated as of October 18, 2022 and is entered into by and between Syra Health Corp., a Delaware corporation (the “Corporation”), and Priya Prasad (the “Employee”). All capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Employment Agreement (as defined herein).

 

WHEREAS, on February 29, 2022, the Corporation entered into an employment agreement with the Employee, as amended on May 27, 2022 (as amended, the “Employment Agreement”); and

 

WHEREAS, the Corporation and the Employee desire to amend the Employment Agreement as set forth herein.

 

NOW THEREFORE, in consideration of the above, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Section 8(c) of the Employment Agreement is amended and restated in its entirety as follows:

 

(c) Intentionally Omitted.

 

2. This Amendment shall be for the benefit of and be binding upon, the parties hereto and their respective successors and assigns. Except as amended hereby, the terms and provisions of the Employment Agreement shall remain in full force and effect, and the Employment Agreement is in all respects ratified and confirmed. On and after the date of this Amendment, each reference in the Employment Agreement to the “Agreement”, “hereinafter”, “herein”, “hereinafter”, “hereunder”, “hereof”, or words of like import shall mean and be a reference to the Employment Agreement as amended by this Amendment. This Amendment shall be construed, enforced, and governed under the internal laws of the State of Indiana, without giving effect to any choice of law provision or rule of any other jurisdiction. This Amendment may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Amendment transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first indicated above.

 

  SYRA HEALTH CORP.
     
  By: /s/ Deepika Vuppalanchi
    Name: Deepika Vuppalanchi
    Title: Chief Executive Officer

 

  EMPLOYEE
   
  /s/ Priya Prasad
  Priya Prasad

 

 

 

 

 

 

Exhibit 10.25

 

AMENDMENT #1

 

CONTRACT #0000000000000000000056593

 

This is an Amendment to the Contract (the “Contract”) entered into by and between the Indiana Family and Social Services Administration, Division of Mental Health and Addiction (the “State”) and SYRA HEALTH CORP (the “Contractor”) approved by the last State signatory on October 6, 2021.

 

In consideration of the mutual undertakings and covenants hereinafter set forth, the parties agree as follows:

 

1.This Contract State Epidemiological Outcomes Workgroup (SEOW) is hereby amended to extend the term, increase funds, and update the scope of work.

 

2.The Contract is hereby extended for an additional period of two (2) years. It shall terminate on June 30, 2025.

 

3.The consideration during this extension period is $636,000.00. Total remuneration under the Contract is not to exceed $1,246,000.00. The rate details for this Amendment are set forth on Exhibit 3 which is attached hereto and incorporated herein. Exhibit 3 supplements all previous exhibits and is not meant to replace them.

 

4.The scope of work is amended to include additional funding, update project details, and update deliverables. The scope of work is outlined in Exhibit 3 which is attached hereto and incorporated herein. Exhibit 3 supplements all previous exhibits and is not meant to replace them.

 

5.The Contract is also amended by adding the following:

 

A.Minority and Women’s Business Enterprises Compliance.

 

As required by 25 IAC 5-6-2(b), the following Division certified MBE or WBE subcontractor(s) will be participating in this Contract during the extension period. This participation represents the same percentage as the original MBE and/or WBE commitment.

 

MBE/WBE   PHONE   COMPANY NAME   SCOPE OF PRODUCTS and/or SERVICES   UTILIZATION DATE   PERCENT
Minority   317-567-3905   IT Transformers   Provide reliable technology-enables solutions quickly, cost-effectively, and successfully.   07/01/2023 – 06/30/2025.   8.69
Woman   317-313-7948   Certified Fraud & Forensic Investigations   Protect the financial interests of their customers.   07/01/2023 – 06/30/2025   10.66

 

-1-
 

 

A copy of each subcontractor agreement must be submitted to the Division within thirty (30) days of the effective date of this Amendment. The subcontractor agreements may be uploaded into Pay Audit (Indiana’s subcontractor payment auditing system), emailed to MWBECompliance@idoa.IN.gov, or mailed to MWBE Compliance, 402 W. Washington Street, Indianapolis IN 46204. Failure to provide a copy of any subcontractor agreement may be deemed a violation of the rules governing MBE/WBE procurement and may result in sanctions allowable under 25 IAC 5-7-8. Requests for changes must be submitted to MWBECompliance@idoa.IN.gov for review and approval before changing the participation plan submitted in connection with this Amendment.

 

The Contractor shall report payments made to Division certified subcontractors under this Contract on a monthly basis using Pay Audit. The Contractor shall notify subcontractors that they must confirm payments received from Contractor in Pay Audit. The Pay Audit system can be accessed on the IDOA webpage at: www.in.gov/idoa/mwbe/payaudit.htm. Contractor may also be required to report Division certified subcontractor payments directly to the Division, as reasonably requested and in the format required by the Division.

 

Contractor’s failure to comply with the provisions in this clause may be considered a material breach of the Contract.

 

B.Indiana Veteran Owned Small Business Enterprises Compliance.

 

As required by 25 IAC 9-4-1(b), the following certified IVOSB subcontractors will be participating in this Contract during the extension period. This participation represents the same percentage as the original IVOSB commitment.

 

IVB   PHONE   COMPANY NAME   SCOPE OF PRODUCTS and/or SERVICES   UTILIZATION DATE   PERCENT
Veteran   317-927-7004   Bingle Research Group, Inc.   Building brands through research.   07/01/2023 – 06/30/2025   6.82

 

A copy of each subcontractor agreement must be submitted to IDOA’s IVOSB Division within thirty (30) days of the effective date of this Amendment. The subcontractor agreements may be uploaded into Pay Audit (Indiana’s subcontractor payment auditing system), emailed to IndianaVeteransPreference@idoa.IN.gov, or mailed to IDOA, 402 W. Washington Street, Room W-478, Indianapolis, IN 46204. Failure to provide a copy of any subcontractor agreement may be deemed a violation of the rules governing IVOSB procurement and may result in sanctions allowable under 25 IAC 9-5-2. Requests for changes must be submitted to IndianaVeteransPreference@idoa.IN.gov for review and approval before changing the participation plan submitted in connection with this Amendment.

 

-2-
 

 

The Contractor shall report payments made to certified IVOSB subcontractors under this Contract on a monthly basis using Pay Audit. The Contractor shall notify subcontractors that they must confirm payments received from Contractor in Pay Audit. The Pay Audit system can be accessed on the IDOA webpage at: www.in.gov/idoa/mwbe/payaudit.htm. The Contractor may also be required to report IVOSB certified subcontractor payments directly to the IVOSB Division, as reasonably requested and in the format required by the IVOSB Division.

 

The Contractor’s failure to comply with the provisions in this clause may be considered a material breach of the Contract.

 

All matters set forth in the original Contract and not affected by this Amendment shall remain in full force and effect.

 

Non-Collusion and Acceptance

 

The undersigned attests, subject to the penalties for perjury, that the undersigned is the Contractor, or that the undersigned is the properly authorized representative, agent, member or officer of the Contractor. Further, to the undersigned’s knowledge, neither the undersigned nor any other member, employee, representative, agent or officer of the Contractor, directly or indirectly, has entered into or been offered any sum of money or other consideration for the execution of this Contract other than that which appears upon the face hereof. Furthermore, if the undersigned has knowledge that a state officer, employee, or special state appointee, as those terms are defined in IC § 4-2-6-1, has a financial interest in the Contract, the Contractor attests to compliance with the disclosure requirements in IC § 4-2-6-10.5.

 

Agreement to Use Electronic Signatures

 

I agree, and it is my intent, to sign this Contract by accessing State of Indiana Supplier Portal using the secure password assigned to me and by electronically submitting this Contract to the State of Indiana. I understand that my signing and submitting this Contract in this fashion is the legal equivalent of having placed my handwritten signature on the submitted Contract and this affirmation. I understand and agree that by electronically signing and submitting this Contract in this fashion I am affirming to the truth of the information contained therein. I understand that this Contract will not become binding on the State until it has been approved by the Department of Administration, the State Budget Agency, and the Office of the Attorney General, which approvals will be posted on the Active Contracts Database: https://secure.in.gov/apps/idoa/contractsearch/

 

-3-
 

 

In Witness Whereof, the Contractor and the State have, through their duly authorized representatives, entered into this Contract. The parties, having read and understood the foregoing terms of this Contract, do by their respective signatures dated below agree to the terms thereof.

 

SYRA HEALTH CORP   Indiana Family and Social Services Administration, Division of Mental Health and Addiction
     
By: /s/ Deepika Vuppalanchi   By: /s/ Jay Chaudhary
Title: Chief Executive Offier   Title: Director
Date:

4/25/2023 | 07:18 PDF

  Date: 4/25/2023 | 07:19 PDT

 

Electronically Approved by: Indiana Office of Technology

 

By: _________________________ (for)

Tracy Barnes, Chief Information Officer

 

Electronically Approved by: Department of Administration

 

By:_________________________ (for)

Rebecca Holwerda, Commissioner

     

Electronically Approved by: State Budget Agency

 

 

By: _________________________ (for)

Zachary Q. Jackson, Director

 

Electronically Approved as to Form and Legality: Office of the Attorney General

 

By: _________________________ (for)

Theodore E. Rokita, Attorney General

 

-4-
 

 

Exhibit 3

Supplemental Scope of Work

Contractor: Syra Health Corp

 

Syra Health Corp, (Contractor) shall coordinate the work of the State Epidemiological Outcomes Workgroup (SEOW) and support data-driven decision-making regarding prevention efforts across State agencies and bodies, including but not limited to, the Division of Mental Health and Addiction (DMHA). The SEOW is a critical component to enable States to allocate limited prevention funds; report on NOMs; and to address the Substance Abuse and Mental Health Services Administration’s Strategic Prevention Framework that was implemented by Center for Substance Abuse Prevention.

 

This amendment extends the contract term for twenty-four (24) months and does not replace the existing contract or scope of work. This Scope of Work outlines the project activities to be completed during the extension period of State Fiscal Year 2024 (July 1, 2023 – June 30, 2024) and State Fiscal Year 2025 (July 1, 2024 – June 30, 2025).

 

This project is supported entirely through federal funds. This project is funded through the Substance Abuse Prevention and Treatment Block Grant funds, in the amount of $636,000.00 (SFY24 Total: $318,000.00 and SFY25 Total: $318,000.00)

 

Duties, Requirements and Deliverable Descriptions

 

SEOW Monthly Progress Reports

 

The Contractor shall submit a monthly progress report detailing the work and activities completed on behalf of the SEOW. This may include but is not limited to: planning for meetings and consultations; data review, mining or analysis; development of content for reports; regional prevention system evaluation planning, planning for symposium.

 

The Contractor shall submit the Progress Report no later than 15 days following the last day of the month.

 

SEOW meetings

 

The Contractor shall hold at least five meetings annually, facilitate discussion, and work with members appointed by the State in interpreting data and reports.

 

The Contractor shall provide biennial recommendations for suggested improvements for the functioning of the SEOW group and for the enhancement of reported data. The Contractor is expected to provide consultation with DMHA on data interpretation and data application. The Contractor shall assist in the preparation of summary documents regarding decisions and recommendations made to the Division of Mental Health and Addiction.

 

The Contractor shall submit the meeting agenda, attendance roster, and summary of meeting notes and recommendations no later than 30 days after the meeting date.

 

-5-
 

 

Data Portal / Tableau support

 

The Contractor shall support the DMHA in providing a user-friendly data portal. The Contractor shall provide updated data on an annual basis. The data portal will be hosted by DMHA.

 

The Contractor shall submit the updated data by June 30 of each state fiscal year.

 

State level consultations

 

The Contractor shall provide two consultations annually as requested by DMHA to aide in strategic planning efforts. State may request up to 2 more consultations free of charge if necessary.

 

The Contractor shall submit a summary of each state level consultation no later than 30 days after the completion of the consultation.

 

Local level consultations

 

The Contractor shall provide consultation, planning, technical assistance, and/or presentation to Local Epidemiological Outcomes Workgroups (LEOW’s), members of the DMHA Regional System for the Prevention of Substance Misuse, and/or other prevention providers at the county or regional level as requested by DMHA. It is expected that the Contractor will provide at least two but no more than four local level consultations annually as designated by the Division of Mental Health and Addiction.

 

The Contractor shall submit a summary of local level consultations by June 30 of each state fiscal year.

 

Prevention priorities

 

The Contractor shall provide guidance to DMHA on the identification of priority areas to be included in the Prevention Strategic Plan. The Contractor shall review progress on prevention priorities and findings will be reported in a brief annually.

 

The Contractor shall submit the brief no later than June 30 of each fiscal year.

 

Annual epidemiological report draft

 

The Contractor shall produce drafts of each chapter of the annual epidemiological report and share with the SEOW members for review and feedback.

 

The Contractor shall submit drafts by May 1 of each fiscal year.

 

Annual epidemiological report

 

The Contractor shall produce the final version of the annual epidemiological report for publication and dissemination, including requested hard and electronic versions for dissemination by DMHA and other SEOW agencies (approximately 50 hard/paper copies shall be provided).

 

The Contractor shall submit the final report by June 30 of each fiscal year.

 

-6-
 

 

Dissemination list for annual epidemiological report

 

The Contractor shall provide a list of dissemination methods and recipient agencies for the final annual epidemiological report.

 

The Contractor shall submit the dissemination list by June 30 of each fiscal year.

 

Drug fact sheets

 

The Contractor shall produce a summary brief of the annual epidemiological report, including requested hard and electronic versions for dissemination by DMHA and other SEOW agencies (approximately 50 hard/paper copies shall be provided).

 

The Contractor shall produce the summary brief by June 30 of each state fiscal year.

 

Special topics briefs

 

The Contractor shall produce four (4) briefs on special topics that target specific subject matters, populations, or geographic areas within Indiana. Topics will be selected in consultation with other SEOW members.

 

The Contractor shall produce the briefs, including requested hard and electronic versions for dissemination by DMHA and other SEOW agencies (approximately 50 hard/paper copies shall be provided), by June 30 of each state fiscal year.

 

Presentation to Mental Health and Addiction Policy Advisory Council

 

The Contractor shall provide a presentation of the SEOW findings and facilitate discussion around their use to the Mental Health and Addiction Policy Advisory Council (MHAPAC) annually.

 

The Contractor shall submit any presentation materials (i.e., slide deck, handouts) no later than 30 days after the presentation.

 

SEOW symposium

 

The Contractor shall convene an annual symposium for members of the SEOW, MHAPAC, and the public that will share data, discuss its applications, and highlight the work of the SEOW.

 

The Contractor will be responsible for all logistical considerations of the symposium, including but not limited to: agenda, content, speakers, registration, surveys, and event venue.

 

The Contractor shall submit a summary of the symposium, including the agenda, number of attendees, and results of any surveys or recommendations. This shall be submitted no later than 45 days after the symposium.

 

Regional Prevention System Evaluation Plan

 

The contractor shall work with a sub-contractor to evaluate the DMHA Regional System for the Prevention of Substance Misuse. The contractor and sub-contractor shall consult with DMHA to identify key outcomes and evaluation measures and develop an evaluation plan. The contractor shall submit the draft of the plan to DMHA for review prior to finalization.

 

-7-
 

 

The Contractor shall review and revise the evaluation plan as needed and in consultation with DMHA.

 

The contractor shall submit the evaluation plan no later than August 31, 2023.

 

Regional Prevention System Evaluation Progress Summary

 

The contractor shall submit quarterly progress summaries, detailing the evaluation efforts and activities for that period.

 

The contractor shall submit the quarterly progress summaries no later than 15 days following the last day of each quarter.

 

Regional Prevention System Evaluation Report

 

The contractor shall prepare a final evaluation report summarizing the evaluation process, findings, and recommendations. The contractor shall review the evaluation report with DMHA.

 

The contractor shall submit the evaluation report no later than June 30, 2025.

 

Other requirements

 

The Contractor shall assure that the SEOW maintains a surveillance program consistent with the federal guidelines regarding the National Outcome Measures (NOMs) initiative. Substance abuse and mental health NOMs are drawn from many types of data: substance use and mental illness incidence and prevalence, related consequence data, and program process and output data. For more information on the NOMs please refer to SAMHSA Performance Measurement Tools: http://www.samhsa.gov/grants/tools.aspx

 

The Contractor shall employ professional staff with statistical and epidemiological expertise and develop a comprehensive and systematic strategy for monitoring substance use and abuse across the state.

 

The Contractor shall assure that all data is stored on secure computers and servers in accordance with HIPAA and other state and federal regulations governing the protection of human subjects in research.

 

-8-
 

 

Deliverables Table

 

Deliverables (See Deliverable Description above)   Unit   Number of Units   Payment
SEOW Monthly Progress Report   Report   24   Monthly: $21,000 Total: $504,000
             
SEOW meetings   Meeting Summary   10   Per meeting: $1,000 Total: $10,000
             
Data portal/tableau support   Data Submission   2   Per year: $5,000 Total: $10,000
             
State level consultations   Summary Report (2 per fiscal year)   4   Per Report: $2,000 Total: $8,000
             
Local level consultations   Summary Report   2   Per Year: $4,000 Total: $8,000
             
Prevention Priorities   Report Brief   2   Per Year: $6,000 Total: $12,000
             
Annual epidemiological report draft   Draft Report   2   Per Year: $5,000 Total: $10,000
             
Annual epidemiological report   Report   2   Per Year: $5,000 Total: $10,000
             
Dissemination list for annual epidemiological report   List   2   Per Year: $1,000 Total: $2,000
             
Drug fact sheets   Report Brief   2   Per year: $1,000 Total: $2,000
             
Special topics briefs   Report Brief (4 per fiscal year)   8   Per brief: $2000 Total: $16,000
             
Presentation to Mental Health and Addiction Policy Advisory Council   Summary Report   2   Per Year: $1,000 Total: $2,000
             
SEOW Symposium   Summary Report   2   Per Year: $15,000 Total: $30,000
             
Regional Prevention System Evaluation Plan   Plan   1   Total: $2,000
             
Regional Prevention System Evaluation Progress Report   Quarterly Report   8   Quarterly: $1,000 Total: $8,000
             
Regional Prevention System Evaluation Report   Report   1   Total: $2,000

 

Total SFY24: $318,000.00

Total SFY25: $318,000.00

Total Amount: $636,000.00

 

Funding Summary

 

Funding Source  FAIN   CFDA   Amount 
SAPT Block Grant   B08TI083447    93.959   $636,000 

 

-9-

 

Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the inclusion in this Registration Statement on Form S-1 of our report dated May 3, 2023, of SYRA HEALTH CORP. relating to the audits of the financial statements for the periods ended December 31, 2022 and 2021 and the reference to our firm under the caption “Experts” in the Registration Statement.

 

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

 

May 3, 2023

 

 

 

Exhibit 99.1

 

CONSENT OF DIRECTOR NOMINEE

 

Syra Health Corp. (the “Company”) is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering (“IPO”) of its Class A common stock. In connection with the IPO, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of the Company in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

  /s/ Sherron Rogers
  Name: Sherron Rogers
  Date: January 5, 2023

 

 

 

 

 

Exhibit 99.2

 

CONSENT OF DIRECTOR NOMINEE

 

Syra Health Corp. (the “Company”) is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering (“IPO”) of its Class A common stock. In connection with the IPO, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of the Company in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

  /s/ Andrew M. Dahlem
  Name: Andrew M. Dahlem
  Date: January 5, 2023

 

 

 

 

 

Exhibit 99.3

 

CONSENT OF DIRECTOR NOMINEE

 

Syra Health Corp. (the “Company”) is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering (“IPO”) of its Class A common stock. In connection with the IPO, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of the Company in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

  /s/ Vijayapal R. Reddy
  Name: Vijayapal R. Reddy
  Date: January 5, 2023

 

 

 

 

 

Exhibit 99.4

 

CONSENT OF DIRECTOR NOMINEE

 

Syra Health Corp. (the “Company”) is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering (“IPO”) of its Class A common stock. In connection with the IPO, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of the Company in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

  /s/ Ketan Paranjape
  Name: Ketan Paranjape
  Date: January 5, 2023

 

 

 

 

 

Exhibit 99.5

 

CONSENT OF DIRECTOR NOMINEE

 

Syra Health Corp. (the “Company”) is filing a Registration Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), in connection with the initial public offering (“IPO”) of its Class A common stock. In connection with the IPO, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of the Company in the Registration Statement, as may be amended from time to time. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

 

  /s/ Avutu S. Reddy
  Name: Avutu S. Reddy
  Date: January 5, 2023