Alaunos Therapeutics, Inc 8-K, filed Oct 13, 2026
Alaunos Therapeutics, Inc. (TCRT)
About this 8-K
Alaunos Therapeutics, Inc filed this 8-K on October 13, 2026.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 5.02: Director or officer change, or executive pay
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 – Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On October 13, 2026, Alaunos Therapeutics, Inc., a Delaware corporation (the “Company” or “Alaunos”), acquired Velaris Therapeutics, Inc., a Delaware corporation (“Velaris”), in accordance with the terms of the Agreement and Plan of Merger, dated October 13, 2026 (the “Merger Agreement”), by and among the Company, Valkyrie Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), Valkyrie Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Second Merger Sub”), and Velaris. Pursuant to the Merger Agreement, First Merger Sub merged with and into Velaris, pursuant to which Velaris was the surviving corporation and became a wholly owned subsidiary of the Company (the “First Merger”). Immediately following the First Merger, Velaris merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (together with the First Merger, the “Merger”). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
Under the terms of the Merger Agreement, at the closing of the Merger (the “Closing”), the Company issued to the stockholders of Velaris (i) 105,286 shares of Series B Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) (as described below) and (ii) 33,054 shares of Series C Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) (as described below), each share of which is, in each case, convertible into 1,000 shares of the common stock of the Company, par value $0.001 per share (the “Common Stock”), subject to certain conditions described below. In addition, shares of Series C Preferred Stock issued in respect of outstanding unvested restricted shares of Velaris common stock remain subject to the same vesting terms, and each outstanding option to purchase shares of Velaris common stock was assumed by the Company and converted into an option to purchase shares of Common Stock, with the number of shares and exercise price adjusted based on the exchange ratio in the Merger Agreement.
Reference is made to the discussion of the Series B Preferred Stock and Series C Preferred Stock in Item 5.03 of this Current Report on Form 8-K, which is incorporated into this Item 1.01 by reference.
Pursuant to the Merger Agreement and the Purchase Agreement (as defined below), the Company has agreed to hold a stockholders’ meeting to submit the following matters to its stockholders for their consideration: (i) the approval of the conversion of the Series B Preferred Stock and the Series C Preferred Stock into shares of Common Stock in accordance with the listing rules of The Nasdaq Stock Market LLC (“Nasdaq”) (the “Conversion Proposal”), (ii) the approval of an amendment to the certificate of incorporation of the Company to (A) increase the number of authorized shares of Common Stock to a number sufficient to permit the conversion in full of the Series B Preferred Stock and the Series C Preferred Stock (the “Authorized Share Increase”), (B) change the name of the Company to “Velaris Therapeutics, Inc.”, (C) effect the redomestication of the Company, (D) effect a reverse stock split of the outstanding shares of Common Stock at a ratio to be determined by the Company’s board of directors with the consent of the Lead Investor (as defined below), and (E) make such other changes as are mutually agreeable to the Company and Velaris (the “Charter Amendment Proposal”), and (iii) the approval of a new equity incentive plan (the “Equity Plan Proposal”) (together with the Conversion Proposal and the Charter Amendment Proposal, the “Meeting Proposals”). In connection with these matters, the Company intends to file with the Securities and Exchange Commission (the “SEC”) a proxy statement and other relevant materials.
The Board of Directors of the Company (the “Board”) approved the Merger Agreement and the related transactions, and the consummation of the Merger did not require the approval of the Company stockholders.
The Merger Agreement also provides that, from the Closing until the earliest of the conversion of all outstanding shares of Series B Preferred Stock following stockholder approval of the Conversion Proposal, twelve months following the Closing and the date on which the lead investor in the Financing (the “Lead Investor”) otherwise agrees, the Company will conduct the development of Velaris’s programs in all material respects in accordance with an agreed development plan and operating budget and will not materially deviate from such plan without the consent of the Lead Investor, subject to certain exceptions.
The Merger Agreement further provides that, effective upon stockholder approval of the Conversion Proposal, three directors of the Company will resign from the Board and designees of the Lead Investor will be appointed to fill the resulting vacancies, such that the director designated by Velaris and the designees of the Lead Investor will constitute four of the five members of the Board. The Merger Agreement also requires that any redomestication of the Company provide that each director elected by the holders of the Series B Preferred Stock will be entitled to three votes on each matter presented to the Board.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company or Velaris. The Merger Agreement contains representations, warranties and covenants that the Company and Velaris made to each other as of specific dates. The assertions embodied in those representations, warranties and covenants were made solely for purposes of the Merger Agreement between the Company and Velaris and may be subject to important qualifications and limitations agreed to by the Company and Velaris in connection with negotiating its terms, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to investors or securityholders, or may have been used for the purpose of allocating risk between the Company and Velaris rather than establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. For the foregoing reasons, no person should rely on the representations and warranties as statements of factual information at the time they were made or otherwise.
Support Agreements
In connection with the execution of the Merger Agreement, the Company entered into stockholder support agreements (the “Support Agreements”) with certain of the Company’s officers and directors (together with affiliated entities). The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of the Company’s capital stock owned by such stockholder in favor of the Meeting Proposals at the Company stockholders’ meeting to be held in connection therewith, and has granted the Company an irrevocable proxy to vote such shares in accordance therewith. The Support Agreements terminate upon the earliest of nine months following the date thereof, the approval of the Meeting Proposals and the mutual written agreement of the parties thereto.
The foregoing description of the Support Agreements does not purport to be complete and is qualified in its entirety by reference to the form of the Support Agreement, which is provided as Exhibit C to the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
Lock-up Agreements
Concurrently and in connection with the execution of the Merger Agreement, certain of the executive officers and directors of Velaris and the Company who continue to serve following the Closing entered into lock-up agreements with the Company, pursuant to which each such individual will be subject to a 180-day lock-up on the sale or transfer of shares of Common Stock and preferred stock of the Company held by such individual at the Closing, including those shares received by Velaris stockholders in the Merger, subject to customary exceptions (the “Lock-up Agreements”). The lock-up period will be extended if the resale registration statement described below has not been declared effective by the SEC prior to the end of such 180-day period.
The foregoing description of the Lock-up Agreements does not purport to be complete and is qualified in its entirety by reference to the form of the Lock-up Agreement, which is provided as Exhibit A to the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
Private Placement and Securities Purchase Agreement
On October 13, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers named therein (the “Investors”).
Pursuant to the Purchase Agreement, the Company agreed to sell an aggregate of (i) 687,789 shares of Common Stock at a price of $1.4357 per share and (ii) 243,063 shares of Series C Preferred Stock at a price of $1,435.70 per share (together, the “PIPE Securities”), for an aggregate purchase price of approximately $350 million (collectively, the “Financing”). Each share of Series C Preferred Stock is convertible into 1,000 shares of Common Stock, as described below. The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series C Preferred Stock are set forth in the Certificate of Designation of Series C Preferred Stock (as defined below).
The Company intends to use the net proceeds from the Financing to fund the research and development of Velaris’s programs and for working capital and general corporate purposes, and has agreed in the PIPE Letter Agreement (as defined below) to certain restrictions on the use of such proceeds.
The closing of the Financing is expected to occur on October 14, 2026 (the “Financing Closing Date”), subject to the satisfaction of customary closing conditions.
The foregoing summary of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
PIPE Letter Agreement
In connection with the Purchase Agreement, the Company entered into a letter agreement with the Lead Investor (the “PIPE Letter Agreement”), pursuant to which the Company agreed to comply with its obligations under the Merger Agreement relating to the reconstitution of the Board following stockholder approval of the Conversion Proposal described above, and not to amend those obligations, or the director election rights of the Series B Preferred Stock, or take any action that would reasonably be expected to prevent, impede or delay such reconstitution, without the consent of the Lead Investor. The PIPE Letter Agreement also provides that, without the consent of the Lead Investor, the Company will not use the proceeds of the Financing to fund the Company’s legacy business in excess of agreed amounts, to redeem or repurchase shares of its capital stock or to repay indebtedness owed to its directors, officers or affiliates.
The foregoing description of the PIPE Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the PIPE Letter Agreement, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
Registration Rights Agreement
In connection with the closing of the Financing, the Company will enter into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investors, which former Velaris stockholders who received shares in the Merger may also join. Pursuant to the Registration Rights Agreement, the Company is required to prepare and file a resale registration statement with the SEC within 30 calendar days following the Financing Closing Date. The Company shall use its commercially reasonable efforts to cause this registration statement to be declared effective by the SEC within five business days of the date the Company is notified by the SEC that the registration statement will not be reviewed (or within 60 calendar days following the initial filing of the registration statement if the SEC reviews the registration statement).
The Company has also agreed to, among other things, indemnify the Investors, their officers, directors, members, employees, partners, managers, stockholders, affiliates, investment advisors and agents under the registration statement from certain liabilities and pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to the Company’s obligations under the Registration Rights Agreement.
The Financing is exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), as a transaction by an issuer not involving a public offering, and Rule 506 of Regulation D promulgated thereunder. The Investors are acquiring the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends will be affixed to the securities issued in this transaction.
The foregoing summary of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Registration Rights Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K.
Share Repurchase and Voting Agreement
Concurrently with the execution of the Merger Agreement, the Company entered into a Share Repurchase and Voting Agreement (the “Repurchase Agreement”) with the holders of all of its outstanding Series A-1 Convertible Preferred Stock and Series A-2 Convertible Preferred Stock (together, the “Existing Preferred Stock”), including Robert W. Postma and Jaime W. Vieser, each a director of the Company, and an entity affiliated with Mr. Postma. Pursuant to the Repurchase Agreement, among other things, (i) such holders agreed to convert their shares of Existing Preferred Stock into shares of Common Stock prior to the record date for the stockholders’ meeting described above, to the extent permitted by the beneficial ownership limitations applicable thereto, (ii) such holders agreed to vote all of their shares of the Company’s capital stock in favor of the Meeting Proposals, and (iii) following stockholder approval of the Conversion Proposal, the Company will repurchase all such shares of Common Stock and any remaining shares of Existing Preferred Stock for an aggregate cash amount equal to the liquidation value of the Existing Preferred Stock plus accrued dividends thereon (approximately $1.6 million if stockholder approval is obtained prior to February 2027). Such holders also consented to the Merger and the related transactions and waived certain rights under the certificates of designation of the Existing Preferred Stock. The Repurchase Agreement was approved by a committee of disinterested directors of the Board.
The foregoing summary of the Repurchase Agreement does not purport to be complete and is qualified in its entirety by reference to the form of Repurchase Agreement, which is filed as Exhibit 10.3 to this Current Report on Form 8-K.
Discovery and Option Agreement
Prior to the effective time of the Merger, Velaris entered into a Fusion Protein Discovery and Option Agreement (the “ADOA”) with Paragon Laboratories, Inc. (“Paragon”). Pursuant to the ADOA, Paragon will conduct research programs, overseen by a joint development committee of representatives of each party, directed to the discovery and development of Fc fusion protein candidates, including programs directed to ActRIIA and ActRIIB that were initiated under a prior research letter agreement between Velaris and Paragon, and a program directed to a BMP9/10-sparing ActRIIA fusion protein. The parties may agree to conduct additional research programs under the ADOA. In addition, under the research letter agreement between Velaris and Paragon, as amended on October 13, 2026, Velaris holds options with respect to three research programs directed to antibody candidates, including an anti-PDGF-B monoclonal antibody and a bispecific molecule combining an ActRIIA fusion protein with an anti-PDGF-B antibody, which the parties expect to document in a separate discovery and option agreement.
Velaris has an exclusive option, on a program-by-program basis and exercisable until a specified period following the delivery of the final research deliverables for the applicable program, to obtain an exclusive, worldwide license to develop, manufacture and commercialize the fusion proteins arising from such program, pursuant to a license agreement to be entered into on terms set forth in the ADOA. In consideration for Paragon’s research services, Velaris will pay Paragon a one-time research initiation fee for certain programs, which will become payable following the completion of a qualified financing, and will reimburse Paragon for its development costs, consisting of third-party costs (including a mark-up on certain costs) and a monthly fee for Paragon’s personnel and resources. Velaris may also engage Paragon to perform chemistry, manufacturing and controls activities for a program on a fixed-fee basis. Under each license agreement, Velaris will be obligated to make milestone payments upon the achievement of specified development, regulatory and commercial milestones and to pay a single-digit percentage royalty on net sales of licensed products, subject to customary reductions, until the later of the expiration of specified patent rights and the twelfth anniversary of first commercial sale, on a product-by-product and country-by-country basis. Paragon will also be subject to certain exclusivity obligations with respect to the licensed fusion proteins for a period following the execution of each license agreement.
In addition, Velaris (or, at Paragon’s election, the Company, as Velaris’s parent) will grant Paragon two warrants, each to purchase a number of shares of Common Stock equal to 1.00% of the Company’s outstanding shares on a fully diluted basis (including the shares issued or issuable in the Merger and the Financing), at an exercise price equal to fair market value on the date of grant and with a term of ten years. The first warrant is to be granted 120 days following the Closing and the second warrant twelve months thereafter.
Each license agreement under the ADOA will permit Paragon, in its sole discretion, to terminate the license, with the licensed rights reverting to Paragon, upon the occurrence of certain events, including if (i) the Company’s stockholders’ equity, as determined in accordance with the Nasdaq listing rules, does not exceed $200 million as of the end of the second full fiscal quarter following the Closing, or the Company fails to timely file the periodic report including such balance sheet, or (ii) the Company fails to deliver freely tradeable shares of Common Stock within 120 days following an exercise of the warrants held by Paragon. Paragon may exercise this right within 180 days following the occurrence of such an event, and its right is not affected by any subsequent cure. Until Paragon’s reversion right expires, Velaris may not, without Paragon’s consent, sublicense (other than to contractors), assign or grant a lien on the licensed rights, and upon any reversion Velaris must transfer to Paragon the related data, regulatory filings and assignable third-party agreements and grant Paragon an exclusive license under related Velaris intellectual property, in each case without further consideration.
Velaris may terminate the ADOA or any research program for convenience upon 30 days’ prior written notice, subject to payment of accrued costs and non-cancellable obligations. Each party may terminate the ADOA for the other party’s uncured material breach or insolvency, and Paragon may terminate a research program if it is suspended or delayed for four consecutive months as a result of Velaris’s action or inaction. The ADOA also contains customary provisions relating to intellectual property, confidentiality and indemnification.
The foregoing summary of the ADOA does not purport to be complete and is subject to, and qualified in its entirety by, the ADOA, a copy of which will be filed, with certain confidential portions omitted, as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
Item 2.01 – Completion of Acquisition or Disposition of Assets.
On October 13, 2026, the Company completed its business combination with Velaris. The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
Item 3.02 – Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. The PIPE Securities were offered and sold in transactions exempt from registration under the Securities Act, in reliance on Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder. Each of the Investors represented that it was an “accredited investor,” as defined in Regulation
D, and is acquiring the PIPE Securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The PIPE Securities have not been registered under the Securities Act and such PIPE Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. Neither this Current Report on Form 8-K nor any of the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy shares of Common Stock or any other securities of the Company.
Pursuant to the Merger Agreement, the Company issued shares of Series B Preferred Stock and Series C Preferred Stock to the former stockholders of Velaris. The information contained in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. Such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.
Item 5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Directors
In accordance with the Merger Agreement, on October 13, 2026, effective immediately after the effective time of the Second Merger, Peter Harwin was appointed to the Board as a director.
Peter Harwin (Age 40). Mr. Harwin is a Founding Partner at Fairmount Funds Management LLC (“Fairmount”), a healthcare investment firm he co-founded in April 2016. Prior to Fairmount, he was a member of the investment team at Boxer Capital, LLC. Mr. Harwin also serves as chairman of the board of directors of Cogent Biosciences, Inc. (Nasdaq: COGT), Crescent Biopharma, Inc. (Nasdaq: CBIO) and Damora Therapeutics, Inc. (Nasdaq: DMRA), and is a member of the board of directors of Oruka Therapeutics, Inc. (Nasdaq: ORKA). Mr. Harwin previously served as a director of Apogee Therapeutics, Inc. (Nasdaq: APGE) from June 2023 to May 2026, Spyre Therapeutics, Inc. (Nasdaq: SYRE) from June 2023 to May 2026 and Viridian Therapeutics, Inc. (Nasdaq: VRDN) from October 2020 to March 2025. He received a B.B.A. from Emory University.
There are no arrangements or understandings between Mr. Harwin and any other person pursuant to which he was appointed as a director of the Company, other than the Merger Agreement. Funds affiliated with Fairmount, including the Lead Investor, received 105,286 shares of Series B Preferred Stock in the Merger, agreed to purchase 687,789 shares of Common Stock and 68,964 shares of Series C Preferred Stock in the Financing for an aggregate purchase price of approximately $100.0 million, and are party to the PIPE Letter Agreement. Mr. Harwin is also a director of Paragon, the counterparty to the ADOA, which, together with an affiliate, received an aggregate of 26,322 shares of Series C Preferred Stock in the Merger. Each of the foregoing is described in Item 1.01 of this Current Report on Form 8-K, which is incorporated herein by reference. Except as described herein, Mr. Harwin is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Mr. Harwin will be compensated as a director in accordance with the Company’s non-employee director compensation program described in the Company’s Definitive Proxy Statement on Schedule 14A for its 2025 Annual Meeting of Stockholders.
In connection with the Closing, Mr. Harwin was appointed to the Nominating and Corporate Governance Committee of the Board.
Indemnification Agreements
In connection with Mr. Harwin’s appointment as a director, the Company expects to enter into its standard form of indemnification agreement for directors with Mr. Harwin.
Resignation of Directors
In accordance with the Merger Agreement, on October 13, 2026, each of Robert W. Postma, Michael A. Jerman and Jaime W. Vieser delivered resignations that will become effective automatically only upon, and subject to, stockholder approval of the Conversion Proposal. None of the resignations were as a result of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Retention Bonuses
In connection with the Merger, the Board approved, and the Company entered into, a retention bonus letter agreement with Holger Weis, the Company’s Chief Executive Officer, and an retention agreement and an amendment to its consulting agreement with Ferdinand Groenewald, the Company’s Vice President, Finance (together, the “Retention Agreements”), in lieu of any change of control, severance or similar payments or benefits that would otherwise have been payable in connection with the Merger. Pursuant to his letter agreement, Mr. Weis is eligible to receive a one-time cash retention bonus of $206,250 if (i) the Company’s development of ALN1003 is completed
by July 30, 2027, as determined by the Board in good faith, and (ii) Mr. Weis remains continuously employed by the Company through such date. Pursuant to his amended consulting agreement, Mr. Groenewald is eligible to receive a one-time cash retention bonus of $90,000 if he continues to provide services to the Company through the filing of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2026 and its Quarterly Report on Form 10-Q for the quarter ending March 31, 2027. If earned, each retention bonus will be paid in a lump sum within 30 days following the applicable retention date. If the executive’s employment or services are terminated by the Company without cause prior to the applicable retention date, the retention bonus will be paid, subject to the executive’s execution and non-revocation of a general release of claims; otherwise, the retention bonus will be forfeited if the executive’s employment or services end prior to the applicable retention date. In addition, on October 12, 2026, the compensation committee of the Board approved the grant to Mr. Weis and Mr. Groenewald of options to purchase 50,000 and 10,000 shares of Common Stock, respectively, at an exercise price of $1.4357 per share, which options will vest on the same terms as the applicable retention bonus.
The foregoing summaries of the Retention Agreements do not purport to be complete, and are subject to, and qualified in their entirety by, such agreements, copies of which will be filed with the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2026.
Item 5.03 – Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On October 13, 2026, the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of the Series B Preferred Stock (the “Certificate of Designation of Series B Preferred Stock”) and a Certificate of Designation of Preferences, Rights and Limitations of the Series C Preferred Stock (the “Certificate of Designation of Series C Preferred Stock,” and together with the Certificate of Designation of Series B Preferred Stock, the “Certificates of Designation”) in connection with the Merger and the Financing referenced in Item 1.01 above. The Certificates of Designation provide for the issuance of shares of the Company’s Series B Preferred Stock and Series C Preferred Stock, as applicable.
Holders of Series B Preferred Stock and Series C Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock and Series C Preferred Stock, as applicable, equal to, on an as-if-converted-to-Common-Stock basis, and in the same form as dividends actually paid on shares of the Common Stock. Except as otherwise required by law, the Series B Preferred Stock and Series C Preferred Stock do not have voting rights. However, as long as any shares of Series B Preferred Stock or Series C Preferred Stock, as applicable, are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of Series B Preferred Stock or Series C Preferred Stock, as applicable, (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or Series C Preferred Stock, as applicable, (b) alter or amend the applicable Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series B Preferred Stock or Series C Preferred Stock, as applicable, (d) issue further shares of Series B Preferred Stock or Series C Preferred Stock, as applicable, or increase or decrease (other than by conversion) the number of authorized shares of Series B Preferred Stock or Series C Preferred Stock, as applicable, (e) prior to stockholder approval of the Conversion Proposal and the Authorized Share Increase, amend, waive or modify the Merger Agreement in any manner that would be reasonably likely to prevent, impede or materially delay such approval, or (f) enter into any agreement with respect to any of the foregoing or, for the Series B Preferred Stock, with respect to the following. Furthermore, as long as at least 30% of the originally issued Series B Preferred Stock remains issued and outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of Series B Preferred Stock, (i) consummate a Fundamental Transaction (as defined in the Certificate of Designation of Series B Preferred Stock) or any merger or consolidation of the Company or other business combination in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, (ii) increase or decrease the size of the Board, (iii) without the unanimous approval of the Board, adopt, amend or repeal any written delegation of authority, policy, corporate authority matrix or similar document, framework or schedule, (iv) terminate or replace the Company’s independent registered accounting firm, independent compensation consultant or corporate counsel, (v) use the proceeds of the Financing in violation of certain restrictions, or take any action that would constitute a material deviation from the agreed operating plan, or (vi) enter into any agreement with respect to any of the foregoing. In addition, from and after stockholder approval of the Conversion Proposal, for so long as at least 30% of the originally issued Series B Preferred Stock remains outstanding, the holders of the Series B Preferred Stock, voting as a separate class, will be entitled to elect two directors of the Company. The Series B Preferred Stock and Series C Preferred Stock do not have a preference upon any liquidation, dissolution or winding-up of the Company.
Following stockholder approval of the Conversion Proposal and the Authorized Share Increase, each share of Series B Preferred Stock will be convertible, at the option of the holder, into 1,000 shares of Common Stock and each share of Series C Preferred Stock will automatically convert into 1,000 shares of Common Stock, each subject to certain limitations, including that a holder of Series B Preferred Stock or Series C Preferred Stock is prohibited from converting shares of Series B Preferred Stock or Series C Preferred Stock, as applicable, into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 0% and 19.99%) of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion.
If stockholder approval of the Conversion Proposal and the Authorized Share Increase has not been obtained, then beginning six months following the initial issuance of the Series B Preferred Stock or Series C Preferred Stock, as applicable, a holder may require the Company to settle a conversion in cash in an amount equal to the fair value (as defined in the applicable Certificate of Designation, by reference to the trading price of the Common Stock) of the shares of Common Stock that would otherwise have been issuable upon such conversion.
The foregoing descriptions of the Series B Preferred Stock and Series C Preferred Stock do not purport to be complete and are qualified in their entirety by reference to the Certificates of Designation, copies of which are filed as Exhibit 3.1 and Exhibit 3.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 7.01 – Regulation FD Disclosure.
On October 13, 2026, the Company made available a presentation to be used with investors to discuss the Merger and the Financing. A copy of the presentation is furnished as Exhibit 99.1 to this Current Report on Form 8-K. On October 13, 2026, the Company also issued a press release announcing the Merger and the Financing. A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in Item 7.01 of this Current Report on Form 8-K, including the information in the presentation and press release attached as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K, is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information in Item 7.01 of this Current Report on Form 8-K, including the information in the presentation and press release attached as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K, shall not be deemed to be incorporated by reference in the filings of the Company under the Securities Act of 1933, as amended.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: the closing of the Financing, if at all, and the anticipated use of proceeds therefrom; stockholder approval of the Meeting Proposals, including the conversion rights of the Series B Preferred Stock and Series C Preferred Stock; the filing of a resale registration statement pursuant to the Registration Rights Agreement and the timing thereof; the development of Velaris’s programs and the Company’s operating plan; the repurchase of the Existing Preferred Stock; and the anticipated activities and obligations under the ADOA, including the grant of warrants thereunder and the potential reversion of licensed rights. The use of words such as, but not limited to, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” and similar words or expressions are intended to identify forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on the Company’s current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies, its clinical results and other future conditions. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements. The Company may not actually achieve the forecasts disclosed in our forward-looking statements, and you should not place undue reliance on forward-looking statements. Such forward-looking statements are subject to a number of material risks and uncertainties including but not limited to those set forth under the caption “Risk Factors” in the Company’s most recent Annual Report on Form 10-K filed with the SEC, as supplemented by its Quarterly Reports on Form 10-Q, as well as discussions of potential risks, uncertainties, and other important factors in the Company’s subsequent filings with the SEC. Any forward-looking statement speaks only as of the date on which it was made. Neither the Company, nor its affiliates, advisors or representatives, undertakes any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.
Additional Information and Where to Find It
In connection with the Meeting Proposals, the Company intends to file with the SEC a proxy statement on Schedule 14A (the “Proxy Statement”) and other relevant materials. The definitive Proxy Statement will be mailed to the Company’s stockholders. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE MERGER, THE FINANCING AND THE MEETING PROPOSALS. Investors and stockholders may obtain free copies of these documents, when available, at the SEC’s website at www.sec.gov or on the Company’s website at www.alaunos.com.
Participants in the Solicitation
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the Meeting Proposals. Information regarding the Company’s directors and executive officers is contained in the Company’s Definitive Proxy Statement on Schedule 14A for its 2025 Annual Meeting of Stockholders and its Annual Report on Form 10-K for the fiscal year ended December 31, 2026. Additional information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement when it becomes available.
Item 9.01 – Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number |
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Description |
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2.1(1) |
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3.1 |
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Certificate of Designation of Series B Non-Voting Convertible Preferred Stock |
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3.2 |
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Certificate of Designation of Series C Non-Voting Convertible Preferred Stock |
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10.1 |
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10.2 |
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10.3 |
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99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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(1) Certain schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to provide, on a supplemental basis, a copy of any omitted schedules and attachments to the Securities and Exchange Commission or its staff upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Alaunos Therapeutics, Inc. |
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Date: October 13, 2026 |
By: |
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/s/ Holger Weis |
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Holger Weis |
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Chief Executive Officer |
Confidential
Execution Version
AGREEMENT AND PLAN OF MERGER
by and among:
ALAUNOS THERAPEUTICS, INC.,
a Delaware corporation;
VALKYRIE Merger Sub I, Inc.,
a Delaware corporation;
VALKYRIE Merger Sub II, LLC,
a Delaware limited liability company;
and
VELARIS THERAPEUTICS, INC.,
a Delaware corporation
Dated as of October 13, 2026
Table of Contents
Page
Section 1. |
DEFINITIONS AND INTERPRETATIVE PROVISIONS |
2 |
1.1 |
Definitions |
3 |
1.2 |
Other Definitional and Interpretative Provisions |
14 |
Section 2. |
DESCRIPTION OF TRANSACTION |
16 |
2.1 |
The Merger |
16 |
2.2 |
Effects of the Merger |
16 |
2.3 |
Closing; First Effective Time; Second Effective Time |
16 |
2.4 |
Certificates of Designation; Certificate of Incorporation and Bylaws; Directors and Officers |
16 |
2.5 |
Merger Consideration; Effect of Merger on Company Capital Stock |
17 |
2.6 |
Conversion of Shares |
18 |
2.7 |
Closing of the Company’s Transfer Books |
19 |
2.8 |
Exchange of Shares |
19 |
2.9 |
Company Options |
20 |
2.10 |
Further Action |
21 |
2.11 |
Withholding |
21 |
2.12 |
Parent Net Cash Schedule |
21 |
Section 3. |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
22 |
3.1 |
Due Organization; Subsidiaries |
22 |
3.2 |
Organizational Documents |
22 |
3.3 |
Authority; Binding Nature of Agreement |
22 |
3.4 |
Vote Required |
23 |
3.5 |
Non-Contravention; Consents |
23 |
3.6 |
Capitalization |
24 |
3.7 |
Financial Statements |
25 |
3.8 |
Absence of Changes |
26 |
3.9 |
Absence of Undisclosed Liabilities |
27 |
3.10 |
Title to Assets |
28 |
3.11 |
Real Property; Leasehold |
28 |
3.12 |
Intellectual Property; Privacy |
28 |
3.13 |
Agreements, Contracts and Commitments |
30 |
3.14 |
Compliance; Permits; Restrictions |
32 |
3.15 |
Legal Proceedings; Orders |
32 |
3.16 |
Tax Matters |
33 |
3.17 |
Employee and Labor Matters; Benefit Plans |
34 |
3.18 |
Environmental Matters |
37 |
3.19 |
Insurance |
37 |
3.20 |
No Financial Advisors |
38 |
3.21 |
Transactions with Affiliates |
38 |
3.22 |
Anti-Bribery |
38 |
3.23 |
Disclaimer of Other Representations or Warranties |
38 |
Section 4. |
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS |
39 |
4.1 |
Due Organization; Subsidiaries |
39 |
4.2 |
Organizational Documents |
40 |
i
Table of Contents
(continued)
Page
4.3 |
Authority; Binding Nature of Agreement |
40 |
4.4 |
Vote Required |
40 |
4.5 |
Non-Contravention; Consents |
40 |
4.6 |
Capitalization |
41 |
4.7 |
SEC Filings; Financial Statements |
43 |
4.8 |
Absence of Changes |
46 |
4.9 |
Absence of Undisclosed Liabilities |
47 |
4.10 |
Title to Assets |
47 |
4.11 |
Real Property; Leasehold |
47 |
4.12 |
Intellectual Property; Privacy |
48 |
4.13 |
Agreements, Contracts and Commitments |
50 |
4.14 |
Compliance; Permits |
52 |
4.15 |
Legal Proceedings; Orders |
52 |
4.16 |
Tax Matters |
52 |
4.17 |
Employee and Labor Matters; Benefit Plans |
54 |
4.18 |
Environmental Matters |
57 |
4.19 |
Transactions with Affiliates |
57 |
4.20 |
Insurance |
58 |
4.21 |
Opinion of Financial Advisor |
58 |
4.22 |
No Financial Advisors |
58 |
4.23 |
Anti-Bribery |
58 |
4.24 |
Valid Issuance |
58 |
4.25 |
Disclaimer of Other Representations or Warranties |
59 |
Section 5. |
ADDITIONAL AGREEMENTS OF THE PARTIES |
59 |
5.1 |
Parent Stockholders’ Meeting |
59 |
5.2 |
Proxy Statement |
60 |
5.3 |
Reservation of Parent Common Stock; Issuance of Shares of Parent Common Stock |
62 |
5.4 |
Employee Benefits |
62 |
5.5 |
Indemnification of Officers and Directors |
63 |
5.6 |
Additional Agreements |
65 |
5.7 |
Listing |
65 |
5.8 |
Tax Matters |
66 |
5.9 |
Legends |
66 |
5.10 |
Directors and Officers |
66 |
5.11 |
Section 16 Matters |
66 |
5.12 |
Cooperation |
66 |
5.13 |
Closing Certificates |
67 |
5.14 |
Takeover Statutes |
67 |
5.15 |
Obligations of Merger Subs |
67 |
5.16 |
Private Placement |
67 |
5.17 |
Registration Rights |
68 |
5.18 |
Operating Plan |
68 |
Section 6. |
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY |
69 |
6.1 |
No Restraints |
69 |
6.2 |
Certificates of Designation |
69 |
ii
Table of Contents
(continued)
Page
6.3 |
Parent Financing |
69 |
Section 7. |
CLOSING DELIVERIES OF THE COMPANY |
69 |
7.1 |
Documents |
69 |
7.2 |
FIRPTA Certificate |
70 |
7.3 |
Company Lock-Up Agreements |
70 |
Section 8. |
CLOSING DELIVERIES OF PARENT |
70 |
8.1 |
Documents |
70 |
8.2 |
Listing |
70 |
8.3 |
Parent Lock-Up Agreements |
70 |
Section 9. |
MISCELLANEOUS PROVISIONS |
70 |
9.1 |
Non-Survival of Representations and Warranties |
70 |
9.2 |
Amendment |
71 |
9.3 |
Waiver |
71 |
9.4 |
Entire Agreement; Counterparts; Exchanges by Electronic Transmission |
71 |
9.5 |
Applicable Law; Jurisdiction |
71 |
9.6 |
Attorneys’ Fees |
72 |
9.7 |
Assignability |
72 |
9.8 |
Notices |
72 |
9.9 |
Cooperation |
73 |
9.10 |
Severability |
73 |
9.11 |
Other Remedies; Specific Performance |
73 |
9.12 |
No Third-Party Beneficiaries |
73 |
9.13 |
Expenses |
74 |
iii
Exhibits:
Exhibit A Form of Lock-Up Agreement
Exhibit B-1 Form of Series B Certificate of Designation
Exhibit B-2 Form of Series C Certificate of Designation
Exhibit C Form of Parent Stockholder Support Agreement
Exhibit D Form of Parent Net Cash Certificate
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of October 13, 2026, by and among ALAUNOS THERAPEUTICS, INC., a Delaware corporation (“Parent”), VALKYRIE Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“First Merger Sub”), VALKYRIE Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Parent (“Second Merger Sub” and together with First Merger Sub, “Merger Subs”), and VELARIS THERAPEUTICS, INC., a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1.
RECITALS
A. Parent and the Company desire to enter into a business combination as contemplated by this Agreement based on the mutually agreed values of each of Parent and the Company, and following the Closing, the aggregate percentage ownership will be based upon an agreed valuation for the Company of $200,000,000 and an agreed valuation for Parent of $15,000,000 (prior to giving effect to Parent Net Cash).
B. Parent and the Company intend to effect a merger of First Merger Sub with and into the Company (the “First Merger”) in accordance with this Agreement and the DGCL. Upon consummation of the First Merger, First Merger Sub will cease to exist and the Company will become a wholly owned subsidiary of Parent.
C. Immediately following the First Merger and as part of the same overall transaction as the First Merger, the Company will merge with and into Second Merger Sub (the “Second Merger” and, together with the First Merger, the “Merger”), with Second Merger Sub being the surviving entity of the Second Merger;
D. The Parties intend that, (i) the First Merger and the Second Merger, taken together, will constitute an integrated transaction described in Rev. Rul. 2001-46, 2001-2 C.B. 321 that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, and (ii) this Agreement will constitute, and is hereby adopted as, a plan of reorganization within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).
E. The Parent Board has (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of Parent and its stockholders, (ii) approved and declared advisable this Agreement and the Contemplated Transactions, including the issuance of the Parent Preferred Stock Payment Shares to the stockholders of the Company pursuant to the terms of this Agreement, and (iii) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the stockholders of the Parent vote to approve the Parent Stockholder Matters at the Parent Stockholders’ Meeting to be convened following the Closing.
F. The First Merger Sub Board has (i) determined that the Contemplated Transactions are fair to, advisable, and in the best interests of First Merger Sub and its sole stockholder, (ii) approved and declared advisable this Agreement and the Contemplated Transactions and (iii) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the sole stockholder of First Merger Sub votes to adopt this Agreement and thereby approve the Contemplated Transactions.
G. The sole member of the Second Merger Sub has (i) determined that the Contemplated Transactions are fair to, advisable, and in the best interests of Second Merger Sub and its sole member, and (ii) authorized, approved and declared advisable this Agreement and the Contemplated Transactions.
1
H. The Company Board has (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the Contemplated Transactions and (iii) recommended, upon the terms and subject to the conditions set forth in this Agreement, that the stockholders of the Company vote to approve the Company Stockholder Matters (the “Board Approval”).
I. Subsequent to the Board Approval, but prior to the execution and delivery of this Agreement, the requisite Company stockholders by written consent and in accordance with the Company’s certificate of incorporation, the Company’s bylaws and the DGCL (i) approved and adopted this Agreement and the Contemplated Transactions, (ii) acknowledged that the approval given thereby is irrevocable and that such stockholder is aware of its rights to demand appraisal for its shares pursuant to Section 262 of the DGCL, a true and correct copy of which was attached thereto, and that such stockholder has received and read a copy of Section 262 of the DGCL, and (iii) acknowledged that by its approval of the Merger it is not entitled to appraisal rights with respect to its shares in connection with the Merger and thereby waives any rights to receive payment of the fair value of its capital stock under the DGCL (such matters, the “Company Stockholder Matters” and the consent, the “Stockholder Written Consent”), and the Stockholder Written Consent is to become effective by its terms immediately following the execution of this Agreement by the parties hereto.
J. Concurrently with the execution and delivery of this Agreement and as a condition and inducement to each of Parent and the Company’s willingness to enter into this Agreement, all of the directors, all of the officers and the stockholders of Parent listed in Section A-1 of the Parent Disclosure Schedule (solely in their capacity as stockholders of Parent) (the “Parent Signatories”) and the stockholders of the Company listed in Section A of the Company Disclosure Schedule (the “Company Signatories”) (solely in their capacity as stockholders of the Company) are executing lock-up agreements in substantially the form attached as Exhibit A (each, a “Lock-Up Agreement”).
K. Concurrently with the execution and delivery of this Agreement, certain investors have executed a Securities Purchase Agreement among Parent and the Persons named therein (such investors, the “Investors”) (representing an aggregate commitment of $350,000,000), pursuant to which such Persons will have agreed to purchase the number of shares of Parent Common Stock and Parent Series C Convertible Preferred Stock set forth therein concurrently with the Closing in connection with the Parent Financing (the “Securities Purchase Agreement”).
L. Concurrently with the execution and delivery of this Agreement and as a condition and inducement to the Company’s willingness to enter into this Agreement, certain stockholders set forth on Section A-2 of the Parent Disclosure Schedule (solely in their capacity as stockholders) are executing support agreements with Parent in substantially the form attached hereto as Exhibit C (the “Parent Stockholder Support Agreement”), pursuant to which such Persons have, subject to the terms and conditions set forth therein, agreed to vote all of their shares of capital stock of Parent in favor of the Parent Stockholder Matters.
M. Immediately following the execution and delivery of this Agreement, but prior to the filing of the Certificate of Merger, Parent shall file the Certificates of Designation with the office of the Secretary of State of the State of Delaware.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
Section 1. DEFINITIONS AND INTERPRETATIVE PROVISIONS
2
1.1 Definitions.
(a) For purposes of this Agreement (including this Section 1):
“Accrued Pre-Closing Tax Amount” means any accrued and unpaid Taxes of Parent and its Subsidiaries for Tax periods (or portions thereof) ending on or before the Closing Date either (a) for which the applicable Tax Returns have not been filed as of the Closing Date or (b) that have been shown as due but not paid on Tax Returns that have been filed as of the Closing Date, in each case, (1) determined on a jurisdiction-by-jurisdiction basis, which amount may not be less than zero with respect to any Tax in any jurisdiction or period, (2) computed without taking into account any refunds or overpayments (or credits in lieu thereof), (3) computed taking into account estimated payments, Tax attribute carryovers and carryforwards solely to the extent that such payments, carryovers, or carryforwards are available to reduce Taxes or taxable income, as applicable, for such period at a “more likely than not” or higher level of comfort, (4) determined in accordance with the past accounting methods and practices of Parent and its Subsidiaries, except to the extent that any such method or practice is not supportable at a “more likely than not” or higher level of comfort, (5) determined by excluding any Tax credits transferred pursuant to Section 6418 of the Code (or any corresponding, similar or analogous provision of state, local or non-U.S. Law), and (6) with respect to any period that includes but does not end on the Closing Date, the amount allocated to the portion of such period ending on or before the Closing Date shall be: (i) in the case of Taxes that are based upon or related to income, sales, proceeds, profits, receipts, wages, compensation, or similar items and all other Taxes that are not imposed on a periodic basis, be deemed equal to the amount of such Taxes which would be payable if the taxable period of Parent and its Subsidiaries ended as of the close of business on the Closing Date based on an interim closing of the books (except that exemptions, allowances, and deductions that are otherwise calculated on an annual basis (including depreciation and amortization deductions, other than with respect to property placed in service after the Closing) shall be apportioned on a daily basis); and (ii) in the case of Taxes not described in clause (i), imposed on a periodic basis, be deemed equal to the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period), multiplied by a fraction the numerator of which is the number of calendar days in the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire period.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.
“Agreement” means this Agreement and Plan of Merger, as it may be amended from time to time.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks in San Francisco, California, are authorized or obligated by Law to be closed.
“Certificates of Designation” means the Series B Certificate of Designation and the Series C Certificate of Designation.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Associate” means any current or former employee, independent contractor, officer or director of the Company.
3
“Company Board” means the board of directors of the Company.
“Company Capital Stock” means the Company Common Stock and the Company Preferred Stock.
“Company Common Stock” means the Common Stock, $0.0001 par value per share, of the Company.
“Company Contract” means any Contract: (a) to which the Company or any of its Subsidiaries is a Party; (b) by which the Company or any of its Subsidiaries or any Company IP or any other asset of the Company or its Subsidiaries is or may become bound or under which the Company or any of its Subsidiaries has, or may become subject to, any obligation; or (c) under which the Company or any of its Subsidiaries has or may acquire any right or interest.
“Company Data” means all data and information Processed by or for the Company or any of its Subsidiaries.
“Company ERISA Affiliate” means any corporation or trade or business (whether or not incorporated) which is (or at any relevant time was) treated with the Company as a single employer within the meaning of Section 414 of the Code.
“Company IP” means all Intellectual Property Rights that are owned or purported to be owned by, assigned to, or exclusively licensed by, the Company.
“Company Material Adverse Effect” means any Effect that, considered together with all other Effects that have occurred prior to the date of determination of the occurrence of a Company Material Adverse Effect, has or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or results of operations of the Company, taken as a whole; provided, however, that Effects arising or resulting from the following shall not be taken into account in determining whether there has been a Company Material Adverse Effect: (a) general business, political or economic conditions affecting the industry in which the Company and its Subsidiaries operate, (b) acts of war, armed hostilities or terrorism, acts of God, natural disaster or comparable events, epidemic, pandemic or disease outbreak (including the COVID-19 virus) or any worsening of the foregoing, or any declaration of martial law, quarantine or similar directive, policy or guidance or Law or other action by any Governmental Body in response thereto, (c) changes in financial, banking or securities markets, (d) any change in, or any compliance with or action taken for the purpose of complying with, any Law or GAAP (or interpretations of any Law or GAAP), (e) resulting from the announcement of this Agreement or the pendency of the Contemplated Transactions; provided, that this clause (e) shall not apply to any representation or warranty (or condition to the consummation of the Merger relating to such representation or warranty) to the extent the representation and warranty expressly addresses the consequences resulting from the execution and delivery of this Agreement or the consummation of the Contemplated Transactions, or (f) resulting from the taking of any action, or the failure to take action, by the Company that is required to be taken or not taken in accordance with this Agreement; except in each case with respect to clauses (a) through (c), to the extent disproportionately affecting the Company, taken as a whole, relative to other similarly situated companies in the industries in which the Company operates.
“Company Options” means options or other rights to purchase shares of Company Common Stock issued by the Company.
“Company Programs” means the product candidates and research and development programs of the Company and its Subsidiaries described in the Operating Plan.
4
“Company Unaudited Interim Balance Sheet” means the unaudited balance sheet of the Company as of August 31, 2026 provided to Parent prior to the date of this Agreement.
“Company Valuation” means $200,000,000.
“Concurrent Investment Amount” means $250,000,000 as contemplated by the Securities Purchase Agreement.
“Confidentiality Agreement” means that certain mutual non-disclosure agreement, dated as of September 18, 2026, between Fairmount Funds Management LLC and Parent.
“Consent” means any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization).
“Consenting Holders” means the Lead Investor (as defined in the Securities Purchase Agreement).
“Contemplated Transactions” means the Merger, the Parent Stockholder Support Agreement and the other transactions and actions contemplated by this Agreement to be consummated at or prior to the Closing (but not, for the avoidance of doubt, (a) the actions proposed to be taken at the Parent Stockholders’ Meeting following the Closing pursuant to Section 5.1 or (b) the operation of the Parent Legacy Business, including the sale, license or other disposition of any or all of the Parent Legacy Business).
“Contract” means, with respect to any Person, any written or oral agreement, contract, subcontract, lease (whether for real or personal property), mortgage, license, sublicense or other legally binding commitment or undertaking of any nature to which such Person is a party or by which such Person or any of its assets are bound or affected under applicable Law.
“Data Processing Policy” means each policy, statement, representation, or notice of the Company, Parent or their respective Subsidiaries relating to the Processing of Company Data or Parent Data (as applicable), privacy, data protection, or security.
“DGCL” means the General Corporation Law of the State of Delaware.
“DLLCA” means the Delaware Limited Liability Company Act.
“Effect” means any effect, change, event, circumstance, or development.
“Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security interest, lease, license, option, easement, reservation, servitude, adverse title, claim, infringement, interference, right of first refusal, preemptive right, community property interest or restriction or encumbrance of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).
“Enforceability Exceptions” means the (a) Laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (b) rules of law governing specific performance, injunctive relief and other equitable remedies.
5
“Entity” means any corporation (including any non-profit corporation), partnership (including any general partnership, limited partnership or limited liability partnership), joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or entity, and each of its successors.
“Environmental Law” means any federal, state, local or foreign Law relating to pollution or protection of human health (as it relates to exposure to Hazardous Materials) or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any Law or regulation relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934.
“Exchange Ratio” means 5.2643.
“First Merger Sub Board” means the board of directors of First Merger Sub.
“GAAP” means generally accepted accounting principles and practices in effect from time to time within the United States applied consistently throughout the period involved.
“Governmental Authorization” means any: (a) permit, license, certificate, franchise, permission, variance, exception, approval, exemption, order, clearance, registration, qualification or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law; or (b) right under any Contract with any Governmental Body.
“Governmental Body” means any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, bureau, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any taxing authority); or (d) self-regulatory organization (including Nasdaq).
“Hazardous Materials” means any pollutant, chemical, substance and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, or chemical compound, or hazardous substance, material or waste, whether solid, liquid or gas, that is subject to regulation, control or remediation under any Environmental Law, including without limitation, crude oil or any fraction thereof, and petroleum products or byproducts.
“Intellectual Property Rights” means and includes all intellectual property or other proprietary rights under the laws of any jurisdiction in the world, including, without limitation: (a) rights associated with works of authorship, including exclusive exploitation rights, copyrights, moral rights, software, databases, and mask works; (b) trademarks, service marks, trade dress, logos, trade names and other source identifiers, domain names and URLs and similar rights and any goodwill associated therewith; (c) rights associated with trade secrets, know how, inventions, invention disclosures, methods, processes, protocols, specifications, techniques and other forms of technology; (d) patents and industrial property rights; (e) other similar proprietary rights in intellectual property of every kind and nature; (f) rights of privacy and publicity; and (g) all registrations, renewals, extensions, statutory invention registrations, provisionals, continuations, continuations-in-part, divisions, or reissues of, and applications for, any of the
6
rights referred to in clauses (a) through (f) above (whether or not in tangible form and including all tangible embodiments of any of the foregoing, such as samples, studies and summaries), along with all rights to prosecute and perfect the same through administrative prosecution, registration, recordation or other administrative proceeding, and all causes of action and rights to sue or seek other remedies arising from or relating to the foregoing, including for past, present or future infringement of any of the foregoing.
“IRS” means the United States Internal Revenue Service.
“Knowledge” means, with respect to an individual, that such individual is actually aware of the relevant fact or such individual would reasonably be expected to know such fact in the ordinary course of the performance of such individual’s employment responsibilities. Any Person that is an Entity shall have Knowledge if any officer of such Person as of the date such knowledge is imputed has Knowledge of such fact or other matter. With respect to any matters relating to Intellectual Property Rights, such awareness or reasonable expectation to have knowledge does not require any such individual to conduct or have conducted or obtain or have obtained any freedom to operate opinions of counsel or any Intellectual Property Rights clearance searches.
“Law” means any federal, state, national, foreign, local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body (including under the authority of Nasdaq or the Financial Industry Regulatory Authority).
“Legal Proceeding” means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other Governmental Body or any arbitrator or arbitration panel.
“Nasdaq” means the Nasdaq Stock Market, including the Nasdaq Capital Market or such other Nasdaq market on which shares of Parent Common Stock are then listed.
“Ordinary Course of Business” means, in the case of each of the Company and Parent, such actions taken in the ordinary course of its normal operations and consistent with its past practices or, with respect to the Company, the customary practices of a recently formed company at a similar stage of development. For the avoidance of doubt, Ordinary Course of Business, with respect to the Company, shall also include such build-out, expansion, and development activities as are customary and reasonable for biotechnology companies at a stage of development substantially similar to that of the Company, including, without limitation, activities relating to personnel hiring and retention, laboratory and office expansion, clinical and regulatory infrastructure development, manufacturing scale-up (including engagement of contract development and manufacturing organizations), implementation of quality and compliance systems, and other operational capability enhancements.
“Organizational Documents” means, with respect to any Person (other than an individual), (a) the certificate or articles of association or incorporation or organization or limited partnership or limited liability company, and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with the creation, formation or organization of such Person and (b) all bylaws, regulations and similar documents or agreements relating to the organization or governance of such Person, in each case, as amended or supplemented.
“Parent Associate” means any current or former employee, independent contractor, officer or director of Parent.
7
“Parent Balance Sheet” means the unaudited balance sheet of Parent as of June 30, 2026 (the “Parent Balance Sheet Date”) provided to the Company prior to the date of this Agreement.
“Parent Board” means the board of directors of Parent.
“Parent Common Stock” means the Common Stock, $0.001 par value per share, of Parent.
“Parent Contract” means any Contract: (a) to which Parent or any of its Subsidiaries is a party; (b) by which Parent or any of its Subsidiaries or any Parent IP or any other asset of Parent or any of its Subsidiaries is or may become bound or under which Parent or any of its Subsidiaries has, or may become subject to, any obligation; or (c) under which Parent or any of its Subsidiaries has or may acquire any right or interest.
“Parent Convertible Preferred Stock” means the Parent Series B Convertible Preferred Stock and the Parent Series C Convertible Preferred Stock.
“Parent Covered Person” means, with respect to Parent as an “issuer” for purposes of Rule 506 promulgated under the Securities Act, any Person listed in the first paragraph of Rule 506(d)(1).
“Parent Data” means all data and information Processed by or for Parent or any of its Subsidiaries.
“Parent ERISA Affiliate” means any corporation or trade or business (whether or not incorporated) which is (or at any relevant time was) treated with Parent or any of its Subsidiaries as a single employer within the meaning of Section 414 of the Code.
“Parent Financing” means an acquisition of shares of Parent Common Stock and Parent Series C Convertible Preferred Stock to be consummated concurrently with the Closing pursuant to the Securities Purchase Agreement with aggregate gross proceeds to Parent of at least the Concurrent Investment Amount.
“Parent IP” means all Intellectual Property Rights that are owned or purported to be owned by, assigned to, or exclusively licensed by, Parent or its Subsidiaries.
“Parent Legacy Business” means the business of Parent and its Subsidiaries as conducted at any time prior to the date of this Agreement, including but not limited to the business related to the assets listed on Section 1.1(a) of the Parent Disclosure Schedule (including ALN1003 and Parent’s legacy TCR-T programs).
“Parent Material Adverse Effect” means any Effect that, considered together with all other Effects that have occurred prior to the date of determination of the occurrence of a Parent Material Adverse Effect, has or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or results of operations of Parent; provided, however, that Effects arising or resulting from the following shall not be taken into account in determining whether there has been a Parent Material Adverse Effect: (a) general business, political or economic conditions affecting the industry in which Parent operates, (b) acts of war, armed hostilities or terrorism, acts of God, natural disaster or comparable events, epidemic, pandemic or disease outbreak (including the COVID-19 virus) or any worsening of the foregoing, or any declaration of martial law, quarantine or similar directive, policy or guidance or Law or other action by any Governmental Body in response thereto, (c) changes in financial, banking or securities markets, (d) the taking of any action required to be taken by this Agreement, (e) any change in the stock price or trading volume of Parent Common Stock (it being understood, however, that
8
any Effect causing or contributing to any change in stock price or trading volume of Parent Common Stock may be taken into account in determining whether a Parent Material Adverse Effect has occurred, unless such Effects are otherwise excepted from this definition); (f) any change in, or any compliance with or action taken for the purpose of complying with, any Law or GAAP (or interpretations of any Law or GAAP); (g) resulting from the announcement of this Agreement or the pendency of the Contemplated Transactions; provided, that this subclause (g) shall not apply to any representation or warranty (or condition to the consummation of the Merger relating to such representation or warranty) to the extent the representation and warranty expressly addresses the consequences resulting from the execution and delivery of this Agreement or the consummation of the Contemplated Transactions; (h) the sale, license or other disposition of any or all of the Parent Legacy Business; (i) any going concern qualification or explanatory paragraph in any report of Parent’s independent auditors, any substantial doubt regarding Parent’s ability to continue as a going concern, or any material weakness or significant deficiency in Parent’s internal control over financial reporting or any determination that Parent’s disclosure controls and procedures are not effective, in each case to the extent existing or disclosed in the Parent SEC Documents or Section 4.7(g) of the Parent Disclosure Schedule prior to the date of this Agreement (or any continuation thereof); or (j) resulting from the taking of any action, or the failure to take any action, by Parent that is required to be taken or not taken in accordance with this Agreement, except in each case with respect to clauses (a) through (c) and (f), to the extent such Effects disproportionately affect Parent relative to other similarly situated companies in the industries in which Parent operates (in which case only the incremental disproportionate impact may be taken into account in determining whether there has been a Parent Material Adverse Effect).
“Parent Net Cash” means, without duplication, (a) Parent’s unrestricted cash and cash equivalents and marketable securities, determined, to the extent in accordance with GAAP, in a manner consistent with the manner in which such items were historically determined and in accordance with the financial statements (including any related notes) contained or incorporated by reference in the Parent SEC Documents and the Parent Balance Sheet, minus (b) the sum of all unpaid consolidated short-term and long-term contractual commitments, obligations and liabilities of Parent and its Subsidiaries outstanding as of the Closing, in each case determined in accordance with GAAP and, to the extent in accordance with GAAP, in a manner consistent with the manner in which such items were historically determined and in accordance with the financial statements (including any related notes) contained or incorporated by reference in the Parent SEC Documents and the Parent Balance Sheet, minus (c) the aggregate amount (without duplication) of all fees and expenses incurred by Parent in connection with the negotiation, execution and delivery of this Agreement and the Contemplated Transactions, including: (i) any fees and expenses of legal counsel, accountants, financial advisors, investment bankers, brokers, consultants, tax advisors and other professional advisors of Parent; (ii) any bonus, retention payments (including the Retention Bonuses), severance, change-in-control payments or similar payment obligations (including payments with “single-trigger” provisions triggered at and as of the consummation of the Contemplated Transactions) that are due or payable to any director, officer, employee or consultant of Parent in connection with, or at the time of, the Closing or following the Closing (including in connection with the termination of any employee of Parent), together with any payroll Taxes associated therewith; and (iii) the cost of any “D&O tail policy” to be purchased by Parent in connection with the Contemplated Transactions or the Parent Stockholder Matters (whether or not purchased prior to the Closing), in each case, to the extent unpaid as of the Closing, minus (d) all remaining rent payments and fees and expenses associated with terminating the Parent Real Estate Leases, minus (e) the Accrued Pre-Closing Tax Amount, minus (f) all costs and expenses relating to the winding down of the Parent Legacy Business, including the sale, license or other disposition of any or all of the Parent Legacy Business (including, for clarity, any change-in-control payments, Contract termination or breakage costs or similar payment obligations that are due or payable to any Person to effect the winding down of the Parent Legacy Business), to the extent unpaid as of the Closing, including any such costs incurred by the Company (including the Surviving Entity) following the Closing, minus (g) the estimated costs to be incurred by Parent and its Subsidiaries (including the Surviving Entity) following the Closing to develop ALN1003 through July 30, 2027, minus (h) all amounts payable to retire, repay, redeem,
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convert, exchange or otherwise satisfy Parent’s outstanding convertible notes, warrants, debt instruments and other convertible securities (including accrued interest and any make-whole, prepayment or settlement premium), including to avoid any “fundamental transaction,” change of control put or cash settlement right afforded to any holder of such securities. For the avoidance of doubt, the calculation of Parent Net Cash may result in a number below $0.
“Parent Options” means options or other rights to purchase shares of Parent Common Stock issued by Parent.
“Parent RSUs” means any restricted stock unit award granted pursuant to the Parent Stock Plans.
“Parent Series B Convertible Preferred Stock” means Parent’s non-voting convertible preferred stock, par value $0.001 per share, with the rights, preferences, powers and privileges specified in the Series B Certificate of Designation.
“Parent Series C Convertible Preferred Stock” means Parent’s non-voting convertible preferred stock, par value $0.001 per share, with the rights, preferences, powers and privileges specified in the Series C Certificate of Designation.
“Parent Stock Plans” means, collectively, the Alaunos Therapeutics, Inc. 2020 Equity Incentive Plan and the 2012 Equity Incentive Plan, each as may be amended from time to time.
“Parent Valuation” means $15,000,000 (prior to giving effect to Parent Net Cash)).
“Party” or “Parties” means the Company, First Merger Sub, Second Merger Sub and Parent.
“Permitted Encumbrance” means: (a) any Encumbrance for current Taxes not yet due and payable or for Taxes that are being contested in good faith and, in each case, for which adequate reserves have been made on the Company Unaudited Interim Balance Sheet or the Parent Balance Sheet, as applicable, in accordance with GAAP; (b) minor liens that have arisen in the Ordinary Course of Business and that do not (in any case or in the aggregate) materially detract from the value of the assets or properties subject thereto or materially impair the operations of the Company or any of its Subsidiaries or Parent, as applicable; (c) liens to secure obligations to landlords, lessors or renters under leases or rental agreements; (d) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance or similar programs mandated by Law; (e) non-exclusive licenses of Intellectual Property Rights granted by the Company or any of its Subsidiaries or Parent, as applicable, in the Ordinary Course of Business and that do not (in any case or in the aggregate) materially detract from the value of the Intellectual Property Rights subject thereto; and (f) statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies the payment for which is not delinquent.
“Person” means any individual, Entity or Governmental Body.
“Privacy and Data Processing Requirements” means any applicable (i) Law relating to privacy, data protection, or security, (ii) Data Processing Policy, or (iii) requirement of any self-regulatory organization, industry standard (including, as applicable, the Payment Card Industry Data Security Standard), or Contract by which the Company, Parent or their respective Subsidiaries are bound relating to the Processing of Company Data or Parent Data (as applicable), privacy, data protection, or security,
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including, in each case of (i) through (iii), in connection with direct marketing or the initiation, transmission, monitoring, interception, recording, or receipt of communications.
“Process” means, with respect to any data, information, or information technology system, any operation or set of operations performed thereon, whether or not by automated means, including access, adaptation, alignment, alteration, collection, combination, compilation, consultation, creation, derivation, destruction, disclosure, disposal, dissemination, erasure, interception, maintenance, making available, organization, recording, restriction, retention, retrieval, storage, structuring, transmission, and use, and security measures with respect thereto.
“Reference Date” means October 9, 2026.
“Registered IP” means all Intellectual Property Rights that are registered or issued under the authority of, with or by any Governmental Body, including all patents, registered copyrights, registered mask works, and registered trademarks, service marks and trade dress, and all applications for any of the foregoing.
“Representatives” means directors, officers, employees, agents, attorneys, accountants, investment bankers, advisors and representatives.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Series B Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Parent Series B Convertible Preferred Stock in the form attached hereto as Exhibit B-1.
“Series C Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations of Parent Series C Convertible Preferred Stock in the form attached hereto as Exhibit B-2.
“Subsidiary” means an entity that shall be deemed to be a ‘subsidiary’ of a Person if such Person directly or indirectly owns or purports to own, beneficially or of record, (a) an amount of voting securities or other interests in such entity that is sufficient to enable such Person to elect at least a majority of the members of such entity’s board of directors or other governing body, or (b) at least 50% of the outstanding equity, voting, beneficial or financial interests in such Entity.
“Takeover Statute” means any “fair price,” “moratorium,” “control share acquisition” or other similar anti-takeover Law.
“Tax” means any (i) federal, state, local, foreign or other tax, including any income, capital gain, gross receipts, capital stock, profits, transfer, estimated, registration, stamp, premium, escheat, unclaimed property, customs duty, ad valorem, occupancy, occupation, alternative, add-on, windfall profits, value added, severance, property, business, production, sales, use, license, excise, franchise, employment, payroll, social security, disability, unemployment, workers’ compensation, national health insurance, withholding or other taxes, duties, fees, assessments or governmental charges, surtaxes or deficiencies thereof in the nature of a tax, however denominated (whether imposed directly or through withholding and whether or not disputed), and including any fine, penalty, addition to tax, or interest or additional amount
11
imposed by a Governmental Body with respect thereto (or attributable to the nonpayment thereof) and (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee or successor liability, of being a member of an affiliated, consolidated, combined or unitary group for any period, pursuant to a Contract, through operation of Law or otherwise.
“Tax Return” means any return (including any information return), report, statement, declaration, claim for refund, estimate, schedule, notice, notification, form, election, certificate or other document, and any amendment or supplement to any of the foregoing, filed with or submitted to, or required to be filed with or submitted to, any Governmental Body (or provided to a payee) in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax.
“Treasury Regulations” means the United States Treasury regulations promulgated under the Code.
“WARN Act” means the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or local plant closing mass layoff statute, rule or regulation.
(b) Each of the following terms is defined in the Section set forth opposite such term:
Term |
Section |
ACT |
Section 5.16 |
Allocation Certificate |
Section 5.13 |
Anti-Bribery Laws |
Section 3.22 |
Approval Time |
Section 5.10(b) |
Authorized Share Increase |
Section 5.1(a)(ii) |
Board Approval |
Recitals |
Book-Entry Shares |
Section 2.7 |
Cash Determination Time |
Section 2.12 |
Certificates of Merger |
Section 2.3 |
Certifications |
Section 4.7(a) |
Charter Amendment Proposal |
Section 5.1(a)(ii) |
Closing |
Section 2.3 |
Closing Date |
Section 2.3 |
Company |
Preamble |
Company Audited Financial Statements |
Section 5.2(e) |
Company Benefit Plan |
Section 3.17(a) |
Company Designee |
Section 5.10(a) |
Company Disclosure Schedule |
Section 3. |
Company Financials |
Section 3.7(a) |
Company In-bound License |
Section 3.12(e) |
Company Interim Financial Statements |
Section 5.2(e) |
Company Material Contract(s) |
Section 3.13(a) |
Company Out-bound License |
Section 3.12(e) |
Company Permits |
Section 3.14 |
Company Plan |
Section 3.6(c) |
Company Preferred Stock |
Section 3.6(a) |
Company Real Estate Leases |
Section 3.11 |
Company Required Proxy Information |
Section 5.2(d) |
Company Signatories |
Recitals |
Company Stock Certificate |
Section 2.7 |
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Term |
Section |
Company Stockholder Matters |
Recitals |
Consenting Holder Designees |
Section 5.10(c) |
Continuing Employees |
Section 5.4(a) |
Disqualifying Event |
Section 4.24 |
D&O Indemnified Parties |
Section 5.5(a) |
Equity Plan Proposal |
Section 5.1(a)(iii) |
Exchange Agent |
Section 2.8(a) |
Exchange Fund |
Section 2.8(a) |
Existing Severance Plan |
Section 5.4(b) |
First Certificate of Merger |
Section 2.3 |
First Effective Time |
Section 2.3 |
First Merger |
Recitals |
First Merger Sub |
Preamble |
First Step Surviving Corporation |
Section 2.1 |
FLSA |
Section 3.17(n) |
Intended Tax Treatment |
Section 5.8 |
Investor Agreements |
Section 3.21(b) |
Investors |
Recitals |
Liability |
Section 3.9 |
Lock-Up Agreement |
Recitals |
Merger |
Recitals |
Merger Consideration |
Section 2.5 |
Merger Subs |
Preamble |
Nasdaq Listing Application |
Section 5.7 |
Operating Plan |
Section 5.18(a) |
Operating Plan Period |
Section 5.18(a) |
Parent |
Preamble |
Parent Benefit Plan |
Section 4.17(a) |
Parent Disclosure Schedule |
Section 4. |
Parent Executive |
Section 5.4(c) |
Parent Foreign Plan |
Section 4.17(m) |
Parent In-bound License |
Section 4.12(e) |
Parent Material Contract(s) |
Section 4.13(a) |
Parent Net Cash Schedule |
Section 2.12 |
Parent Out-bound License |
Section 4.12(e) |
Parent Outstanding Shares Certificate |
Section 5.13(b) |
Parent Permits |
Section 4.14 |
Parent Preferred Stock Payment Shares |
Section 2.5 |
Parent Real Estate Leases |
Section 4.11 |
Parent SEC Documents |
Section 4.7(a) |
Parent Signatories |
Recitals |
Parent Stockholder Matters |
Section 5.1(a)(iii) |
Parent Stockholder Support Agreement |
Recitals |
Parent Stockholders’ Meeting |
Section 5.1(a)(iii) |
Post-Closing Plans |
Section 5.4(a) |
Preferred Designees |
Section 5.10(c) |
Preferred Stock Conversion Proposal |
Section 2.5 |
Proxy Statement |
Section 5.2(a) |
Redomestication |
Section 5.1(a)(ii) |
Registrable Securities |
Section 5.17 |
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Term |
Section |
Required Company Stockholder Vote |
Section 3.4 |
Required Parent Stockholder Vote |
Section 4.4 |
Resale Registration Statement |
Section 5.17 |
Resignation Letter |
Section 5.10(b) |
Resigning Directors |
Section 5.10(b) |
Retention Bonus |
Section 5.4(c) |
Second Certificate of Merger |
Section 2.3 |
Second Effective Time |
Section 2.3 |
Second Merger |
Recitals |
Second Merger Sub |
Preamble |
Securities Purchase Agreement |
Recitals |
Series B Designee |
Section 5.10(c) |
Stockholder Written Consent |
Recitals |
Surviving Entity |
Section 2.1 |
Withholding Agent |
Section 2.11 |
1.2 Other Definitional and Interpretative Provisions.
(a) References to “cash,” “dollars” or “$” are to U.S. dollars.
(b) For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include masculine and feminine genders.
(c) The Parties have participated jointly in the negotiating and drafting of this Agreement and agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in the construction or interpretation of this Agreement, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
(d) As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”
(e) Except as otherwise indicated, all references in this Agreement to “Sections,” “Exhibits” and “Schedules” are intended to refer to Sections of this Agreement and Exhibits and Schedules to this Agreement, respectively.
(f) Any reference to legislation or to any provision of any legislation shall include any modification, amendment, re-enactment thereof, any legislative provision substituted therefore and all rules, regulations, and statutory instruments issued or related to such legislations.
(g) The bold-faced headings and table of contents contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.
(h) The inclusion of any information in the Company Disclosure Schedule or Parent Disclosure Schedule shall not be deemed an admission or acknowledgment to any third party, in and of itself and solely by virtue of the inclusion of such information in the Company Disclosure Schedule or
14
Parent Disclosure Schedule, as applicable, that such information is required to be listed in the Company Disclosure Schedule or Parent Disclosure Schedule, as applicable, that such items are material to the Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole, as the case may be, or that such items have resulted in a Company Material Adverse Effect or a Parent Material Adverse Effect. The Parties agree that each of the Company Disclosure Schedule and the Parent Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Agreement. The disclosures in any section or subsection of the Company Disclosure Schedule or the Parent Disclosure Schedule shall qualify other sections and subsections in this Agreement to the extent it is readily apparent on its face from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.
(i) Each of “delivered” or “made available” means, with respect to any documentation, that (i) prior to 11:59 p.m. (Pacific Time) on the date that is two Business Days prior to the date of this Agreement (A) a copy of such material has been posted to and made available by a Party to the other Party and its Representatives in the electronic data room maintained by such disclosing Party or (B) such material is disclosed in the Parent SEC Documents filed with the SEC prior to the date hereof and publicly made available on the SEC’s Electronic Data Gathering Analysis and Retrieval system or (ii) delivered by or on behalf of a Party or its Representatives via electronic mail or in hard copy form prior to the execution of this Agreement.
(j) Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall upon a Saturday, Sunday, or any date on which banks in San Francisco, California, are authorized or obligated by Law to be closed, the Party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular Business Day.
Section 2. DESCRIPTION OF TRANSACTION
2.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, at the First Effective Time, First Merger Sub shall be merged with and into the Company, and the separate existence of First Merger Sub shall cease. As a result of the First Merger, the Company will continue as the surviving corporation in the First Merger (the “First Step Surviving Corporation”). Upon the terms and subject to the conditions set forth in this Agreement, at the Second Effective Time, the First Step Surviving Corporation will merge with and into Second Merger Sub, and the separate existence of the First Step Surviving Corporation shall cease. As a result of the Second Merger, Second Merger Sub will continue as the surviving entity in the Second Merger (the “Surviving Entity”).
2.2 Effects of the Merger. At and after the First Effective Time, the First Merger shall have the effects set forth in this Agreement, the First Certificate of Merger and in the applicable provisions of the DGCL. As a result of the First Merger, the First Step Surviving Corporation will become a wholly owned subsidiary of Parent. At and after the Second Effective Time, the Second Merger shall have the effects set forth in this Agreement, the Second Certificate of Merger and in the applicable provisions of the DGCL and the DLLCA.
2.3 Closing; First Effective Time; Second Effective Time. The consummation of the Merger (the “Closing”) is being consummated remotely via the electronic exchange of documents and signatures substantially simultaneously with the execution and delivery of this Agreement, or at such other time, date and place as Parent and the Company may mutually agree in writing. The date on which the Closing actually takes place is referred to as the “Closing Date.” At the Closing, (i) the Parties shall cause the First Merger to be consummated by executing and filing with the Secretary of State of the State of Delaware a certificate of merger with respect to the First Merger, satisfying the applicable requirements of the DGCL and in form and substance to be agreed upon by the Parties (the “First Certificate of Merger”)
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and (ii) the Parties shall cause the Second Merger to be consummated by executing and filing with the Secretary of State of the State of Delaware a certificate of merger with respect to the Second Merger, satisfying the applicable requirements of the DGCL and the DLLCA and in form and substance to be agreed upon by the Parties (the “Second Certificate of Merger” and together with the First Certificate of Merger, the “Certificates of Merger”). The First Merger shall become effective at the time of the filing of such First Certificate of Merger with the Secretary of State of the State of Delaware or at such later time as may be specified in such First Certificate of Merger with the consent of Parent and the Company (the time as of which the First Merger becomes effective being referred to as the “First Effective Time”). The Second Merger shall become effective at the time of the filing of such Second Certificate of Merger with the Secretary of State of the State of Delaware or at such later time as may be specified in such Second Certificate of Merger with the consent of Parent and the Company (the time as of which the Second Merger becomes effective being referred to as the “Second Effective Time”).
2.4 Certificates of Designation; Certificate of Incorporation and Bylaws; Directors and Officers.
(a) Prior to the First Effective Time, Parent shall file the Certificates of Designation with the office of the Secretary of State of the State of Delaware.
(b) At the First Effective Time:
(i) the certificate of incorporation of the First Step Surviving Corporation shall be amended and restated as set forth in an exhibit to the First Certificate of Merger, until thereafter amended as provided by the DGCL and such certificate of incorporation;
(ii) the bylaws of the First Step Surviving Corporation shall be amended and restated in their entirety to read identically to the bylaws of the Company as in effect immediately prior to the First Effective Time, until thereafter amended as provided by the DGCL and such bylaws; and
(iii) the directors and officers of the First Step Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the First Step Surviving Corporation, shall be such persons as shall be designated by the Company prior to the execution hereof.
(c) At the Second Effective Time:
(i) the certificate of formation of the Surviving Entity shall be the certificate of formation of Second Merger Sub as in effect immediately prior to the Second Effective Time, until thereafter amended as provided by the DLLCA and such certificate of formation; provided, however, that at the Second Effective Time (as part of the Second Certificate of Merger), the certificate of formation shall be amended to (A) change the name of the Surviving Entity to “Velaris Therapeutics, LLC,” (B) comply with Section 5.5, and (C) make such other changes as are mutually agreed to by Parent and the Company;
(ii) the limited liability company agreement of the Surviving Entity shall be amended and restated in its entirety to read identically to the limited liability company agreement of Second Merger Sub as in effect immediately prior to the Second Effective Time, until thereafter amended as provided by the DLLCA and such limited liability company agreement; provided, however, that following the Second Effective Time (but as soon thereafter as practicable), the limited liability company agreement shall be amended to (A) comply with Section 5.5 and (B) change the name of the Surviving Entity to “Velaris Therapeutics, LLC”;
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(iii) the managers and officers of the Surviving Entity, each to hold office in accordance with the certificate of formation and limited liability company agreement of the Surviving Entity, shall be such persons as shall be designated by the Company and set forth on Section 5.10 of the Company Disclosure Schedule; and
(iv) the certificate of incorporation of Parent shall be identical to the certificate of incorporation of Parent immediately prior to the Second Effective Time, until thereafter amended as provided by the DGCL and such certificate of incorporation, provided, however, that following the Second Effective Time (but as soon thereafter as practicable), the certificate of incorporation shall be amended to make such other changes as are mutually agreed to by Parent and the Company.
2.5 Merger Consideration; Effect of Merger on Company Capital Stock. The aggregate merger consideration (the “Merger Consideration”) to be paid by Parent for all of the outstanding shares of Company Capital Stock at the Closing and amounts reserved for Company Options shall be a total of (I) 33,054 shares of Parent Series C Convertible Preferred Stock issued to holders of Company Common Stock, and (II) 105,286 shares of Parent Series B Convertible Preferred Stock issued to holders of Company Preferred Stock (collectively with the shares of Parent Series C Convertible Preferred Stock issued pursuant to the foregoing clause (I), the “Parent Preferred Stock Payment Shares”), in each case, in accordance with Section 2.6(a). Each Parent Preferred Stock Payment Share and each share of Parent Series C Convertible Preferred Stock issued pursuant to the Securities Purchase Agreement shall be convertible into 1,000 shares of Parent Common Stock, subject to and contingent upon the receipt of the Required Parent Stockholder Vote at a meeting of stockholders of Parent to approve, for purposes of the Nasdaq Stock Market Rules, including Nasdaq Listing Rules 5635(a) and 5635(b) (including any change of control resulting therefrom), the issuance of shares of Parent Common Stock to the stockholders of the Company and the Investors upon conversion of any and all shares of Parent Convertible Preferred Stock in accordance with the terms of the Certificates of Designation in substantially the form attached hereto as Exhibit B-1 and Exhibit B-2, respectively (the “Preferred Stock Conversion Proposal”).
2.6 Conversion of Shares.
(a) At the First Effective Time, by virtue of the First Merger and without any further action on the part of Parent, Merger Subs, the Company or any stockholder of the Company or Parent:
(i) any shares of Company Common Stock held as treasury stock or held or owned by the Company or any wholly owned Subsidiary of the Company immediately prior to the First Effective Time shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor; and
(ii) subject to Section 2.5 and Section 2.6(c), each share of (A) Company Common Stock outstanding immediately prior to the First Effective Time (excluding shares to be canceled pursuant to Section 2.6(a)(i)) shall be automatically converted solely into the right to receive a number of shares of Parent Series C Convertible Preferred Stock equal to (x) the Exchange Ratio divided by (y) 1,000, in each case, as set forth on the Allocation Certificate, and (B) Company Preferred Stock outstanding immediately prior to the First Effective Time shall be automatically converted solely into the right to receive a number of shares of Parent Series B Convertible Preferred Stock equal to (x) the Exchange Ratio divided by (y) 1,000, in each case, as set forth on the Allocation Certificate.
(b) If any shares of Company Common Stock outstanding immediately prior to the First Effective Time are subject to any time-based vesting repurchase option or a risk of forfeiture under any applicable restricted stock purchase agreement or other similar agreement with the Company,
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such shares of Company Common Stock shall continue to be subject to any such time-based vesting right of repurchase, risk of forfeiture or other such conditions.
(c) No fractional shares of Parent Convertible Preferred Stock shall be issued in connection with the First Merger, and no certificates or scrip for any such fractional shares shall be issued and no cash shall be paid for any such fractional shares. Any fractional shares of Parent Convertible Preferred Stock that a holder of Company Capital Stock would otherwise be entitled to receive shall be aggregated with all other fractional shares of the same series of Parent Convertible Preferred Stock issuable to such holder, and any remaining fractional share shall be rounded up to the nearest whole share.
(d) At the First Effective Time, by virtue of the First Merger and without any further action on the part of Parent, Merger Subs, the Company or any stockholder of the Company or stockholder of Parent, each share of common stock of First Merger Sub issued and outstanding immediately prior to the First Effective Time shall be converted into and exchanged for one share of common stock of the First Step Surviving Corporation. If applicable, each stock certificate of First Merger Sub evidencing ownership of any such shares shall, as of the First Effective Time, evidence ownership of such shares of common stock of the First Step Surviving Corporation.
(e) If, between the date of this Agreement and the First Effective Time, the outstanding shares of Company Common Stock or Parent Common Stock or Parent Convertible Preferred Stock shall have been changed into, or exchanged for, a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares or other like change, the Exchange Ratio shall, to the extent necessary, be equitably adjusted to reflect such change to the extent necessary to provide the holders of Company Common Stock and Parent Common Stock and Parent Convertible Preferred Stock, with the same economic effect as contemplated by this Agreement prior to such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares or other like change; provided, however, that nothing herein will be construed to permit the Company or Parent to take any action with respect to Company Common Stock or Parent Common Stock or Parent Convertible Preferred Stock, respectively, that is prohibited or not expressly permitted by the terms of this Agreement or the Securities Purchase Agreement.
(f) At the Second Effective Time, by virtue of the Second Merger and without any action on the part of Parent, the First Step Surviving Corporation, Second Merger Sub or their respective stockholders, each share of the First Step Surviving Corporation issued and outstanding immediately prior to the Second Effective Time shall be canceled and extinguished without any conversion thereof and no payment or distribution shall be made with respect thereto.
2.7 Closing of the Company’s Transfer Books. At the First Effective Time: (a) all holders of (i) certificates representing shares of Company Capital Stock and (ii) book-entry shares representing shares of Company Capital Stock (“Book-Entry Shares”), in each case, that were outstanding immediately prior to the First Effective Time shall cease to have any rights as stockholders of the Company; and (b) the stock transfer books of the Company shall be closed with respect to all shares of Company Capital Stock outstanding immediately prior to the First Effective Time. No further transfer of any such shares of Company Capital Stock shall be made on such stock transfer books after the First Effective Time. If, after the First Effective Time, a valid certificate previously representing any shares of Company Capital Stock outstanding immediately prior to the First Effective Time (a “Company Stock Certificate”) is
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presented to the Exchange Agent or to the Surviving Entity, such Company Stock Certificate shall be canceled and shall be exchanged as provided in Sections 2.6 and 2.8.
2.8 Exchange of Shares.
(a) On or prior to the Closing Date, Parent and the Company shall agree upon and select a transfer agent to act as exchange agent in the Merger (the “Exchange Agent”). At the First Effective Time, Parent shall deposit with, or instruct its transfer agent to make available to, the Exchange Agent certificates or evidence of book-entry shares representing the Parent Common Stock and Parent Convertible Preferred Stock issuable pursuant to Section 2.6(a). The Parent Common Stock and Parent Convertible Preferred Stock so deposited with the Exchange Agent, together with any dividends or distributions received by the Exchange Agent with respect to such shares, are referred to collectively as the “Exchange Fund.”
(b) As soon as reasonably practicable after the date of this Agreement, the Exchange Agent shall issue book-entry shares representing the Merger Consideration (in a number of whole shares of Parent Common Stock and Parent Convertible Preferred Stock) that each holder of Company Capital Stock has the right to receive pursuant to the provisions of Section 2.6(a) and each Company Stock Certificate or Book-Entry Share formerly held by each such holder shall be deemed, from and after the First Effective Time, to represent only the right to receive book-entry shares of Parent Common Stock and Parent Convertible Preferred Stock representing the Merger Consideration and, following issuance of book-entry shares representing the Merger Consideration, shall be canceled. The Merger Consideration shall be deemed to have been in full satisfaction of all rights pertaining to Company Capital Stock formerly represented by such Company Stock Certificates or Book-Entry Shares.
(c) Any portion of the Exchange Fund that remains unclaimed by holders of shares of Company Capital Stock as of the date that is one year after the Closing Date shall be delivered to Parent upon demand, and any holders of Company Stock Certificates or Book-Entry Shares who have not theretofore surrendered their Company Stock Certificates or transferred their Book-Entry Shares shall thereafter look only to Parent as general creditors for satisfaction of their claims for Parent Common Stock and Parent Convertible Preferred Stock and any dividends or distributions with respect to shares of Parent Common Stock and Parent Convertible Preferred Stock.
(d) No Party shall be liable to any holder of any shares of Company Capital Stock or to any other Person with respect to any shares of Parent Common Stock or Parent Convertible Preferred Stock (or dividends or distributions with respect thereto) delivered to any public official pursuant to any applicable abandoned property Law, escheat Law or similar Law.
2.9 Company Options.
(a) At the First Effective Time, each Company Option that is outstanding and unexercised immediately prior to the First Effective Time under the Company Plan, whether or not vested, shall be converted into and become an option to purchase Parent Common Stock, and Parent shall assume the Company Plan and each such Company Option in accordance with the terms (as in effect as of the date of this Agreement) of the Company Plan and the terms of the stock option agreement by which such Company Option is evidenced (but with changes to such documents as Parent and the Company determine in good faith are necessary to reflect the substitution of the Company Options by Parent to purchase shares of Parent Common Stock). All rights with respect to Company Common Stock under Company Options assumed by Parent shall thereupon be converted into rights with respect to Parent Common Stock. Accordingly, from and after the First Effective Time: (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock; (ii) the number of shares of Parent Common Stock
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subject to each Company Option assumed by Parent shall be determined by multiplying (A) the number of shares of Company Common Stock that were subject to such Company Option, as in effect immediately prior to the First Effective Time, by (B) the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; (iii) the per share exercise price for the Parent Common Stock issuable upon exercise of each Company Option assumed by Parent shall be determined by dividing (A) the per share exercise price of Company Common Stock subject to such Company Option, as in effect immediately prior to the First Effective Time, by (B) the Exchange Ratio and rounding the resulting exercise price up to the nearest whole cent; and (iv) any restriction on the exercise of any Company Option assumed by Parent shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, that, (I) in the case of any Company Option to which Section 421 of the Code applies as of the First Effective Time by reason of its qualification under Section 422 of the Code, the exercise price, the number of shares of Parent Common Stock subject to such option and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code; and (II) the exercise price, the number of shares of Parent Common Stock subject to, and the terms and conditions of exercise of each option to purchase Parent Common Stock shall also be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that: (x) Parent may amend the terms of the Company Options and the Company Plan as may be necessary to reflect Parent’s substitution of the Company Options with options to purchase Parent Common Stock (such as by making any change in control or similar definition relate to Parent and having any provision that provides for the adjustment of Company Options upon the occurrence of certain corporate events relate to corporate events that relate to Parent and/or Parent Common Stock); and (y) the Parent Board or a committee thereof shall succeed to the authority and responsibility of the Company Board or any committee thereof with respect to each Company Option assumed by Parent.
(b) Parent shall file with the SEC, promptly after the First Effective Time (and in any event, not later than thirty (30) days thereafter), a registration statement on Form S-8 (or any successor form), if available for use by Parent, relating to the shares of Parent Common Stock issuable with respect to Company Options assumed by Parent in accordance with Section 2.9.
2.10 Further Action. If, at any time after the First Effective Time, any further action is determined by the Surviving Entity to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Entity with full right, title and possession of and to all rights and property of the Company, then the officers and directors of the Surviving Entity shall be fully authorized, and shall use their and its reasonable best efforts (in the name of the Company, in the name of Merger Subs, in the name of the Surviving Entity and otherwise) to take such action.
2.11 Withholding. The Parties and the Exchange Agent (each, a “Withholding Agent”) shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Company Capital Stock or any other Person such amounts as such Party or the Exchange Agent is required to deduct and withhold under the Code or any other Law with respect to the making of such payment; provided, however, that if a Withholding Agent determines that any payment to any stockholder of the Company hereunder is subject to deduction and/or withholding, then, except with respect to compensatory payments, or as a result of a failure to deliver the certificate described in Section 7.2, such Withholding Agent shall (i) provide notice to such stockholder as soon as reasonably practicable after such determination (and no later than three (3) Business Days prior to undertaking such deduction and/or withholding), and (ii) use commercially reasonable efforts to cooperate with such stockholder prior to Closing to reduce or eliminate any such deduction and/or withholding. To the extent that amounts are so withheld and paid over to the appropriate Governmental Body, such withheld amounts shall be treated
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for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.
2.12 Parent Net Cash Schedule. Prior to the execution and delivery of this Agreement, Parent delivered to the Company a schedule (the “Parent Net Cash Schedule”) setting forth, in reasonable detail, Parent’s good faith calculation of Parent Net Cash (including each of the components thereof) as of 11:59 p.m. Eastern Time on the Business Day immediately preceding the date of this Agreement (the “Cash Determination Time”), together with a certificate, in substantially the form attached hereto as Exhibit D, executed by the chief financial officer of Parent (or, if there is no chief financial officer at such time, the principal financial officer of Parent or person in a similar role) certifying that the Parent Net Cash Schedule (a) was prepared in good faith and in accordance with this Agreement (including the definition of Parent Net Cash) and (b) accurately reflects, in all material respects, Parent Net Cash as of the Cash Determination Time. Parent has made available to the Company the work papers and back-up materials used or useful in preparing the Parent Net Cash Schedule. The Parties acknowledge and agree that the Parent Valuation, the Company Valuation and the Exchange Ratio have been agreed upon by the Parties in reliance upon, among other things, the Parent Net Cash Schedule.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Section 1.2(h), except as set forth in the disclosure schedule delivered by the Company to Parent (the “Company Disclosure Schedule”), the Company represents and warrants to Parent and Merger Subs as follows:
3.1 Due Organization; Subsidiaries.
(a) The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware and has all necessary corporate power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own or lease and use its property and assets in the manner in which its property and assets are currently owned or leased and used; and (iii) to perform its obligations under all Contracts by which it is bound.
(b) The Company is duly licensed and qualified to do business, and is in good standing (to the extent applicable in such jurisdiction), under the Laws of all jurisdictions where the nature of its business requires such licensing or qualification other than in jurisdictions where the failure to be so qualified individually or in the aggregate would not be reasonably expected to have a Company Material Adverse Effect.
(c) The Company has no Subsidiaries and the Company does not own any capital stock of, or any equity, ownership or profit-sharing interest of any nature in, or controls directly or indirectly, any other Entity.
(d) The Company is not nor has ever been, directly or indirectly, a party to, member of or participant in any partnership, joint venture or similar business Entity. The Company has not agreed to, and is not obligated to make, nor is bound by any Contract under which it may become obligated to make, any future investment in or capital contribution to any other Entity. The Company has not, at any time, been a general partner of, or has otherwise been liable for any of the debts or other obligations of, any general partnership, limited partnership or other Entity.
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3.2 Organizational Documents. The Company has made available to Parent accurate and complete copies of the Organizational Documents of the Company in effect as of the date of this Agreement. The Company is not in breach or violation of its respective Organizational Documents.
3.3 Authority; Binding Nature of Agreement.
(a) The Company has all necessary corporate power and authority to enter into and to perform its obligations under this Agreement and, subject to receipt of the Required Company Stockholder Vote, to consummate the Contemplated Transactions. The Company Board (at meetings duly called and held or by unanimous written consent) has: (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of the Company and its stockholders; (ii) authorized, approved and declared advisable this Agreement and the Contemplated Transactions; and (iii) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the stockholders of the Company vote in favor of the Company Stockholder Matters.
(b) This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Subs, constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
3.4 Vote Required. The affirmative vote (or written consent) of (a) the holders of a majority of the shares of Company Common Stock and Company Preferred Stock each outstanding on the record date for the Stockholder Written Consent and entitled to vote thereon, voting as a single class on an as-converted basis, and (b) the holders of a majority of the shares of Company Preferred Stock outstanding on the record date for the Stockholder Written Consent and entitled to vote thereon, voting as a separate class on an as-converted basis (collectively, the “Required Company Stockholder Vote”), is the only vote (or written consent) of the holders of any class or series of Company Capital Stock necessary to adopt and approve this Agreement and approve the Contemplated Transactions. The Stockholder Written Consent became effective upon the execution of this Agreement by the parties hereto and provided the Required Company Stockholder Vote. No other corporate proceedings by the Company are necessary to authorize this Agreement or to consummate the Contemplated Transactions.
3.5 Non-Contravention; Consents. Subject to obtaining the required Company Stockholder Vote, the filing of the Certificates of Merger required by the DGCL, and the filing of the Certificates of Designation, neither (x) the execution, delivery or performance of this Agreement by the Company, nor (y) the consummation of the Contemplated Transactions, will directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the provisions of the Company’s Organizational Documents;
(b) contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Law or any order, writ, injunction, judgment or decree to which the Company, or any of the assets owned or used by the Company, is subject, except as would not reasonably be expected to be material to the Company or its business;
(c) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company, except as would not reasonably be expected to be material to the Company or its business;
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(d) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any Company Material Contract, or give any Person the right to: (i) declare a default or exercise any remedy under any Company Material Contract; (ii) any material payment, rebate, chargeback, penalty or change in delivery schedule under any Company Material Contract; (iii) accelerate the maturity or performance of any Company Material Contract; or (iv) cancel, terminate or modify any term of any Company Material Contract, except in the case of any non-material breach, default, penalty or modification; or
(e) result in the imposition or creation of any Encumbrance upon or with respect to any asset owned or used by the Company (except for Permitted Encumbrances).
Except for (i) any Consent set forth in Section 3.5 of the Company Disclosure Schedule under any Company Contract, (ii) the Required Company Stockholder Vote, (iii) the filing of the Certificates of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (iv) the filing of the Certificates of Designation with the Secretary of State of the State of Delaware pursuant to the DGCL and (v) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities Laws, the Company is not required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with (A) the execution, delivery or performance of this Agreement, or (B) the consummation of the Contemplated Transactions. The Company Board has taken and will take all actions necessary to ensure that the restrictions applicable to business combinations contained in Section 203 of the DGCL (or analogous provisions) are, and will be, inapplicable to the execution, delivery and performance of this Agreement, the Lock-Up Agreements and to the consummation of the Contemplated Transactions. No other state takeover statute or similar Law applies or purports to apply to the Merger, this Agreement, the Lock-Up Agreements or any of the Contemplated Transactions.
3.6 Capitalization.
(a) The authorized Company Capital Stock as of the date of this Agreement consists of (i) 30,000,000 shares of Company Common Stock, par value $0.0001 per share, of which 6,277,777 shares are issued and are outstanding as of the date of this Agreement, and (ii) 20,000,000 shares of Preferred Stock, par value $0.0001 per share (the “Company Preferred Stock”), of which 20,000,000 shares have been designated ‘Series Seed Preferred Stock,’ of which 20,000,000 shares are issued and are outstanding as of the date of this Agreement. The Company does not hold any shares of its capital stock in its treasury. Section 3.6(a) of the Company Disclosure Schedule lists, as of the date of this Agreement, each record holder of issued and outstanding Company Capital Stock and the number and type of shares of Company Capital Stock held by such holder.
(b) All of the outstanding shares of Company Common Stock and Company Preferred Stock have been duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth in the Investor Agreements, none of the outstanding shares of Company Capital Stock is entitled or subject to any preemptive right, right of participation, right of maintenance or any similar right and none of the outstanding shares of Company Capital Stock is subject to any right of first refusal in favor of the Company. Except as contemplated herein or as set forth in the Investor Agreements, there is no Company Contract relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any shares of Company Capital Stock. The Company is not under any obligation, nor is it bound by any Contract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares of Company Capital Stock or other securities. Section 3.6(b) of the Company Disclosure Schedule accurately and completely lists all repurchase rights held by the Company with respect to shares of Company Capital Stock (including shares issued pursuant to the exercise of stock options) and specifies which of those repurchase
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rights are currently exercisable and whether the holder of such shares of Company Capital Stock timely filed an election with the relevant Governmental Bodies under Section 83(b) of the Code with respect to such shares. Each share of Company Preferred Stock is convertible into one share of Company Common Stock.
(c) Except for the Company’s 2026 Equity Incentive Plan (the “Company Plan”), the Company does not have any stock option plan or any other plan, program, agreement or arrangement providing for any equity-based compensation for any Person. As of the date of this Agreement, the Company has reserved 2,777,778 shares of Company Common Stock for issuance under the Company Plan, of which 1,277,777 shares have been issued and are currently outstanding. As of the Reference Date, 184,722 shares have been reserved for issuance upon exercise of Company Options previously granted and currently outstanding under the Company Plan, and 1,315,279 shares of Company Common Stock remain available for future issuance of awards pursuant to the Company Plan. Section 3.6(c) of the Company Disclosure Schedule sets forth the following information with respect to each Company Option outstanding as of the date of this Agreement: (i) the name of the optionee; (ii) the number of shares of Company Common Stock subject to such Company Option at the time of grant; (iii) the number of shares of Company Common Stock subject to such Company Option as of the date of this Agreement; (iv) the exercise price of such Company Option; (v) the date on which such Company Option was granted; (vi) the applicable vesting schedule, including the number of vested and unvested shares as of the date of this Agreement and any acceleration provisions; (vii) the date on which such Company Option expires; (viii) whether such Company Option is intended to constitute an “incentive stock option” (as defined in the Code) or a non-qualified stock option; and (ix) whether such Company Option is “early exercisable.” The Company has made available to Parent an accurate and complete copy of the Company Plan and a form of stock option agreement that is consistent in all material respects with the stock option agreements evidencing outstanding Company Options granted thereunder.
(d) Except for the Company Options set forth in Section 3.6(c) of the Company Disclosure Schedule, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of the capital stock or other securities of the Company; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other securities of the Company; or (iii) condition or circumstance that could be reasonably likely to give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of capital stock or other securities of the Company. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company.
(e) All outstanding shares of Company Common Stock, Company Preferred Stock, Company Options, and other securities of the Company have been issued and granted in material compliance with (i) the Organizational Documents of the Company in effect as of the relevant time and all applicable securities Laws and other applicable Law, and (ii) all requirements set forth in applicable Contracts.
(f) All distributions, dividends, repurchases and redemptions of the Company Capital Stock or other equity interests of the Company were undertaken in material compliance with (i) the Organizational Documents of the Company in effect as of the relevant time and all applicable securities Laws and other applicable Laws, and (ii) all requirements set forth in applicable Contracts.
3.7 Financial Statements.
(a) Concurrently with the execution hereof, the Company has provided to Parent true and complete copies of the Company Unaudited Interim Balance Sheet (collectively, the
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“Company Financials”). The Company Financials were prepared in accordance with GAAP (except as may be indicated in the notes to such financial statements and except that the unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments, none of which is material) and fairly present, in all material respects, the financial position and operating results of the Company as of the dates and for the periods indicated therein.
(b) The Company maintains accurate books and records reflecting its assets and liabilities and maintains a system of internal accounting controls designed to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of the financial statements of the Company in accordance with GAAP and to maintain accountability of the Company’s assets; (iii) access to the Company’s assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for the Company’s assets is compared with the existing assets at regular intervals and appropriate action is taken with respect to any differences; and (v) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented which are designed to effect the collection thereof on a current and timely basis. The Company maintains internal controls consistent with the practices of similarly situated private companies over financial reporting that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
(c) Section 3.7(c) of the Company Disclosure Schedule lists, and the Company has delivered to Parent accurate and complete copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K under the Exchange Act) effected by the Company since the Company’s inception.
(d) Since the Company’s inception, there have been no formal investigations regarding financial reporting or accounting policies and practices discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer or general counsel of the Company, the Company Board or any committee thereof. Since the Company’s inception, neither the Company nor its independent auditors have identified (i) any significant deficiency or material weakness in the design or operation of the system of internal accounting controls utilized by the Company, (ii) any fraud, whether or not material, that involves the Company, the Company’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company or (iii) any claim or allegation regarding any of the foregoing.
3.8 Absence of Changes. Except as set forth in Section 3.8(i) of the Company Disclosure Schedule, after the date of the Company Unaudited Interim Balance Sheet, the Company has conducted its business only in the Ordinary Course of Business (except for the execution and performance of this Agreement and the discussions, negotiations and transactions related thereto). Except as set forth in Section 3.8(ii) of the Company Disclosure Schedule, there has not been any Company Material Adverse Effect and, except in the Ordinary Course of Business, the Company has not done any of the following:
(a) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of its capital stock; or repurchased, redeemed or otherwise reacquired any shares of its capital stock or other securities (except for shares of Company Common Stock from terminated employees, directors or consultants of the Company or in connection with the payment of the exercise price and/or withholding Taxes incurred upon the exercise, settlement or vesting of any award granted under the Company Plan);
(b) sold, issued, granted, pledged or otherwise disposed of or encumbered or authorized any of the foregoing with respect to: (A) any capital stock or other security of the Company;
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(B) any option, warrant or right to acquire any capital stock or any other security; or (C) any instrument convertible into or exchangeable for any capital stock or other security of the Company;
(c) except as required to give effect to anything in contemplation of the Closing, amended any of its Organizational Documents, or effected or been a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction except, for the avoidance of doubt, the Contemplated Transactions;
(d) formed any Subsidiary or acquired any equity interest or other interest in any other Entity or entered into a joint venture with any other Entity;
(e) (i) lent money to any Person, (ii) incurred or guaranteed any indebtedness for borrowed money, or (iii) guaranteed any debt securities of others;
(f) other than as required by applicable Law or the terms of any Company Benefit Plan as in effect on the date of this Agreement and other than the Company Plan or any Company Option: (A) adopted, terminated, established or entered into any Company Benefit Plan; (B) caused or permitted any Company Benefit Plan to be amended in any material respect; (C) paid any material bonus or distributed any profit-sharing account balances or similar payment to, or increased the amount of the wages, salary, commissions, benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (D) increased the severance or change-of-control benefits offered to any current, former or new employees, directors or consultants or (E) hired, terminated or gave notice of termination (other than for cause) to, any (x) officer or (y) employee whose annual base salary is or is expected to be more than $125,000 per year;
(g) entered into any collective bargaining agreement or similar agreement with any labor union or similar labor organization;
(h) entered into any material transaction other than in connection with the Contemplated Transactions;
(i) acquired any material asset or sold, leased or otherwise irrevocably disposed of any of its assets or properties, or granted any Encumbrance (other than Permitted Encumbrances) with respect to such assets or properties;
(j) sold, assigned, transferred, licensed, sublicensed or otherwise disposed of any material Company IP;
(k) made, changed or revoked any material Tax election, failed to pay any income or other material Tax as such Tax becomes due and payable, filed any amendment making any material change to any Tax Return, settled or compromised any income or other material Tax liability, entered into any Tax allocation, sharing, indemnification or other similar agreement or arrangement (including any “closing agreement” described in Section 7121 of the Code (or any similar Law) with any Governmental Body, but excluding customary commercial Contracts entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes), requested or consented to any extension or waiver of any limitation period with respect to any claim or assessment for any income or other material Taxes (other than pursuant to an extension of time to file any Tax Return granted in the Ordinary Course of Business of not more than six months), or adopted or changed any material accounting method in respect of Taxes;
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(l) made any expenditures, incurred any Liabilities or discharged or satisfied any Liabilities, in each case, in amounts that exceed $100,000;
(m) other than as required by Law or GAAP, taken any action to change accounting policies or procedures;
(n) initiated or settled any Legal Proceeding; or
(o) agreed, resolved or committed to do any of the foregoing.
3.9 Absence of Undisclosed Liabilities. As of the date hereof, the Company has no liability, indebtedness, obligation or expense of any kind, whether accrued, absolute, contingent, matured or unmatured (whether or not required to be reflected in the financial statements in accordance with GAAP) (each a “Liability”), individually or in the aggregate, of a type required to be recorded or reflected on a balance sheet or disclosed in the footnotes thereto under GAAP, except for: (a) Liabilities disclosed, reflected or reserved against in the Company Unaudited Interim Balance Sheet; (b) Liabilities that have been incurred by the Company since the date of the Company Unaudited Interim Balance Sheet in the Ordinary Course of Business; (c) Liabilities for performance of obligations under Company Contracts in the Ordinary Course of Business; (d) Liabilities incurred in connection with the Contemplated Transactions; (e) Liabilities which would not, individually or in the aggregate, reasonably be expected to be material to the Company; and (f) Liabilities described in Section 3.9 of the Company Disclosure Schedule.
3.10 Title to Assets. The Company owns, and has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all tangible properties or tangible assets and equipment used or held for use in its business or operations or purported to be owned by it that are material to the Company or its business, including: (a) all tangible assets reflected on the Company Unaudited Interim Balance Sheet; and (b) all other tangible assets reflected in the books and records of the Company as being owned by the Company. All of such assets are owned or, in the case of leased assets, leased by the Company free and clear of any Encumbrances, other than Permitted Encumbrances.
3.11 Real Property; Leasehold. The Company does not own, nor has ever owned, any real property. The Company has made available to Parent (a) an accurate and complete list of all real properties with respect to which the Company directly or indirectly holds a valid leasehold interest as well as any other real estate that is in the possession of, or occupied or leased by, the Company and (b) copies of all leases under which any such real property is possessed, occupied or leased (the “Company Real Estate Leases”), each of which is in full force and effect, with no existing material default thereunder by the Company, or to the Knowledge of the Company, any other party thereto. The Company’s possession, occupancy, lease, use and/or operation of each such leased property conforms to all applicable Laws in all material respects, and the Company has exclusive possession of each such leased property and leasehold interest and has not granted any occupancy rights to tenants or licensees with respect to such leased property or leasehold interest. In addition, each such leased property and leasehold interest is free and clear of all Encumbrances other than Permitted Encumbrances. The Company has not received any written notice from its landlords or any Governmental Body that: (i) relates to violations of building, zoning, safety or fire ordinances or regulations; (ii) claims any defect or deficiency with respect to any of such properties; or (iii) requests the performance of any repairs, alterations or other work to such properties, except in each case as had not and would not reasonably be expected to be material to the Company.
3.12 Intellectual Property; Privacy.
(a) Section 3.12(a) of the Company Disclosure Schedule identifies each item of material Registered IP owned in whole or in part by the Company, including, with respect to each
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application and registration: (i) the name of the applicant or registrant and any other co-owner, (ii) the jurisdiction of application or registration, and (iii) the application or registration number. To the Knowledge of the Company, each of the patents and patent applications included in Section 3.12(a) of the Company Disclosure Schedule properly identifies by name each and every inventor of the inventions claimed therein as determined in accordance with applicable Laws of the United States. As of the date of this Agreement, no cancellation, interference, opposition, reissue, reexamination or other proceeding of any nature (other than office actions or similar communications issued by any Governmental Body in the ordinary course of prosecution of any pending applications for registration) is pending or, to the Knowledge of the Company, threatened in writing, in which the scope, validity, enforceability or ownership of any Company IP is being or has been contested or challenged. To the Knowledge of the Company, each item of Company IP is valid and enforceable, and with respect to the Company’s Registered IP, subsisting.
(b) There are no actions that must be taken within ninety (90) days of the Closing, the failure of which will result in the abandonment, lapse or cancellation of any material Registered IP owned in whole or in part by the Company.
(c) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company exclusively owns, is the sole assignee of, or has exclusively licensed all material Company IP (other than as disclosed in Section 3.12(c) of the Company Disclosure Schedule), free and clear of all Encumbrances other than Permitted Encumbrances. The Company IP and the Intellectual Property Rights licensed to the Company pursuant to a valid, enforceable written agreement constitute all Intellectual Property Rights used in, material to or otherwise necessary for the operation of the Company’s business as currently conducted. All Intellectual Property Rights licensed to the Company are licensed pursuant to a valid, enforceable written agreement. Each Company Associate involved in the creation or development of any material Company IP, pursuant to such Company Associate’s activities on behalf of the Company, has signed a valid and enforceable written agreement containing an assignment of such Company Associate’s rights in such Company IP to the Company. Each Company Associate who has or has had access to the Company’s trade secrets or confidential information has signed a valid and enforceable written agreement containing confidentiality provisions protecting the Company IP, trade secrets and confidential information. The Company has taken commercially reasonable steps to protect and preserve the confidentiality of its trade secrets and confidential information.
(d) To the Knowledge of the Company, no funding, facilities or personnel of any Governmental Body or any university, college, research institute or other educational institution has been used to create Company IP, except for any such funding or use of facilities or personnel that does not result in such Governmental Body or institution owning such Company IP as of the date of this Agreement.
(e) Section 3.12(e) of the Company Disclosure Schedule sets forth each license agreement pursuant to which the Company (i) is granted a license under any material Intellectual Property Right owned by any third party that is used by the Company in its business as currently conducted (each a “Company In-bound License”) or (ii) grants to any third party a license under any material Company IP or material Intellectual Property Right licensed to the Company under a Company In-bound License (each a “Company Out-bound License”) (provided, that, Company In-bound Licenses shall not include, when entered into in the Ordinary Course of Business, material transfer agreements, clinical trial agreements, agreements with Company Associates, services agreements, non-disclosure agreements, commercially available Software-as-a-Service offerings, or off-the-shelf software licenses; and Company Out-bound Licenses shall not include, when entered into in the Ordinary Course of Business, material transfer agreements, clinical trial agreements, services agreements, non-disclosure agreements, or non-exclusive outbound licenses). All Company In-bound Licenses and Company Out-bound Licenses are in full force and effect and are valid, enforceable and binding obligations of the Company and, to the
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Knowledge of Company, each other party to such Company In-bound Licenses or Company Out-bound Licenses. Neither the Company, nor to the Knowledge of the Company, any other party to such Company In-bound Licenses or Company Out-bound Licenses, is in material breach under any Company In-bound Licenses or Company Out-bound Licenses. Except as set forth in Section 3.12(e) of the Company Disclosure Schedule, none of the terms or conditions of any Company In-Bound License or any Company Out-Bound License requires the Company or any of its Affiliates to maintain, develop, or prosecute any Intellectual Property Rights.
(f) To the Knowledge of the Company: (i) the operation of the business of the Company as currently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property Rights of any other Person and (ii) no other Person is infringing, misappropriating or otherwise violating any Company IP. No Legal Proceeding is pending (or, to the Knowledge of the Company, is threatened in writing) (A) against the Company alleging that the operation of the business of the Company infringes or constitutes the misappropriation or other violation of any Intellectual Property Rights of another Person or (B) by the Company alleging that another Person has infringed, misappropriated or otherwise violated any of the Company IP. Since the Company’s inception, the Company has not received any written notice or other written communication alleging that the operation of the business of the Company infringes or constitutes the misappropriation or other violation of any Intellectual Property Right of another Person.
(g) None of the Company IP owned by the Company or, to the Knowledge of the Company, none of the material Intellectual Property Rights exclusively licensed to the Company is subject to any pending or outstanding injunction, directive, order, judgment or other disposition of dispute that adversely and materially restricts the use, transfer, registration or licensing by the Company of any such Company IP.
(h) To the Knowledge of the Company, the Company and the operation of the Company’s business are and since the Company’s inception has been, in material compliance with all Privacy and Data Processing Requirements. To the Knowledge of the Company, the Company has at all applicable times provided all notices, and obtained and maintained all rights, consents, and authorizations, to Process Company Data as Processed by or for the Company. Since the Company’s inception, there have been (i) no loss or theft of, or security breach relating to, Company Data, (ii) no violation of any security policy of the Company regarding any such Company Data, and (iii) no unauthorized access to, or unauthorized, unintended, or improper use disclosure, or other Processing of any Company Data. The Company has taken commercially reasonable steps and implemented reasonable disaster recovery and security plans and procedures to protect the information technology systems used in, material to or necessary for operation of the Company’s business as currently conducted and Company Data from unauthorized use access, or other Processing. To the Knowledge of the Company, there have been no (i) material malfunctions or unauthorized intrusions or breaches of the information technology systems used in, material to or necessary for the operation of the Company’s business or (ii) material unauthorized access to, or other processing of, Company Data.
3.13 Agreements, Contracts and Commitments.
(a) Section 3.13(a) of the Company Disclosure Schedule lists the following Company Contracts in effect as of the date of this Agreement other than any Company Benefit Plans (each, a “Company Material Contract” and collectively, the “Company Material Contracts”):
(i) each Company Contract relating to any agreement of indemnification or guaranty not entered into in the Ordinary Course of Business;
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(ii) each Company Contract containing (A) any covenant limiting the freedom of the Company or the Surviving Entity to engage in any line of business or compete with any Person, (B) any most-favored nation or other preferred pricing arrangement in favor of a Person other than the Company or any similar term by which any Person is or could become entitled to any benefit, right or privilege that must be at least as favorable to such Person as those offered to any other Person, (C) any exclusivity provision, right of first refusal or right of first negotiation or similar covenant in favor of a Person other than the Company, or (D) any non-solicitation provision not entered into the Ordinary Course of Business;
(iii) each Company Contract relating to capital expenditures and requiring payments after the date of this Agreement in excess of $100,000 pursuant to its express terms and not cancelable without penalty;
(iv) each Company Contract relating to the disposition or acquisition of material assets or any ownership interest in any Entity, except as contemplated hereby;
(v) each Company Contract relating to any mortgages, indentures, loans, notes or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit in excess of $100,000 or creating any material Encumbrances with respect to any assets of the Company or any loans or debt obligations with officers or directors of the Company;
(vi) each Company Contract requiring payment by or to the Company after the date of this Agreement in excess of $100,000 in the aggregate in the current calendar year or any future calendar year pursuant to its express terms relating to: (A) any distribution agreement (identifying any that contain exclusivity provisions); (B) any agreement involving provision of services or products with respect to any pre-clinical or clinical development activities of the Company; (C) any dealer, distributor, joint marketing, alliance, joint venture, cooperation, development or other agreement currently in force under which the Company has continuing obligations to develop or market any product, technology or service, or any agreement pursuant to which the Company has continuing obligations to develop any Intellectual Property Rights that will not be owned, in whole or in part, by the Company; or (D) any Contract with any third party providing any services relating to the manufacture or production of any product, service or technology of the Company or any Contract to sell, distribute or commercialize any products or service of the Company;
(vii) each Company Contract with any financial advisor, broker, finder, investment banker or other similar Person providing financial advisory services to the Company in connection with the Contemplated Transactions;
(viii) each Company Real Estate Lease;
(ix) each Company Contract with any Governmental Body;
(x) each Company Out-bound License and Company In-bound License, and each Company Contract containing a covenant not to sue or otherwise enforce any Intellectual Property Rights;
(xi) each Company Contract requiring the payment of any royalty, dividend or similar arrangement based on the revenues or profits of the Company;
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(xii) each Company Contract, offer letter, employment agreement, or independent contractor agreement with any employee, independent contractor or other natural person service provider whose annual compensation equals or exceeds $125,000 that (A) is not immediately terminable at will by the Company without notice, severance or other cost or payment, except as required under applicable Law, or (B) provides for retention payments, change of control payments, severance, accelerated vesting, or any similar payment or benefit that may or will become due as a result of the Merger;
(xiii) each Company Contract providing any option to receive a license or other right, any right of first negotiation, any right of first refusal or any similar right to any Person related to any material Company IP or material Intellectual Property Right licensed to the Company under a Company In-bound License;
(xiv) each Company Contract entered into in settlement of any Legal Proceeding or other dispute; and
(xv) any other Company Contract that is not terminable at will (with no penalty or payment or requirement for prior notice, except as required by applicable law) by the Company and (A) which involves payment or receipt by the Company after the date of this Agreement under any such agreement, Contract or commitment of more than $100,000 in the aggregate, or obligations after the date of this Agreement in excess of $100,000 in the aggregate, or (B) that is material to the business or operations of the Company taken as a whole.
(b) The Company has delivered or made available to Parent accurate and complete copies of all Company Material Contracts, including all amendments thereto. Except as set forth in Section 3.13(b) of the Company Disclosure Schedule, there are no Company Material Contracts that are not in written form. Neither the Company nor, to the Company’s Knowledge, as of the date of this Agreement any other party to a Company Material Contract, has breached, violated or defaulted under, or received notice that it breached, violated or defaulted under, any of the terms or conditions of any Company Material Contract in such manner as would permit any other party to cancel or terminate any such Company Material Contract, or would permit any other party to seek damages which would reasonably be expected to be material to the Company or its business. As to the Company, as of the date of this Agreement, each Company Material Contract is valid, binding, enforceable and in full force and effect, subject to the Enforceability Exceptions. No Person is renegotiating, or has a right pursuant to the terms of any Company Material Contract to change, any material amount paid or payable to the Company under any Company Material Contract or any other material term or provision of any Company Material Contract, and no Person has indicated in writing to the Company that it desires to renegotiate, modify, not renew or cancel any Company Material Contract.
3.14 Compliance; Permits; Restrictions. The Company holds all required Governmental Authorizations which are material to the operation of the business of the Company as currently conducted (the “Company Permits”). Section 3.14 of the Company Disclosure Schedule identifies each Company Permit. Each such Company Permit is valid and in full force and effect, and the Company is in material compliance with the terms of the Company Permits. No Legal Proceeding is pending or, to the Knowledge of the Company, threatened, which seeks to revoke, limit, suspend, or materially modify any Company Permit.
3.15 Legal Proceedings; Orders.
(a) As of the date of this Agreement, there is no material pending Legal Proceeding and, to the Knowledge of the Company, no Person has threatened in writing to commence any Legal Proceeding: (i) that involves (A) the Company, (B) any Company Associate (in his or her capacity
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as such) or (C) any of the material assets owned or used by the Company; or (ii) that challenges, or that would have the effect of preventing, delaying, making illegal or otherwise interfering with, the Contemplated Transactions.
(b) Except as set forth in Section 3.15(b) of the Company Disclosure Schedule, since the Company’s inception through the date of this Agreement, no Legal Proceeding has been pending against the Company that resulted in material liability to the Company.
(c) There is no order, writ, injunction, judgment or decree to which the Company, or any of the material assets owned or used by the Company, is subject. To the Knowledge of the Company, no officer or employees of the Company is subject to any order, writ, injunction, judgment or decree that prohibits such officer or employee from engaging in or continuing any conduct, activity or practice relating to the business of the Company or to any material assets owned or used by the Company.
3.16 Tax Matters.
(a) The Company has timely filed all income and other material Tax Returns that were required to be filed by or with respect to it under applicable Law. All such Tax Returns are correct and complete in all material respects and have been prepared in compliance with all applicable Law. No written claim has ever been made by any Governmental Body in any jurisdiction where the Company does not file a particular Tax Return or pay a particular Tax that the Company or such Subsidiary is subject to taxation by that jurisdiction.
(b) All income and other material Taxes due and owing by the Company on or before the date hereof (whether or not shown on any Tax Return) have been fully and timely paid (taking into account any applicable extensions). The unpaid Taxes of the Company did not, as of the date of the Company Unaudited Interim Balance Sheet, materially exceed the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax items) set forth on the face of the Company Unaudited Interim Balance Sheet. Since the date of the Company Unaudited Interim Balance Sheet, the Company has not incurred any material Liability for Taxes outside the Ordinary Course of Business.
(c) All Taxes that the Company is or was required by Law to withhold or collect have been duly and timely withheld or collected in all material respects on behalf of its respective employees, independent contractors, stockholders, lenders, customers or other third parties and have been timely paid to the proper Governmental Body or other Person or properly set aside in accounts for this purpose.
(d) There are no Encumbrances for a material amount of Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company.
(e) No deficiencies for a material amount of Taxes with respect to the Company have been claimed, proposed or assessed by any Governmental Body in writing, that have not been fully resolved. There are no pending or ongoing and, to the Knowledge of the Company, no threatened audits, assessments or other actions for or relating to any liability in respect of a material amount of Taxes of the Company. The Company nor any of its predecessors has waived any statute of limitations or agreed to any extension of time with respect to any income or other material Tax assessment or deficiency (in each case, excluding automatic extensions of time within which to file a Tax Return).
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(f) The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(g) The Company is not a party to any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement, or similar agreement or arrangement, other than customary commercial Contracts entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes.
(h) The Company (nor Parent as a result of the Merger) will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for Tax purposes for a Tax period ending on or prior to the Closing Date; (ii) use of an improper method of accounting for a Tax period ending on or prior to the Closing Date; (iii) “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed at or prior to the Closing; (iv) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Law) entered into or existing, respectively, at or prior to the Closing; (v) installment sale or open transaction disposition made at or prior to the Closing; or (vi) prepaid amount, advance payment or deferred revenue received or accrued at or prior to the Closing.
(i) The Company has not ever been (i) a member of a consolidated, combined or unitary Tax group (other than such a group the common parent of which is the Company) or (ii) a party to any joint venture, partnership, or other arrangement that is treated as a partnership for U.S. federal income Tax purposes. The Company has no Liability for any material Taxes of any Person (other than the Company) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by Contract (other than a Contract entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes) or otherwise by operation of law.
(j) Since the Company’s inception, the Company has not distributed stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code (or any similar provisions of state, local or foreign Law).
(k) The Company has not had a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise had an office or fixed place of business in a country other than the country in which it is organized.
(l) The Company has not participated in or been a party to a transaction that, as of the date of this Agreement, constitutes a “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).
(m) Section 3.16(m) of the Company Disclosure Schedule sets forth the entity classification of the Company for U.S. federal income tax purposes. The Company has not made an election or taken any other action to change its federal and state income tax classification from such classification.
For purposes of this Section 3.16, each reference to the Company shall be deemed to include any Person that was liquidated into, merged with, or is otherwise a predecessor to, the Company.
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3.17 Employee and Labor Matters; Benefit Plans.
(a) Section 3.17(a) of the Company Disclosure Schedule is a list of all material Company Benefit Plans, other than at-will employment offer letters on the Company’s standard form and other than individual compensatory equity award agreements made pursuant to the Company’s standard forms, in which case only representative standard forms of such agreements shall be scheduled. “Company Benefit Plan” means each (i) “employee benefit plan” as defined in Section 3(3) of ERISA and (ii) other pension, retirement, deferred compensation, excess benefit, profit-sharing, bonus, incentive, equity or equity-based, phantom equity, employment, consulting, severance, change-of-control, retention, health, life, disability, group insurance, paid time off, reimbursement, holiday, welfare and fringe benefit plan, program, agreement, Contract, or arrangement (whether written or unwritten, qualified or nonqualified, funded or unfunded, subject or not subject to ERISA and including any that have been frozen), in each case, sponsored, maintained, administered, contributed to, or required to be contributed to, by the Company for the benefit of any current or former employee, director, officer or independent contractor of the Company (or beneficiary thereof) or under which the Company has any actual or contingent liability (including, without limitation, by reason of having a Company ERISA Affiliate).
(b) As applicable with respect to each material Company Benefit Plan, the Company has made available to Parent, true and complete copies of (i) each material Company Benefit Plan, including all amendments thereto, and in the case of an unwritten material Company Benefit Plan, a written description thereof, (ii) all current trust documents, investment management Contracts, custodial agreements, administrative services agreements and insurance and annuity Contracts relating thereto, (iii) the current summary plan description and each summary of material modifications thereto, (iv) the most recently filed annual reports with any Governmental Body (e.g., Form 5500 and all schedules thereto), (v) the most recent IRS determination, opinion or advisory letter, (vi) the most recent summary annual reports, nondiscrimination testing reports, actuarial reports, financial statements and trustee reports, (vii) substantiation of ACA Information Reporting on Forms 1094/1095, and (viii) all notices and filings from the IRS or Department of Labor or other Governmental Body concerning audits or investigations, or “prohibited transactions” within the meaning of Section 406 of ERISA or Section 4975 of the Code, or other non-routine correspondence.
(c) Each Company Benefit Plan has been maintained, operated and administered in compliance in all material respects with its terms and the applicable provisions of ERISA, the Code and all other Laws.
(d) The Company Benefit Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code have received determination or opinion letters from the IRS on which they may currently rely to the effect that such plans are qualified under Section 401(a) of the Code and the related trusts are exempt from federal income Taxes under Section 501(a) of the Code, respectively, and nothing has occurred that would reasonably be expected to materially adversely affect the qualification of such Company Benefit Plan or the tax exempt status of the related trust.
(e) Neither the Company nor any Company ERISA Affiliate maintains, contributes to, is required to contribute to, or has any actual or contingent liability with respect to, (i) any “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) that is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, (ii) any “multiemployer plan” (within the meaning of Section 3(37) of ERISA), (iii) any “multiple employer plan” (within the meaning of Section 413 of the Code) or (iv) any “multiple employer welfare arrangement” (within the meaning of Section 3(40) of ERISA).
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(f) There are no pending audits or investigations by any Governmental Body involving any Company Benefit Plan, and no pending or, to the Knowledge of the Company, threatened claims (except for routine individual claims for benefits payable in the normal operation of the Company Benefit Plans), suits or proceedings involving any Company Benefit Plan, or, to the Knowledge of the Company, any fiduciary thereof or service provider thereto, in any case except as would not be reasonably expected to result in material liability to the Company. All contributions and premium payments required to have been made under any of the Company Benefit Plans or by applicable Law (without regard to any waivers granted under Section 412 of the Code), have been timely made and the Company has no material liability for any unpaid contributions with respect to any Company Benefit Plan. Neither the Company, nor any Company Benefit Plan, is liable for, nor reasonably expected to be liable for, any excise tax or penalty under ERISA or the Code.
(g) None of the Company, any Company ERISA Affiliate or, to the Knowledge of the Company, any fiduciary, trustee or administrator of any Company Benefit Plan, has engaged in, or in connection with the Contemplated Transactions will engage in, any transaction with respect to any Company Benefit Plan which would subject any such Company Benefit Plan, the Company, or Parent to a material Tax, material penalty or material liability for a “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code.
(h) No Company Benefit Plan provides death, medical, dental, vision, life insurance, disability or other welfare benefits beyond termination of service or retirement other than coverage mandated by Law and, to the Knowledge of the Company, the Company has not made a written representation promising the same.
(i) Each Company Benefit Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code to which the Company or any Affiliate thereof is a party has been administered and operated in documentary and operational compliance with the provisions of Section 409A of the Code and the Treasury Regulations thereunder, and no additional tax under Section 409A(a)(1)(B) of the Code has been or could reasonably be expected to be incurred by a participant in any such Company Benefit Plan.
(j) Neither the execution of this Agreement, nor the performance of the Contemplated Transactions (either alone or when combined with the occurrence of any other event, including without limitation, a termination of employment), will: (i) result in any payment becoming due to any current or former employee, director, officer, or independent contractor of the Company thereof, pursuant to any Company Benefit Plan (ii) increase any amount of compensation or benefits otherwise payable under any Company Benefit Plan, (iii) result in the acceleration of the time of payment, funding or vesting of any benefits under any Company Benefit Plan, (iv) require any contribution or payment to fund any obligation under any Company Benefit Plan or (v) limit the right to merge, amend or terminate any Company Benefit Plan.
(k) Except as set forth in Section 3.17(a) of the Company Disclosure Schedule, neither the execution of this Agreement, nor the consummation of the Contemplated Transactions (either alone or when combined with the occurrence of any other event, including without limitation, a termination of employment) will result in the receipt or retention by any person who is a “disqualified individual” (within the meaning of Section 280G of the Code) with respect to the Company of any payment or benefit that is or could be characterized as a “parachute payment” (within the meaning of Section 280G of the Code), determined without regard to the application of Section 280G(b)(5) of the Code.
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(l) No current or former employee, officer, director or independent contractor of the Company has any “gross up” agreements with the Company or other assurance of reimbursement by the Company for any Taxes imposed under Section 409A of the Code or Section 4999 of the Code.
(m) The Company does not maintain any Company Benefit Plan for the benefit of any service providers located outside of the United States.
(n) The Company has provided to Parent a true and correct list, as of the date of this Agreement, containing the names of all current full-time, part-time or temporary employees and independent contractors (and indication as such), and, as applicable: (i) the annual dollar amount of all cash compensation in the form of wages, salary, fees, commissions, or director’s fees payable to each person; (ii) dates of employment or service; (iii) title and, with respect to independent contractors, a current written description of such person’s contracting services; (iv) visa status, if applicable; and (v) with respect to employees, (A) a designation of whether they are classified as exempt or non-exempt for purposes of the Fair Labor Standards Act, as amended (“FLSA”) and any similar state, federal or ex-U.S. law and (B) whether such an employee is on leave and, if so, the expected return date.
(o) The Company is not and has never been a party to, bound by, or has a duty to bargain under, any collective bargaining agreement or other Contract with a labor union or similar labor organization representing any of its employees, and there is no labor union or similar labor organization representing or, to the Knowledge of the Company, purporting to represent or seeking to represent any employees of the Company, including through the filing of a petition for representation election. There is not and has not been since the Company’s inception, nor, to the Knowledge of the Company, is there or has there been since the Company’s inception any threat of, any strike, slowdown, work stoppage, lockout, union election petition, demand for recognition, or any similar activity or dispute or any union organizing activity, affecting the Company.
(p) The Company is, and since the Company’s inception has been, in material compliance with all applicable Laws respecting labor, employment, employment practices, and terms and conditions of employment, including worker classification, contractor classification, discrimination, harassment and retaliation, equal employment opportunities, fair employment practices, meal and rest periods, immigration, employee safety and health, payment of wages (including overtime wages), unemployment and workers’ compensation, leaves of absence, and hours of work. Except as would not be reasonably likely to result in a material liability to the Company, with respect to employees of the Company, the Company, since the Company’s inception, has withheld and reported all amounts required by Law to be withheld and reported with respect to wages, salaries and other payments, benefits, or compensation to employees. There is no material Legal Proceeding pending or, to the Knowledge of the Company, threatened or reasonably anticipated against the Company relating to any current or former employee, applicant for employment, or consultant of the Company.
(q) Since the Company’s inception, the Company has complied in all material respects with the WARN Act, and no action that could trigger the WARN Act will be implemented before the Closing Date without advance notification to and approval of Parent.
3.18 Environmental Matters. The Company is and since inception has complied with all applicable Environmental Laws, which compliance includes the possession by the Company of all permits and other Governmental Authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof, except for any failure to be in such compliance that, either individually or in the aggregate, would not reasonably be expected to be material to the Company or its business. The Company has not received since inception any written notice or other communication (in writing or otherwise), whether from a Governmental Body or other Person, that alleges that the Company
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is not in compliance with or has liability pursuant to any Environmental Law and, to the Knowledge of the Company, there are no circumstances that would reasonably be expected to prevent or interfere with the Company’s compliance in any material respects with any Environmental Law, except where such failure to comply would not reasonably be expected to be material to the Company or its business. No current or (during the time a prior property was leased or controlled by the Company) prior property leased or controlled by the Company has had a release of or exposure to Hazardous Materials in material violation of or as would reasonably be expected to result in any material liability of the Company pursuant to Environmental Law. No consent, approval or Governmental Authorization of or registration or filing with any Governmental Body is required by Environmental Laws in connection with the execution and delivery of this Agreement or consummation of the Contemplated Transactions by the Company. Prior to the date hereof, the Company has provided or otherwise made available to Parent true and correct copies of all material environmental reports, assessments, studies and audits in the possession or control of the Company with respect to any property leased or controlled by the Company or any business operated by it.
3.19 Insurance. The Company has delivered or made available to Parent accurate and complete copies of all material insurance policies and all material self-insurance programs and arrangements relating to the business, assets, liabilities and operations of the Company. Each of such insurance policies is in full force and effect and the Company is in compliance in all material respects with the terms thereof. Other than customary end of policy notifications from insurance carriers, since the Company’s inception, the Company has not received any notice or other written communication regarding any actual or possible: (a) cancellation or invalidation of any insurance policy; or (b) refusal or denial of any coverage, reservation of rights or rejection of any material claim under any insurance policy. The Company has provided timely written notice to the appropriate insurance carrier(s) of each Legal Proceeding that is currently pending against the Company for which the Company has insurance coverage, and no such carrier has issued a denial of coverage or a reservation of rights with respect to any such Legal Proceeding, or informed the Company of its intent to do so.
3.20 No Financial Advisors. Except as set forth in Section 3.20 of the Company Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage fee, finder’s fee, opinion fee, success fee, transaction fee or other fee or commission in connection with the Contemplated Transactions based upon arrangements made by or on behalf of the Company.
3.21 Transactions with Affiliates.
(a) Section 3.21(a) of the Company Disclosure Schedule describes any material transactions or relationships, since the Company’s inception, between, on one hand, the Company and, on the other hand, any (i) officer or director of the Company or, to the Knowledge of the Company, any of such officer’s or director’s immediate family members, (ii) owner of more than 5% of the voting power of the outstanding Company Capital Stock or (iii) to the Knowledge of the Company, any “related person” (within the meaning of Item 404 of Regulation S-K under the Securities Act) of any such officer, director or owner (other than the Company) in the case of each of (i), (ii) or (iii) that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act.
(b) Section 3.21(b) of the Company Disclosure Schedule lists each stockholders agreement, voting agreement, registration rights agreement, co-sale agreement or other similar Contract between the Company and any holders of Company Capital Stock, including any such Contract granting any Person investor rights, rights of first refusal, rights of first offer, registration rights, director designation rights or similar rights (collectively, the “Investor Agreements”).
3.22 Anti-Bribery. None of the Company nor any of its directors, officers, employees or, to the Company’s Knowledge, agents or any other Person acting on their behalf (in each in their
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respective capacities as such) has directly or indirectly made any bribes, rebates, payoffs, influence payments, kickbacks, illegal payments, illegal political contributions, or other payments, in the form of cash, gifts, or otherwise, or taken any other action, in violation of the Foreign Corrupt Practices Act of 1977, the UK Bribery Act of 2010 or any other anti-bribery or anti-corruption Law (collectively, the “Anti-Bribery Laws”). The Company is not, nor has ever been, the subject of any investigation or inquiry by any Governmental Body with respect to potential violations of Anti-Bribery Laws.
3.23 Disclaimer of Other Representations or Warranties.
(a) Except as previously set forth in this Section 3 or in any certificate delivered by the Company to Parent and/or Merger Subs pursuant to this Agreement, the Company makes no representation or warranty, express or implied, at law or in equity, with respect to it or any of its assets, liabilities or operations, and any such other representations or warranties are hereby expressly disclaimed.
(b) The Company acknowledges and agrees that, except for the representations and warranties of Parent and Merger Subs set forth in Section 4 or in any certificate delivered by Parent and/or Merger Subs to the Company pursuant to this Agreement, none of Parent, Merger Subs or any of their respective Representatives is relying on any other representation or warranty of Parent or any other Person made outside of Section 4 or such certificate, including regarding the accuracy or completeness of any such other representations or warranties or the omission of any material information, whether express or implied, in each case, with respect to the Contemplated Transactions.
Section 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS
Subject to Section 1.2(h), except (a) as set forth in the disclosure schedule delivered by Parent to the Company (the “Parent Disclosure Schedule”) or (b) as disclosed in the Parent SEC Documents filed with the SEC after December 31, 2025 and prior to the date hereof and publicly available on the SEC’s Electronic Data Gathering Analysis and Retrieval system (but (i) without giving effect to any amendment thereof filed with, or furnished to the SEC on or after the date hereof and (ii) excluding any disclosures contained under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or in any other section to the extent they are forward-looking statements or cautionary, predictive or forward-looking in nature), it being understood that any matter disclosed in the Parent SEC Documents (x) shall not be deemed disclosed for purposes of Section 4.1, Section 4.2, Section 4.3, Section 4.4, Section 4.5, Section 4.6, and Section 4.7 and (y) shall be deemed to be disclosed in a section of the Parent Disclosure Schedule only to the extent that it is readily apparent from a reading of such Parent SEC Documents that is applicable to such section of the Parent Disclosure Schedule, Parent and Merger Subs represent and warrant to the Company as follows:
4.1 Due Organization; Subsidiaries.
(a) Each of Parent, First Merger Sub and Second Merger Sub is a corporation or limited liability company, as applicable, duly incorporated or formed, as applicable, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, and has all necessary corporate or limited liability company, as applicable, power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own or lease and use its property and assets in the manner in which its property and assets are currently owned or leased and used; and (iii) to perform its obligations under all Contracts by which it is bound. Since their respective date of incorporation, or formation, as applicable, no Merger Sub has engaged in any activities other than activities incident to its formation or in connection with or as contemplated by this Agreement.
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(b) Parent is duly licensed and qualified to do business, and is in good standing (to the extent applicable in such jurisdiction), under the Laws of all jurisdictions where the nature of its business requires such licensing or qualification other than in jurisdictions where the failure to be so qualified individually or in the aggregate would not be reasonably expected to have a Parent Material Adverse Effect.
(c) Parent has no Subsidiaries other than Merger Subs, and Parent does not own any capital stock of, or any equity, ownership or profit-sharing interest of any nature in, or controls directly or indirectly, any other Entity other than Merger Subs. Each Merger Sub is a corporation or other legal entity duly organized, validly existing and, if applicable, in good standing under the Laws of the jurisdiction of its organization and has all necessary corporate or other power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own or lease and use its property and assets in the manner in which its property and assets are currently owned or leased and used; and (iii) to perform its obligations under all Contracts by which it is bound.
(d) Neither the Parent nor any of its Subsidiaries is or has otherwise been, directly or indirectly, a party to, member of or participant in any partnership, joint venture or similar business Entity. Neither the Parent nor any of its Subsidiaries has agreed or is obligated to make, or is bound by any Contract under which it may become obligated to make, any future investment in or capital contribution to any other Entity. Neither the Parent nor any of its Subsidiaries has, at any time, been a general partner of, or has otherwise been liable for, any of the debts or other obligations of, any general partnership, limited partnership or other Entity.
4.2 Organizational Documents. Parent has made available to the Company accurate and complete copies of the Organizational Documents of Parent and each of its Subsidiaries in effect as of the date of this Agreement. Neither Parent nor any of its Subsidiaries is in breach or violation of its respective Organizational Documents.
4.3 Authority; Binding Nature of Agreement.
(a) The Parent and each of the Merger Subs have all necessary corporate power and authority to enter into and to perform its obligations under this Agreement and, subject, with respect to Parent, to receipt of the Required Parent Stockholder Vote and, with respect to Merger Subs, the adoption of this Agreement by Parent in its capacity as sole stockholder of Merger Subs, to perform its obligations hereunder and to consummate the Contemplated Transactions. The Parent Board (at meetings duly called and held or by unanimous written consent) has: (i) determined that the Contemplated Transactions are fair to, advisable and in the best interests of Parent and its stockholders; (ii) authorized, approved and declared advisable this Agreement and the Contemplated Transactions, including the issuance of Parent Preferred Stock Payment Shares to the stockholders of the Company pursuant to the terms of this Agreement and the treatment of the Company Options pursuant to this Agreement; and (iii) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the stockholders of Parent vote to approve the Parent Stockholder Matters. The First Merger Sub Board (by unanimous written consent) has: (A) determined that the Contemplated Transactions are fair to, advisable, and in the best interests of First Merger Sub and its sole stockholder; (B) authorized, approved and declared advisable this Agreement and the Contemplated Transactions; and (C) determined to recommend, upon the terms and subject to the conditions set forth in this Agreement, that the stockholder of First Merger Sub vote to adopt this Agreement and thereby approve the Contemplated Transactions. The sole member of Second Merger Sub has: (A) determined that the Contemplated Transactions are fair to, advisable, and in the best interests of Second Merger Sub and its sole member; and (B) authorized, approved and declared advisable this Agreement and the Contemplated Transactions.
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(b) This Agreement has been duly executed and delivered by Parent and each Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes the legal, valid and binding obligation of Parent and Merger Subs, enforceable against each of Parent and Merger Subs in accordance with its terms, subject to the Enforceability Exceptions.
4.4 Vote Required. The approval of holders of Parent Common Stock is not required in order to approve this Agreement or, except with respect to Parent Stockholder Matters, the transactions contemplated hereby. The affirmative vote of a majority of the votes cast at the Parent Stockholders’ Meeting by the holders of Parent Common Stock (other than the Parent Common Stock issuable pursuant to the Securities Purchase Agreement) are the only vote of the holders of any class or series of Parent’s capital stock necessary to approve the proposal described in Section 5.1(a)(i) (“Required Parent Stockholder Vote”).
4.5 Non-Contravention; Consents. Subject to obtaining the Required Parent Stockholder Vote, the filing of the Certificates of Merger required by the DGCL and the filing of the Certificates of Designation, neither (x) the execution, delivery or performance of this Agreement by Parent or Merger Subs, nor (y) the consummation of the Contemplated Transactions, will directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the provisions of the Organizational Documents of Parent or Merger Subs;
(b) contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Law or any order, writ, injunction, judgment or decree to which Parent or its Subsidiaries, or any of the assets owned or used by Parent or its Subsidiaries, is subject, except as would not reasonably be expected to be material to Parent or its business;
(c) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by Parent, except as would not reasonably be expected to be material to Parent or its business;
(d) contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any Parent Material Contract, or give any Person the right to: (i) declare a default or exercise any remedy under any Parent Material Contract; (ii) any material payment, rebate, chargeback, penalty or change in delivery schedule under any Parent Material Contract; (iii) accelerate the maturity or performance of any Parent Material Contract; or (iv) cancel, terminate or modify any term of any Parent Material Contract, except in the case of any non-material breach, default, penalty or modification; or
(e) result in the imposition or creation of any Encumbrance upon or with respect to any asset owned or used by Parent (except for Permitted Encumbrances).
Except for (i) any Consent set forth in Section 4.5 of the Parent Disclosure Schedule, (ii) the Required Parent Stockholder Vote, (iii) the filing of the Certificates of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (iv) the filing of the Certificates of Designation with the Secretary of State of the State of Delaware pursuant to the DGCL and (v) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities Laws, neither Parent nor any of its Subsidiaries is or will be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with (A) the execution,
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delivery or performance of this Agreement, or (B) the consummation of the Contemplated Transactions. The Parent Board and the First Merger Sub Board have taken and will take all actions necessary to ensure that the restrictions applicable to business combinations contained in Section 203 of the DGCL (or analogous provisions) are, and will be, inapplicable to the execution, delivery and performance of this Agreement, the Lock-Up Agreements and to the consummation of the Contemplated Transactions. No other state takeover statute or similar Law applies or purports to apply to the Merger, this Agreement, the Lock-Up Agreements or any of the Contemplated Transactions.
4.6 Capitalization.
(a) The authorized capital stock of Parent as of the date of this Agreement consists of 50,000,000 shares of Parent Common Stock, par value $0.001 per share, of which (A) 3,324,567 shares were issued and outstanding as of the close of business on the Reference Date and (B) 3,440,670 shares are issued and outstanding as of the date of this Agreement (including 116,103 shares issued following the Reference Date in respect of compensation for services rendered through September 30, 2026), and 30,000,000 shares of preferred stock of Parent, par value $0.001 per share, of which (i) 1,000 shares have been designated as Series A-1 Convertible Preferred Stock, of which 500 shares have been issued and are outstanding as of the date of this Agreement, and (ii) 1,000 shares have been designated as Series A-2 Convertible Preferred Stock, of which 850 shares have been issued and are outstanding as of the date of this Agreement. Parent does not hold any shares of its capital stock in its treasury.
(b) All of the outstanding shares of Parent Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. None of the outstanding shares of Parent Common Stock are entitled or subject to any preemptive right, right of participation, right of maintenance or any similar right and none of the outstanding shares of Parent Common Stock is subject to any right of first refusal in favor of Parent. Except as contemplated herein, there is no Parent Contract relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any shares of Parent Common Stock. Parent is not under any obligation, nor is it bound by any Contract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares of Parent Common Stock or other securities. Section 4.6(b) of the Parent Disclosure Schedule accurately and completely lists all repurchase rights held by Parent with respect to shares of Parent Common Stock (including shares issued pursuant to the exercise of stock options) and specifies which of those repurchase rights are currently exercisable.
(c) Except for the Parent Stock Plans, and except as set forth in Section 4.6(c) of the Parent Disclosure Schedule, Parent does not have any stock option plan or any other plan, program, agreement or arrangement providing for any equity-based compensation for any Person. As of the close of business on the Reference Date, Parent has reserved 1,130,745 shares of Parent Common Stock for issuance under the Parent Stock Plans, of which Parent RSUs and Parent Options to purchase a total of 336,748 shares, in the aggregate, have been issued and are currently outstanding of, which no shares are subject to Parent’s right of repurchase, of which (1) 268,426 shares have been reserved for issuance upon exercise of Parent Options previously granted and currently outstanding under the Parent Stock Plans, (2) no shares have been reserved for issuance upon the settlement of Parent RSUs, as no Parent RSUs are outstanding as of the close of business on the Reference Date, (3) 116,103 shares have been issued as stock awards following the Reference Date under the Parent Stock Plans, and (4) 746,216 shares remain available for future issuance pursuant to the Parent Stock Plans. No outstanding shares of Parent Common Stock are subject to Parent’s right of repurchase. Section 4.6(c) of the Parent Disclosure Schedule sets forth the following information with respect to each Parent Option and Parent RSU outstanding as of the Reference Date: (i) the name of the holder; (ii) the number of shares of Parent Common Stock subject to such Parent Option or Parent RSU at the time of grant; (iii) the number of shares of Parent Common Stock subject to
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such Parent Option or Parent RSU as of the close of business on the Reference Date; (iv) the exercise price of such Parent Option; (v) the date on which such Parent Option or Parent RSU was granted; (vi) the applicable vesting schedule, including the number of vested and unvested shares as of the close of business on the Reference Date and any acceleration provisions; (vii) the date on which such Parent Option or Parent RSU expires; (viii) whether such Parent Option is intended to constitute an “incentive stock option” (as defined in the Code) or a non-qualified stock option and (ix) whether such Parent Option is “early exercisable”. Parent has made available to the Company accurate and complete copies of the Parent Stock Plans and the form of the stock option agreements and restricted stock unit agreements evidencing outstanding Parent Options and Parent RSUs granted thereunder. No vesting of Parent Options or Parent RSUs will be accelerated in connection with the closing of the Contemplated Transactions other than as set forth on such Section 4.6(c) of the Parent Disclosure Schedule.
(d) Except for the Parent Options and the Parent RSUs granted pursuant to the Parent Stock Plans, and as otherwise set forth in Section 4.6(d) of the Parent Disclosure Schedule, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of the capital stock or other securities of Parent or any of its Subsidiaries; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other securities of Parent or any of its Subsidiaries; or (iii) condition or circumstance that could be reasonably likely to give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of capital stock or other securities of Parent or any of its Subsidiaries. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to Parent or any of its Subsidiaries. In addition, there are no stockholder rights plans (or similar plan commonly referred to as a “poison pill”) or bonds, debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of Parent may vote.
(e) All outstanding shares of Parent Common Stock, Parent Options, Parent RSUs and other securities of Parent have been issued and granted in material compliance with (i) the Organizational Documents of Parent in effect as of the relevant time and all applicable securities Laws and other applicable Law, and (ii) all requirements set forth in applicable Contracts.
(f) All distributions, dividends, repurchases and redemptions of Parent Common Stock or other equity interests of Parent were undertaken in material compliance with (i) the Organizational Documents of Parent in effect as of the relevant time and all applicable securities Laws and other applicable Laws, and (ii) all requirements set forth in applicable Contracts.
4.7 SEC Filings; Financial Statements.
(a) Parent has delivered or made available to the Company accurate and complete copies of all registration statements, proxy statements, Certifications (as defined below) and other statements, reports, schedules, forms and other documents filed by Parent with the SEC since December 31, 2023 (the “Parent SEC Documents”), other than such documents that can be obtained on the SEC’s website at www.sec.gov. Since December 31, 2023, all material statements, reports, schedules, forms and other documents required to have been filed by Parent or its officers with the SEC have been so filed on a timely basis. As of the time it was filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), each of the Parent SEC Documents complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act (as the case may be) and, as of the time they were filed, or if amended or superseded by a filing prior to the date of this Agreement, on the date of the last such amendment or superseding filing prior to the date of this Agreement, none of the Parent SEC Documents contained any untrue statement of a material fact or omitted to state a
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material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The certifications and statements required by (i) Rule 13a-14 under the Exchange Act and (ii) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act) relating to the Parent SEC Documents (collectively, the “Certifications”) are accurate and complete and comply as to form and content with all applicable Laws, and no current or former executive officer of Parent has failed to make the Certifications required of him or her. Parent has made available to the Company true and complete copies of all correspondence, other than transmittal correspondence or general communications by the SEC not specifically addressed to Parent, between the SEC, on the one hand, and Parent, on the other, since December 31, 2023, including all SEC comment letters and responses to such comment letters and responses to such comment letters by or on behalf of Parent except for such comment letters and responses to such comment letters that are publicly accessible through EDGAR. As of the date of this Agreement, there are no outstanding unresolved comments in comment letters received from the SEC or Nasdaq with respect to Parent SEC Documents. To the Knowledge of Parent, none of the Parent SEC Documents is the subject of ongoing SEC review and there are no inquiries or investigations by the SEC or any internal investigations pending or threatened, including with regards to any accounting practices of Parent. As used in this Section 4.7, the term “file” and variations thereof shall be broadly construed to include any manner in which a document or information is filed, furnished, supplied or otherwise made available to the SEC.
(b) The financial statements (including any related notes) contained or incorporated by reference in the Parent SEC Documents: (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) were prepared in accordance with GAAP (except as may be indicated in the notes to such financial statements or, in the case of unaudited financial statements, except as permitted by Form 10-Q of the SEC, and except that the unaudited financial statements may not contain footnotes and are subject to normal and recurring year-end adjustments) applied on a consistent basis unless otherwise noted therein throughout the periods indicated; and (iii) fairly present, in all material respects, the financial position of Parent and its consolidated Subsidiaries as of the respective dates thereof and the results of operations and cash flows of Parent for the periods covered thereby. Other than as expressly disclosed in the Parent SEC Documents filed prior to the date hereof, there has been no material change in Parent’s accounting methods or principles that would be required to be disclosed in Parent’s financial statements in accordance with GAAP.
(c) Parent’s independent registered public accounting firm has at all times since its engagement by Parent as Parent’s auditor been: (i) a registered public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act); (ii) to the Knowledge of Parent, “independent” with respect to Parent within the meaning of Regulation S-X under the Exchange Act; and (iii) to the Knowledge of Parent, in compliance with subsections (g) through (l) of Section 10A of the Exchange Act and the rules and regulations promulgated by the SEC and the Public Company Accounting Oversight Board thereunder.
(d) Except as set forth in the Parent SEC Documents and Section 4.7(d) of the Parent Disclosure Schedule, since December 31, 2023, through the date of this Agreement, Parent has not received any comment letter from the SEC or the staff thereof or any correspondence from officials of Nasdaq or the staff thereof relating to the delisting or maintenance of listing of the Parent Common Stock on Nasdaq. As of the date of this Agreement, Parent has timely responded to all comment letters of the staff of the SEC relating to the Parent SEC Documents, and the SEC has not advised Parent that any final responses are inadequate, insufficient or otherwise non-responsive. Parent has made available to the Company true, correct and complete copies of all comment letters, written inquiries and enforcement correspondences between the SEC, on the one hand, and Parent, on the other hand, occurring since December 31, 2023 and will, reasonably promptly following the receipt thereof, make available to the Company any such correspondence sent or received after the date of this Agreement. To the Knowledge
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of Parent, as of the date of this Agreement, none of the Parent SEC Documents is the subject of an ongoing SEC review or outstanding SEC comment.
(e) Except as set forth in the Parent SEC Documents, since December 31, 2023, there have been no formal investigations regarding financial reporting or accounting policies and practices discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, principal accounting officer or general counsel of Parent, the Parent Board or any committee thereof, other than ordinary course audits or reviews of accounting policies and practices or internal controls required by the Sarbanes-Oxley Act.
(f) Except as set forth in the Parent SEC Documents and Section 4.7(f) of the Parent Disclosure Schedule, Parent is and since its first date of listing on Nasdaq, has been, in compliance in all material respects with the applicable current listing and governance rules and regulations of Nasdaq.
(g) Parent maintains, and at all times since December 31, 2023, has maintained, a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and to provide reasonable assurance (i) that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (ii) that receipts and expenditures are made only in accordance with authorizations of management and the Parent Board, (iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of Parent’s assets that could have a material effect on Parent’s financial statements and (iv) that Parent maintains records in reasonable detail which accurately and fairly reflect the transactions and dispositions of the assets of Parent and any of its Subsidiaries. Parent has evaluated the effectiveness of Parent’s internal control over financial reporting as of December 31, 2025, and, to the extent required by applicable Law, presented in any applicable Parent SEC Document that is a report on Form 10-K or Form 10-Q (or any amendment thereto) its conclusions about the effectiveness of the internal control over financial reporting as of the end of the period covered by such report or amendment based on such evaluation. Parent has disclosed, based on its most recent evaluation of internal control over financial reporting, to Parent’s auditors and audit committee (and has described in Section 4.7(g) of the Parent Disclosure Schedule) (A) all material weaknesses and all significant deficiencies, if any, in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect Parent’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves Parent, any of its Subsidiaries, Parent’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Parent and its Subsidiaries or (C) any claim or allegation regarding any of the foregoing. Except as disclosed in the Parent SEC Documents, Parent has not identified, based on its most recent evaluation of internal control over financial reporting, any significant deficiencies or material weaknesses in the design or operation of Parent’s internal control over financial reporting.
(h) Parent maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are reasonably designed to ensure that information required to be disclosed by Parent in the periodic reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods, and that all such information is accumulated and communicated to Parent’s executive officers as appropriate to allow timely decisions regarding required disclosure and to make the Certifications.
(i) Section 4.7(i) to the Parent Disclosure Schedule sets forth an accurate statement of Parent’s cash and cash equivalents as of the close of business on the Business Day preceding the date of this Agreement, and there has been no material change in the amount thereof from such statement through the date of this Agreement. The cash forecast set forth in Section 4.7(i) to the Parent Disclosure
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Schedule: (i) has been prepared by Parent in good faith, (ii) is based on assumptions that Parent considers to be reasonable, and (iii) fairly reflects Parent’s reasonably anticipated rate of cash usage for the periods covered therein. The Parent Net Cash Schedule was prepared in good faith in accordance with the definition of Parent Net Cash and the other applicable provisions of this Agreement and accurately sets forth, in all material respects, Parent Net Cash as of the Cash Determination Time.
(j) Parent has not been and is not currently a “shell company” as defined under Section 12b-2 of the Exchange Act.
4.8 Absence of Changes. Except as set forth in Section 4.8 of the Parent Disclosure Schedule, after the date of the Parent Balance Sheet, Parent and its Subsidiaries have conducted its business only in the Ordinary Course of Business (except for the execution and performance of this Agreement and the discussions, negotiations and transactions related thereto) and there has not been any Parent Material Adverse Effect and neither Parent nor any of its Subsidiaries has done any of the following:
(a) declared, accrued, set aside or paid any dividend or made any other distribution in respect of any shares of its capital stock; or repurchased, redeemed or otherwise reacquired any shares of its capital stock or other securities (except for shares of Parent Common Stock from terminated employees, directors or consultants of Parent or in connection with the payment of the exercise price and/or withholding Taxes incurred upon the exercise, settlement or vesting of any award granted under the Parent Stock Plans);
(b) sold, issued, granted, pledged or otherwise disposed of or encumbered or authorized any of the foregoing with respect to: (A) any capital stock or other security of Parent (except for Parent Common Stock issued upon the valid exercise of outstanding Parent Options); (B) any option, warrant or right to acquire any capital stock or any other security, other than option grants to employees in the Ordinary Course of Business; or (C) any instrument convertible into or exchangeable for any capital stock or other security of Parent;
(c) except as required to give effect to anything in contemplation of the Closing, amended any of its Organizational Documents, or effected or been a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction except, for the avoidance of doubt, the Contemplated Transactions;
(d) formed any Subsidiary or acquired any equity interest or other interest in any other Entity or entered into a joint venture with any other Entity;
(e) (A) lent money to any Person (except for the advance of reasonable business expenses to employees, directors and consultants in the Ordinary Course of Business), (B) incurred or guaranteed any indebtedness for borrowed money, or (C) guaranteed any debt securities of others;
(f) other than as required by applicable Law or the terms of any Parent Benefit Plan as in effect on the date of this Agreement and other than the Parent Stock Plans or any Parent Option: (A) adopted, terminated, established or entered into any Parent Benefit Plan; (B) caused any Parent Benefit Plan to be amended in any material respect; (C) paid any material bonus or distributed any profit-sharing account balances or similar payment to, or, other than in the Ordinary Course of Business, increased the amount of the wages, salary, commissions, benefits or other compensation or remuneration payable to, any of its directors, officers or employees; (D) increased the severance or change-of-control benefits offered to any current, former or new employees, directors or consultants or (E) hired, terminated or gave notice of termination (other than for cause) to any (x) officer or (y) employee whose annual base salary is or is expected to be more than $125,000 per year;
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(g) entered into any collective bargaining agreement or similar agreement with any labor union or similar labor organization;
(h) entered into any material transaction other than (A) in the Ordinary Course of Business or (B) in connection with the Contemplated Transactions;
(i) acquired any material asset or sold, leased or otherwise irrevocably disposed of any of its assets or properties, or granted any Encumbrance (other than Permitted Encumbrances) with respect to such assets or properties;
(j) sold, assigned, transferred, licensed, sublicensed or otherwise disposed of any material Parent IP (other than pursuant to non-exclusive licenses in the Ordinary Course of Business);
(k) made, changed or revoked any material Tax election, failed to pay any income or other material Tax as such Tax becomes due and payable, filed any amendment making any material change to any Tax Return, settled or compromised any income or other material Tax liability, entered into any Tax allocation, sharing, indemnification or other similar agreement or arrangement (including any “closing agreement” described in Section 7121 of the Code (or any similar Law) with any Governmental Body, but excluding customary commercial Contracts entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes), requested or consented to any extension or waiver of any limitation period with respect to any claim or assessment for any income or other material Taxes (other than pursuant to an extension of time to file any Tax Return granted in the Ordinary Course of Business of not more than six months), or adopted or changed any material accounting method in respect of Taxes;
(l) made any expenditures, incurred any Liabilities or discharged or satisfied any Liabilities, in each case, in amounts that exceed the aggregate amount of $300,000;
(m) other than as required by Law or GAAP, taken any action to change accounting policies or procedures;
(n) initiated or settled any Legal Proceeding; or
(o) agreed, resolved or committed to do any of the foregoing.
4.9 Absence of Undisclosed Liabilities. As of the date hereof, neither Parent nor any of its Subsidiaries has any Liability, individually or in the aggregate, of a type required to be recorded or reflected on a balance sheet or disclosed in the footnotes thereto under GAAP except for: (a) Liabilities disclosed, reflected or reserved against in the Parent Balance Sheet; (b) Liabilities that have been incurred by Parent or its Subsidiaries since the date of the Parent Balance Sheet in the Ordinary Course of Business; (c) Liabilities for performance of obligations of Parent or any of its Subsidiaries under Parent Contracts in the Ordinary Course of Business; (d) Liabilities incurred in connection with the Contemplated Transactions; (e) Liabilities which would not, individually or in the aggregate, reasonably be expected to be material to the Parent; and (f) Liabilities described in Section 4.9 of the Parent Disclosure Schedule.
4.10 Title to Assets. Each of Parent and its Subsidiaries owns, and has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all tangible properties or tangible assets and equipment used or held for use in its business or operations or purported to be owned by it that are material to Parent or its business, including: (a) all tangible assets reflected on the Parent Balance Sheet; and (b) all other tangible assets reflected in the books and records of Parent or any of its Subsidiaries as being owned by Parent or such Subsidiary. All of such assets are owned or, in the case of
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leased assets, leased by Parent or its Subsidiaries free and clear of any Encumbrances, other than Permitted Encumbrances.
4.11 Real Property; Leasehold. Neither Parent nor any of its Subsidiaries own or ever have owned any real property. Parent has made available to the Company (a) an accurate and complete list of all real properties with respect to which Parent directly or indirectly holds a valid leasehold interest as well as any other real estate that is in the possession of, or occupied or leased by, Parent or any of its Subsidiaries, and (b) copies of all leases under which any such real property is possessed, occupied or leased (the “Parent Real Estate Leases”), each of which is in full force and effect, with no existing material default thereunder by Parent or any of its Subsidiaries, or to the Knowledge of Parent, any other party thereto. Parent’s possession, occupancy, lease, use and/or operation of each such leased property conforms to all applicable Laws in all material respects, and Parent has exclusive possession of each such leased property and leasehold interest and has not granted any occupancy rights to tenants or licensees with respect to such leased property or leasehold interest. In addition, each such leased property and leasehold interest is free and clear of all Encumbrances other than Permitted Encumbrances. Parent has not received any written notice from its landlords or any Governmental Body that: (i) relates to violations of building, zoning, safety or fire ordinances or regulations; (ii) claims any defect or deficiency with respect to any of such properties; or (iii) requests the performance of any repairs, alterations or other work to such properties, except in each case as had not and would not reasonably be expected to be adverse or material to Parent.
4.12 Intellectual Property; Privacy.
(a) Section 4.12(a) of the Parent Disclosure Schedule identifies each item of material Registered IP owned in whole or in part by the Parent or its Subsidiaries, including, with respect to each application and registration: (i) the name of the applicant/registrant and any other co-owners, (ii) the jurisdiction of application or registration, and (iii) the application or registration number. To the Knowledge of Parent, each of the U.S. patents included in Section 4.12(a) of the Parent Disclosure Schedule properly identifies by name each and every inventor of the inventions claimed therein as determined in accordance with applicable Laws of the United States. As of the date of this Agreement, no cancellation, interference, opposition, reissue, reexamination or other proceeding of any nature (other than office actions or similar communications issued by any Governmental Body in the ordinary course of prosecution of any pending applications for registration) is pending or, to the Knowledge of Parent, threatened in writing, in which the scope, validity, enforceability or ownership of any Parent IP is being or has been contested or challenged. To the Knowledge of Parent, each item of Parent IP is valid and enforceable, and with respect to Parent’s material Registered IP, subsisting.
(b) There are no actions that must be taken within ninety (90) days of the Closing, the failure of which will result in the abandonment, lapse or cancellation of any material Registered IP owned in whole or in part by Parent or any of its Subsidiaries.
(c) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent or its Subsidiaries exclusively own, are the sole assignee of, or have exclusively licensed all of material Parent IP, free and clear of all Encumbrances other than Permitted Encumbrances. The Parent IP constitute all Intellectual Property Rights used in, material to or otherwise necessary for the operation of Parent’s and any of its Subsidiaries’ business as currently conducted. Each Parent Associate involved in the creation or development of any material Parent IP, pursuant to such Parent Associate’s activities on behalf of Parent or any of its Subsidiaries, has signed a valid and enforceable written agreement containing an assignment of such Parent Associate’s rights in such Parent IP to Parent or its Subsidiaries. Each Parent Associate who has or has had access to Parent’s or any of its Subsidiaries’ trade secrets or confidential information has signed a valid and enforceable written agreement containing confidentiality provisions protecting the Parent IP, trade secrets
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and confidential information. Parent has taken commercially reasonable steps to protect and preserve the confidentiality of its trade secrets and confidential information.
(d) Except as set forth in Section 4.12(d) of the Parent Disclosure Schedule, to the Knowledge of Parent, no funding, facilities or personnel of any Governmental Body or any university, college, research institute or other educational institution has been used to create Parent IP, except for any such funding or use of facilities or personnel that does not result in such Governmental Body or institution obtaining ownership rights or a license to such Parent IP or the right to receive royalties for the practice of such Parent IP.
(e) Section 4.12(e) of the Parent Disclosure Schedule sets forth each license agreement pursuant to which Parent (i) is granted a license under any material Intellectual Property Right owned by any third party that is used by Parent or its Subsidiaries in its business as currently conducted (each a “Parent In-bound License”) or (ii) grants to any third party a license under any material Parent IP (each a “Parent Out-bound License”) (provided, that, Parent In-bound Licenses shall not include, when entered into in the Ordinary Course of Business, material transfer agreements, services agreements, clinical trial agreements, agreements with Parent Associates, non-disclosure agreements, commercially available Software-as-a-Service offerings, or off-the-shelf software licenses; and Parent Out-bound Licenses shall not include, when entered into in the Ordinary Course of Business, material transfer agreements, clinical trial agreements, services agreements, non-disclosure agreements, or non-exclusive outbound licenses). All Parent In-bound Licenses and Parent Out-bound Licenses are in full force and effect and are valid, enforceable and binding obligations of Parent and, to the Knowledge of Parent, each other party to such Parent In-bound Licenses or Parent Out-bound Licenses. Neither Parent, nor, to the Knowledge of Parent, any other party to such Parent In-bound Licenses or Parent Out-bound Licenses, is in material breach under any Parent In-bound Licenses or Parent Out-bound Licenses. Except as set forth in Section 4.12(e) of the Parent Disclosure Schedule, none of the terms or conditions of any Parent In-Bound License or any Parent Out-bound License requires Parent or any of its Subsidiaries or any of their Affiliates to maintain, develop or prosecute any Intellectual Property Rights.
(f) To the Knowledge of Parent: (i) the operation of the business of Parent and its Subsidiaries as currently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property Rights of any other Person and (ii) no other Person is infringing, misappropriating or otherwise violating any Parent IP. No Legal Proceeding is pending (or, to the Knowledge of Parent, is threatened in writing) (A) against Parent or its Subsidiaries alleging that the operation of the business of Parent or its Subsidiaries infringes or constitutes the misappropriation or other violation of any Intellectual Property Rights of another Person or (B) by Parent or its Subsidiaries alleging that another Person has infringed, misappropriated or otherwise violated any of the Parent IP. Since January 1, 2020, neither Parent nor its Subsidiaries have received any written notice or other written communication alleging that the operation of the business of Parent or its Subsidiaries infringes or constitutes the misappropriation or other violation of any Intellectual Property Right of another Person.
(g) None of the Parent IP or, to the Knowledge of Parent, any material Intellectual Property Rights exclusively licensed by Parent or its Subsidiaries, is subject to any pending or outstanding injunction, directive, order, judgment or other disposition of dispute, that adversely and materially restricts the use, transfer, registration or licensing by Parent or its Subsidiaries of any such Parent IP or material Intellectual Property Rights exclusively licensed to Parent or its Subsidiaries.
(h) To the Knowledge of Parent, Parent and the operation of Parent’s and its Subsidiaries’ business are, and have at all times been, in material compliance with all Privacy and Data Processing Requirements. To the knowledge of Parent, Parent and its Subsidiaries have at all applicable times provided all notices, and obtained and maintained all rights, consents, and authorizations, to Process
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Parent Data as Processed by or for Parent or its Subsidiaries. Since Parent’s inception, there have been (i) no loss or theft of, or security breach relating to, Parent Data, (ii) no violation of any security policy of Parent or its Subsidiaries regarding any such Parent Data, and (iii) no unauthorized access to, or unauthorized, unintended, or improper use, disclosure, or other Processing of, any Parent Data. Parent and its Subsidiaries have taken commercially reasonable steps and implemented reasonable disaster recovery and security plans and procedures to protect the information technology systems used in, material to or necessary for operation of Parent’s or its Subsidiaries business as currently conducted and Parent Data from unauthorized use, access, or other Processing. To the Knowledge of Parent, there have been no (i) material malfunctions or unauthorized intrusions or breaches of the information technology systems used in, material to or necessary for the operation of Parent’s or its Subsidiaries’ business or (ii) material unauthorized access to, or other processing of, Parent Data.
4.13 Agreements, Contracts and Commitments.
(a) Section 4.13 of the Parent Disclosure Schedule lists the following Parent Contracts in effect as of the date of this Agreement other than any Parent Benefit Plans (each, a “Parent Material Contract” and collectively, the “Parent Material Contracts”):
(i) a material Contract as defined in Item 601(b)(10) of Regulation S-K as promulgated under the Securities Act;
(ii) each Parent Contract relating to any agreement of indemnification or guaranty not entered into in the Ordinary Course of Business;
(iii) each Parent Contract containing (A) any covenant limiting in any material respect the freedom of Parent or its Subsidiaries to engage in any line of business or compete with any Person, (B) any most-favored nation or other preferred pricing arrangement in favor of a Person other than Parent or any similar term by which any Person is or could become entitled to any benefit, right or privilege that must be at least as favorable to such Person as those offered to any other Person, (C) any exclusivity provision, option to receive a license, right of first refusal or right of first negotiation or similar covenant in favor of a Person other than Parent, or (D) any non-solicitation provision not entered into in the Ordinary Course of Business;
(iv) each Parent Contract relating to capital expenditures and requiring payments after the date of this Agreement in excess of $100,000 pursuant to its express terms and not cancelable without penalty;
(v) each Parent Contract relating to the disposition or acquisition of material assets or any ownership interest in any Entity, except as contemplated hereby;
(vi) each Parent Contract relating to any mortgages, indentures, loans, notes or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit in excess of $100,000 or creating any material Encumbrances with respect to any assets of Parent or its Subsidiaries or any loans or debt obligations with officers or directors of Parent;
(vii) each Parent Contract requiring payment by or to Parent after the date of this Agreement in excess of $100,000 in the aggregate in the current calendar year or any future calendar year pursuant to its express terms relating to: (A) any distribution agreement (identifying any that contain exclusivity provisions); (B) any agreement involving provision of services or products with respect to any pre-clinical or clinical development activities of Parent; (C) any dealer, distributor, joint marketing, alliance, joint venture, cooperation, development or other agreement currently in force under which Parent
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has continuing obligations to develop or market any product, technology or service, or any agreement pursuant to which Parent has continuing obligations to develop any Intellectual Property Rights that will not be owned, in whole or in part, by Parent; or (D) any Parent Contract with any third party providing any services relating to the manufacture or production of any product, service or technology of Parent or any Parent Contract to sell, distribute or commercialize any products or service of Parent;
(viii) each Parent Contract with any financial advisor, broker, finder, investment banker or other similar Person providing financial advisory services to Parent in connection with the Contemplated Transactions;
(ix) each Parent Real Estate Lease;
(x) each Parent Contract with any Governmental Body;
(xi) each Parent Out-bound License and Parent In-bound License, and each Parent Contract containing a covenant not to sue or otherwise enforce any Intellectual Property Rights;
(xii) each Parent Contract requiring the payment of any royalty, dividend or similar arrangement based on the revenues or profits of Parent or its Subsidiaries;
(xiii) each Parent Contract, offer letter, employment agreement, or independent contractor agreement with any employee, independent contractor or other natural person service provider whose annual compensation equals or exceeds $125,000 that (A) is not immediately terminable by Parent without notice, severance, or other cost or liability, except as required under applicable Law, or (B) provides for retention payments, change-of-control payments, severance, accelerated vesting, or any similar payment or benefit that may or will become due as a result of the Merger;
(xiv) any other Contract that is not terminable at will (with no penalty or payment or requirement for prior notice, except as required by applicable law) by Parent or its Subsidiaries, as applicable, and (A) which involves payment or receipt by Parent or its Subsidiaries after the date of this Agreement under any such agreement, Contract or commitment of more than $100,000 in the aggregate, or obligations after the date of this Agreement in excess of $100,000 in the aggregate, or (B) that is material to the business or operations of Parent and its Subsidiaries, taken as a whole;
(xv) each Parent Contract entered into in settlement of any Legal Proceeding or other dispute pursuant to which Parent or any of its Subsidiaries is subject to injunctive or other equitable relief or has outstanding obligations to pay consideration in excess of $50,000; and
(xvi) each Parent Contract providing any option to receive a license or other right, any right of first negotiation, any right of first refusal or any similar right to any Person related to any material Parent IP or material Intellectual Property Right licensed to Parent under a Parent In-bound License.
(b) Parent has delivered or made available to the Company accurate and complete copies of all Parent Material Contracts, including all amendments thereto. Except as set forth in Section 4.13(b) of the Parent Disclosure Schedule, there are no Parent Material Contracts that are not in written form. Neither Parent nor any of its Subsidiaries has, nor, to Parent’s Knowledge, as of the date of this Agreement, has any other party to a Parent Material Contract, breached, violated or defaulted under, or received notice that it breached, violated or defaulted under, any of the terms or conditions of any Parent
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Material Contract (and, if such Parent Material Contract provides for a cure period, such breach, violation or default has not been cured within such period) in such manner as would permit any other party to cancel or terminate any such Parent Material Contract, or would permit any other party to seek damages which would reasonably be expected to be material to Parent or its business. As to Parent and its Subsidiaries, as of the date of this Agreement, each Parent Material Contract is valid, binding, enforceable and in full force and effect, subject to the Enforceability Exceptions. No Person is renegotiating, or has a right pursuant to the terms of any Parent Material Contract to change, any material amount paid or payable to Parent under any Parent Material Contract or any other material term or provision of any Parent Material Contract, and no Person has indicated in writing to Parent that it desires to renegotiate, modify, not renew or cancel any Parent Material Contract.
4.14 Compliance; Permits. Parent or its Subsidiaries hold all required Governmental Authorizations which are material to the operation of the business of Parent or such Subsidiary as currently conducted (the “Parent Permits”). Section 4.14 of the Parent Disclosure Schedule identifies each Parent Permit. Each such Parent Permit is valid and in full force and effect, and Parent is in material compliance with the terms of the Parent Permits. No Legal Proceeding is pending or, to the Knowledge of Parent, threatened, which seeks to revoke, limit, suspend, or materially modify any Parent Permit.
4.15 Legal Proceedings; Orders.
(a) As of the date of this Agreement, there is no material pending Legal Proceeding and, to the Knowledge of Parent, no Person has threatened in writing to commence any Legal Proceeding: (i) that involves (A) Parent, (B) any of its Subsidiaries, (C) any Parent Associate (in his or her capacity as such) or (D) any of the material assets owned or used by Parent or its Subsidiaries; or (ii) that challenges, or that would have the effect of preventing, delaying, making illegal or otherwise interfering with, the Contemplated Transactions.
(b) Except as set forth in Section 4.15(b) of the Parent Disclosure Schedule, since January 1, 2023 through the date of this Agreement, no Legal Proceeding has been pending against Parent that resulted in material liability to Parent.
(c) There is no order, writ, injunction, judgment or decree to which Parent or any of its Subsidiaries, or any of the material assets owned or used by Parent or any of its Subsidiaries, is subject. To the Knowledge of Parent, no officer of Parent or any of its Subsidiaries is subject to any order, writ, injunction, judgment or decree that prohibits such officer or employee from engaging in or continuing any conduct, activity or practice relating to the business of Parent or any of its Subsidiaries or to any material assets owned or used by Parent or any of its Subsidiaries.
4.16 Tax Matters.
(a) Parent and each of its Subsidiaries have filed all income and other material Tax Returns that were required to be filed by or with respect to it under applicable Law for all taxable periods for which the applicable statute of limitations has not expired. All such Tax Returns are correct and complete in all material respects and have been prepared in compliance with all applicable Law. No written claim has ever been made by any Governmental Body in any jurisdiction where Parent or any of its Subsidiaries does not file a particular Tax Return or pay a particular Tax that Parent or such Subsidiary is subject to taxation by that jurisdiction.
(b) All income and other material Taxes due and owing by Parent or any of its Subsidiaries on or before the date hereof (whether or not shown on any Tax Return) for any taxable period for which the applicable statute of limitations has not expired have been fully and timely paid (taking into
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account any applicable extensions). The unpaid Taxes of Parent and its Subsidiaries did not, as of the date of the Parent Balance Sheet, materially exceed the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax items) set forth on the face of the Parent Balance Sheet. Since the Parent Balance Sheet Date, neither Parent nor any of its Subsidiaries has incurred any material Liability for Taxes outside the Ordinary Course of Business.
(c) All Taxes that Parent and each of its Subsidiaries is or was required by Law to withhold or collect have been duly and timely withheld or collected in all material respects on behalf of its respective employees, independent contractors, stockholders, lenders, customers or other third parties and have been timely paid to the proper Governmental Body or other Person or properly set aside in accounts for this purpose.
(d) There are no Encumbrances for a material amount of Taxes (other than Taxes not yet due and payable) upon any of the assets of Parent or any of its Subsidiaries.
(e) No deficiencies for a material amount of Taxes with respect to Parent or any of its Subsidiaries have been claimed, proposed or assessed by any Governmental Body in writing that have not been fully resolved. There are no pending or ongoing and, to the Knowledge of Parent, threatened audits, assessments or other actions for or relating to any liability in respect of a material amount of Taxes of Parent. Neither Parent nor any of its Subsidiaries (or predecessors thereof) has waived any statute of limitations or agreed to any extension of time with respect to any income or other material Tax assessment or deficiency (in each case, excluding automatic extensions of time within which to file a Tax Return).
(f) Neither Parent nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(g) Neither Parent nor any of its Subsidiaries is a party to any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement, or similar agreement or arrangement, other than customary commercial Contracts entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes.
(h) Neither Parent nor any of its Subsidiaries (including the Company and its Subsidiaries as a result of the Merger) will be required to include any item of income in, or exclude any item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for Tax purposes for a Tax period ending on or prior to the Closing Date; (ii) use of an improper method of accounting for a Tax period ending on or prior to the Closing Date; (iii) “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed at or prior to the Closing; (iv) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Law) entered into or existing, respectively, at or prior to the Closing; (v) installment sale or open transaction disposition made on or prior to the Closing; (vi) prepaid amount, advance payment or deferred revenue received or accrued at or prior to the Closing; or (vii) application of Section 367(d) of the Code to any transfer of intangible property on or prior to the Closing. Parent has not made any election under Section 965(h) of the Code.
(i) Neither Parent nor any of its Subsidiaries has ever been (i) a member of a consolidated, combined or unitary Tax group (other than such a group the common parent of which is Parent) or (ii) a party to any joint venture, partnership, or other arrangement that is treated as a partnership for U.S. federal income Tax purposes. Parent has no Liability for any material Taxes of any Person (other than Parent and any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar
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provision of state, local, or foreign Law), as a transferee or successor, by Contract (other than a Contract entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes) or otherwise by operation of Law.
(j) Within the past three (3) years, neither Parent nor any of its Subsidiaries has distributed stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code (or any similar provisions of state, local or foreign Law).
(k) Parent has never had a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise had an office or fixed place of business in a country other than the country in which it is organized.
(l) Neither Parent nor any of its Subsidiaries has participated in or been a party to a transaction that, as of the date of this Agreement, constitutes a “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).
(m) Section 4.16(m) of the Parent Disclosure Schedule sets forth the entity classification of Parent and each of its Subsidiaries for U.S. federal income tax purposes. Neither Parent nor any of its Subsidiaries has made an election or taken any other action to change its federal and state income tax classification from such classification.
For purposes of this Section 4.16, each reference to Parent or any of its Subsidiaries shall be deemed to include any Person that was liquidated into, merged with, or is otherwise a predecessor to, Parent.
4.17 Employee and Labor Matters; Benefit Plans.
(a) Section 4.17(a) of the Parent Disclosure Schedule is a list of all material Parent Benefit Plans, other than employment offer letters on Parent’s standard form and other than individual Parent Options or other compensatory equity award agreements made pursuant to the Parent’s standard forms, in which case only representative standard forms of such agreements shall be scheduled. “Parent Benefit Plan” means each (i) “employee benefit plan” as defined in Section 3(3) of ERISA and (ii) other pension, retirement, deferred compensation, excess benefit, profit sharing, bonus, incentive, equity or equity-based, phantom equity, employment, consulting, severance, change-of-control, retention, health, life, disability, group insurance, paid time off, holiday, reimbursement, welfare and fringe benefit plan, program, agreement, Contract, or arrangement (whether written or unwritten, qualified or nonqualified, funded or unfunded, subject or not subject to ERISA and including any that have been frozen), in each case, sponsored, maintained, administered, contributed to, or required to be contributed to, by Parent or any of its Subsidiaries for the benefit of any current or former employee, director, officer or independent contractor of Parent or any of its Subsidiaries or under which Parent or any of its Subsidiaries has any actual or contingent liability (including, without limitation, by reason of having a Parent ERISA Affiliate).
(b) As applicable with respect to each material Parent Benefit Plan, Parent has made available to the Company true and complete copies of (i) each material Parent Benefit Plan, including all amendments thereto, and in the case of an unwritten material Parent Benefit Plan, a written description thereof, (ii) all current trust documents, investment management Contracts, custodial agreements, administrative services agreements and insurance and annuity Contracts relating thereto, (iii) the current summary plan description and each summary of material modifications thereto, (iv) the most recently filed annual reports with any Governmental Body (e.g., Form 5500 and all schedules thereto), (v) the most recent IRS determination, opinion or advisory letter, (vi) the most recent summary annual reports, nondiscrimination testing reports, actuarial reports, financial statements and trustee reports, (vii)
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substantiation of ACA Information Reporting on Forms 1094/1095, and (viii) all notices and filings from the IRS or Department of Labor or other Governmental Body concerning audits or investigations, or “prohibited transactions” within the meaning of Section 406 of ERISA or Section 4975 of the Code, or other non-routine correspondence.
(c) Each Parent Benefit Plan has been maintained, operated and administered in compliance in all material respects with its terms and the applicable provisions of ERISA, the Code and all other Laws.
(d) The Parent Benefit Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code have received determination or opinion letters from the IRS on which they may currently rely to the effect that such plans are qualified under Section 401(a) of the Code and the related trusts are exempt from federal income Taxes under Section 501(a) of the Code, respectively, and nothing has occurred that would reasonably be expected to materially adversely affect the qualification of such Parent Benefit Plan or the tax exempt status of the related trust.
(e) Neither Parent, any of its Subsidiaries nor any Parent ERISA Affiliate maintains, contributes to, is required to contribute to, or has any actual or contingent liability with respect to, (i) any “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) that is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, (ii) any “multiemployer plan” (within the meaning of Section 3(37) of ERISA), (iii) any “multiple employer plan” (within the meaning of Section 413 of the Code) or (iv) any “multiple employer welfare arrangement” (within the meaning of Section 3(40) of ERISA).
(f) There are no pending audits or investigations by any Governmental Body involving any Parent Benefit Plan, and no pending or, to the Knowledge of Parent, threatened claims (except for routine individual claims for benefits payable in the normal operation of the Parent Benefit Plans), suits or proceedings involving any Parent Benefit Plan, or, to the Knowledge of Parent, any fiduciary thereof or service provider thereto, in any case except as would not be reasonably expected to result in material liability to Parent or any of its Subsidiaries. All contributions and premium payments required to have been made under any of the Parent Benefit Plans or by applicable Law (without regard to any waivers granted under Section 412 of the Code), have been timely made and neither Parent nor any Parent ERISA Affiliate has any material liability for any unpaid contributions with respect to any Parent Benefit Plan. Neither Parent, nor any Parent Benefit Plan, is liable for, nor reasonably expected to be liable for, any excise tax or penalty under ERISA or the Code.
(g) None of Parent, any of its Subsidiaries or any Parent ERISA Affiliates, or to the Knowledge of Parent, any fiduciary, trustee or administrator of any Parent Benefit Plan, has engaged in, or in connection with the Contemplated Transactions will engage in, any transaction with respect to any Parent Benefit Plan which would subject any such Parent Benefit Plan, Parent, any of its Subsidiaries or Parent ERISA Affiliates to a material Tax, material penalty or material liability for a “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code.
(h) No Parent Benefit Plan provides death, medical, dental, vision, life insurance, disability or other welfare benefits beyond termination of service or retirement other than coverage mandated by Law and to the Knowledge of Parent, neither Parent nor any of its Subsidiaries has made a written representation promising the same.
(i) Each Parent Benefit Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code to which Parent or any Affiliate thereof is a party
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has been administered and operated in documentary and operational compliance with the provisions of Section 409A of the Code and the Treasury Regulations thereunder, and no additional tax under Section 409A(a)(1)(B) of the Code has been or could reasonably be expected to be incurred by a participant in any such Parent Benefit Plan.
(j) Except as set forth in Section 4.17(j) of the Parent Disclosure Schedule, neither the execution of this Agreement, nor the performance of the Contemplated Transactions (either alone or when combined with the occurrence of any other event, including without limitation, a termination of employment) will: (i) result in any payment becoming due to any current or former employee, director, officer, or independent contractor of Parent or any Subsidiary thereof pursuant to any Parent Benefit Plan, (ii) increase any amount of compensation or benefits otherwise payable under any Parent Benefit Plan, (iii) result in the acceleration of the time of payment, funding or vesting of any benefits under any Parent Benefit Plan, (iv) require any contribution or payment to fund any obligation under any Parent Benefit Plan or (v) limit the right to merge, amend or terminate any Parent Benefit Plan.
(k) Except as set forth in Section 4.17(k) of the Parent Disclosure Schedule, neither the execution of this Agreement, nor the consummation of the Contemplated Transactions (either alone or when combined with the occurrence of any other event, including without limitation, a termination of employment) will result in the receipt or retention by any person who is a “disqualified individual” (within the meaning of Section 280G of the Code) with respect to Parent and its Subsidiaries of any payment or benefit that is or could be characterized as a “parachute payment” (within the meaning of Section 280G of the Code), determined without regard to the application of Section 280G(b)(5) of the Code.
(l) No current or former employee, officer, director or independent contractor of Parent or any of its Subsidiaries has any “gross up” agreements with the Parent or any of its Subsidiaries or other assurance of reimbursement by the Parent or any of its Subsidiaries for any Taxes imposed under Section 409A of the Code or Section 4999 of the Code.
(m) Each Parent Benefit Plan maintained for the benefit of service providers located outside of the United States (each, a “Parent Foreign Plan”) has obtained from the Governmental Body having jurisdiction with respect to such plan any required determinations that such plan is in compliance with the Laws of any such Governmental Body.
(n) The assets of each of the Parent Foreign Plans that is similar to an employee pension benefit plan (as defined in Section 3(2) of ERISA (whether or not subject to ERISA)) or that otherwise provides retirement, medical or life insurance benefits following retirement or other termination of service or employment are at least equal to the liabilities of such plans.
(o) Parent has provided to the Company a true and correct list, as of the date of this Agreement, containing the names of all current full-time, part-time or temporary employees and independent contractors (and indication as such), and, as applicable: (i) the annual dollar amount of all cash compensation in the form of wages, salary, fees, commissions, or director’s fees payable to each person; (ii) dates of employment or service; (iii) title and, with respect to independent contractors, a current written description of such person’s contracting services; (iv) visa status, if applicable; and (v) with respect to employees, (A) a designation of whether they are classified as exempt or non-exempt for purposes of FLSA and any similar state, federal or ex-U.S. law and (B) whether such an employee is on leave, and if so, the expected return date.
(p) Neither Parent nor any of its Subsidiaries is or has ever been a party to, bound by, or has a duty to bargain under, any collective bargaining agreement or other Contract with a labor union or similar labor organization representing any of its employees, and there is no labor union or similar
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labor organization representing or, to the Knowledge of Parent, purporting to represent or seeking to represent any employees of Parent or its Subsidiaries, including through the filing of a petition for representation election. There is not and has not been in the past five years, nor, to the Knowledge of Parent, is there or has there been in the past five years any threat of, any strike, slowdown, work stoppage, lockout, union election petition, demand for recognition, or any similar activity or dispute, or any union organizing activity, against Parent or any of its Subsidiaries.
(q) Parent and each of its Subsidiaries is, and since December 31, 2023 has been, in material compliance with all applicable Laws respecting labor, employment, employment practices, and terms and conditions of employment, including worker classification, contractor classification, discrimination, harassment and retaliation, equal employment opportunities, fair employment practices, meal and rest periods, immigration, employee safety and health, payment of wages (including overtime wages), unemployment and workers’ compensation, leaves of absence, and hours of work. Except as would not be reasonably likely to result in a material liability to Parent or any of its Subsidiaries, with respect to employees of Parent and its Subsidiaries, each of Parent and its Subsidiaries, since December 31, 2023, has withheld and reported all amounts required by Law to be withheld and reported with respect to wages, salaries and other payments, benefits, or compensation to employees. There is no material Legal Proceeding pending or, to the Knowledge of Parent, threatened or reasonably anticipated against Parent or any of its Subsidiaries relating to any current or former employee, applicant for employment, or consultant of Parent.
(r) Within the preceding two years, Parent has complied in all material respects with the WARN Act.
4.18 Environmental Matters. Parent and each of its Subsidiaries are in compliance and since December 31, 2023 have complied with all applicable Environmental Laws, which compliance includes the possession by Parent of all permits and other Governmental Authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof, except for any failure to be in such compliance that, either individually or in the aggregate, would not reasonably be expected to be material to Parent or its business. Neither Parent nor any of its Subsidiaries has received since December 31, 2023 (or prior to that time, which is pending and unresolved), any written notice or other communication (in writing or otherwise), whether from a Governmental Body or other Person, that alleges that Parent or any of its Subsidiaries is not in compliance with or has liability pursuant to any Environmental Law and, to the Knowledge of Parent, there are no circumstances that would reasonably be expected to prevent or interfere with Parent’s or any of its Subsidiaries’ compliance in any material respects with any Environmental Law, except where such failure to comply would not reasonably be expected to be material to Parent or its business. No current or (during the time a prior property was leased or controlled by Parent or any of its Subsidiaries) prior property leased or controlled by Parent or any of its Subsidiaries has had a release of or exposure to Hazardous Materials in material violation of or as would reasonably be expected to result in any material liability of Parent or any of its Subsidiaries pursuant to Environmental Law. No consent, approval or Governmental Authorization of or registration or filing with any Governmental Body is required by Environmental Laws in connection with the execution and delivery of this Agreement or the consummation of the Contemplated Transactions by Parent or Merger Subs. Prior to the date hereof, Parent has provided or otherwise made available to the Company true and correct copies of all material environmental reports, assessments, studies and audits in the possession or control of Parent or any of its Subsidiaries with respect to any property leased or controlled by Parent or any of its Subsidiaries or any business operated by them.
4.19 Transactions with Affiliates. Except as set forth in the Parent SEC Documents filed prior to the date of this Agreement, since the date of the filing of Amendment No. 1 to Parent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 with the SEC on April 30, 2026, no
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event has occurred that would be required to be reported by Parent pursuant to Item 404 of Regulation S-K. Section 4.19 of the Parent Disclosure Schedule identifies each Person who is (or who may be deemed to be) an Affiliate of Parent as of the date of this Agreement.
4.20 Insurance. Parent has delivered or made available to the Company accurate and complete copies of all material insurance policies and all material self-insurance programs and arrangements relating to the business, assets, liabilities and operations of Parent and each of its Subsidiaries. Each of such insurance policies is in full force and effect and Parent and each of its Subsidiaries is in compliance in all material respects with the terms thereof. Other than customary end of policy notifications from insurance carriers, since December 31, 2023, neither Parent nor any of its Subsidiaries has received any notice or other written communication regarding any actual or possible: (a) cancellation or invalidation of any insurance policy; or (b) refusal or denial of any coverage, reservation of rights or rejection of any material claim under any insurance policy. Parent and each of its Subsidiaries has provided timely written notice to the appropriate insurance carrier(s) of each Legal Proceeding that is currently pending against Parent or any of its Subsidiaries for which Parent or such Subsidiary has insurance coverage, and no such carrier has issued a denial of coverage or a reservation of rights with respect to any such Legal Proceeding, or informed Parent or any of its Subsidiaries of its intent to do so.
4.21 [Reserved].
4.22 No Financial Advisors. Except as set forth in Section 4.22 of the Parent Disclosure Schedule, no broker, finder or investment banker is entitled to any tail fee, brokerage fee, finder’s fee, opinion fee, success fee, transaction fee or other fee or commission in connection with the Contemplated Transactions and the transactions contemplated by the Securities Purchase Agreement based upon arrangements made by or on behalf of Parent or any of its Subsidiaries.
4.23 Anti-Bribery. None of Parent or any of its Subsidiaries nor any of their respective directors, officers, employees or, to Parent’s Knowledge, agents or any other Person acting on its behalf (in each in their respective capacities as such) has directly or indirectly made any bribes, rebates, payoffs, influence payments, kickbacks, illegal payments, illegal political contributions, or other payments, in the form of cash, gifts, or otherwise, or taken any other action, in violation of Anti-Bribery Laws. Neither Parent nor any of its Subsidiaries is or has been the subject of any investigation or inquiry by any Governmental Body with respect to potential violations of Anti-Bribery Laws.
4.24 Valid Issuance. The Parent Common Stock and Parent Convertible Preferred Stock to be issued in the Merger will, when issued in accordance with the provisions of this Agreement, be validly issued, fully paid and nonassessable. To the Knowledge of Parent as of the date of this Agreement, no “bad actor” disqualifying event described in Rule 506(d)(1)(i)–(viii) of the Securities Act (a “Disqualifying Event”) is applicable to Parent or, to Parent’s Knowledge, any Parent Covered Person, except for a Disqualifying Event as to which Rule 506(d)(2)(ii)–(iv) or (d)(3) of the Securities Act is applicable.
4.25 Disclaimer of Other Representations or Warranties.
(a) Except as previously set forth in this Section 4 or in any certificate delivered by Parent or Merger Subs to the Company pursuant to this Agreement, neither Parent nor any Merger Sub makes any representation or warranty, express or implied, at law or in equity, with respect to it or any of its assets, liabilities or operations, and any such other representations or warranties are hereby expressly disclaimed.
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(b) Each of Parent, First Merger Sub and Second Merger Sub acknowledges and agrees that, except for the representations and warranties of the Company set forth in Section 3. or in any certificate delivered by the Company to Parent or the Merger Subs pursuant to this Agreement, none of the Company or any of their respective Representatives is relying on any other representation or warranty of the Company or any other Person made outside of Section 3 or such certificates, including regarding the accuracy or completeness of any such other representations or warranties or the omission of any material information, whether express or implied, in each case, with respect to the Contemplated Transactions.
Section 5. ADDITIONAL AGREEMENTS OF THE PARTIES
5.1 Parent Stockholders’ Meeting.
(a) As promptly as practicable following the execution of this Agreement, Parent shall take all action necessary under applicable Law to call, give notice of and hold a meeting of the holders of Parent Common Stock for the purpose of seeking:
(i) approval of the Preferred Stock Conversion Proposal;
(ii) to authorize (A) the change of the name of Parent to “Velaris Therapeutics, Inc.”, (B) the redomicile of Parent from Delaware to the Cayman Islands or such other jurisdiction as may be determined by the Company (the “Redomestication”), on the terms set forth in Section 5.10(f), (C) a reverse stock split of the issued and outstanding shares of Parent Common Stock at a ratio to be determined by the Parent Board with the consent of the Consenting Holders, (D) an increase in the number of authorized shares of Parent Common Stock to a number sufficient to permit the conversion in full of all then outstanding shares of Parent Convertible Preferred Stock (disregarding for such purpose any beneficial ownership limitations set forth in the Certificates of Designation) (the “Authorized Share Increase”), and (E) such other changes as are mutually agreeable to Parent and the Company (the “Charter Amendment Proposal”); and
(iii) the approval of a new equity incentive plan of Parent in form and substance reasonably acceptable to the Company (the “Equity Plan Proposal”) (the matters contemplated by the clauses 5.1(a)(i)–5.1(a)(iii) are referred to as the “Parent Stockholder Matters,” and such meeting, the “Parent Stockholders’ Meeting”).
(b) Parent agrees to use reasonable best efforts to call and hold the Parent Stockholders’ Meeting as soon as practicable after the date hereof. If the approval of the Parent Stockholder Matters is not obtained at the Parent Stockholders’ Meeting or if on a date preceding the Parent Stockholders’ Meeting, Parent reasonably believes that (i) it will not receive proxies sufficient to obtain the Required Parent Stockholder Vote, whether or not quorum would be present or (ii) it will not have sufficient shares of Parent Common Stock represented (whether in person or by proxy) to constitute a quorum necessary to conduct the business of the Parent Stockholders’ Meeting, then, in each case, Parent shall use its reasonable best efforts to adjourn the Parent Stockholders’ Meeting one or more times to a date or dates no more than 30 days after the scheduled date for such meeting, and to obtain such approvals at such time. If the Parent Stockholders’ Meeting is not so adjourned, and/or if the approval of the Parent Stockholder Matters is not then obtained, Parent shall use its reasonable best efforts to obtain such approvals as soon as practicable thereafter, and in any event to obtain such approvals at the next occurring annual meeting of the stockholders of Parent or, if such annual meeting is not scheduled to be held within six months after the Parent Stockholders’ Meeting, a special meeting of the stockholders of Parent to be held within six months after the Parent Stockholders’ Meeting. Parent shall hold an annual meeting or special meeting of its stockholders, at which a vote of the stockholders of Parent to approve the Parent Stockholder Matters will
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be solicited and taken, at least once every six months until Parent obtains approval of the Parent Stockholder Matters.
(c) Parent agrees that: (i) the Parent Board shall recommend that the holders of Parent Common Stock vote to approve the Parent Stockholder Matters and shall use its reasonable best efforts to solicit and obtain such approval within the time frames set forth in Section 5.1(b), and (ii) the Proxy Statement shall include a statement to the effect that the Parent Board recommends that the Parent’s stockholders vote to approve the Parent Stockholder Matters.
(d) The Company and Parent acknowledge that, under the Nasdaq Stock Market Rules, the shares of Parent Common Stock issuable pursuant to the Securities Purchase Agreement and the Parent Preferred Stock Payment Shares will not be entitled to vote on the Preferred Stock Conversion Proposal.
5.2 Proxy Statement.
(a) As promptly as practicable after the Closing Date and in any event on or before the date that is 30 days after the date hereof, Parent, in cooperation with the Company, shall prepare and file with the SEC a proxy statement relating to the Parent Stockholders’ Meeting to be held in connection with the Parent Stockholder Matters (together with any amendments thereof or supplements thereto, the “Proxy Statement”). Parent shall use commercially reasonable efforts to (i) cause the Proxy Statement to comply with applicable rules and regulations promulgated by the SEC, (ii) cause the Proxy Statement to be cleared by the SEC as promptly as practicable and (iii) respond promptly to any comments or requests of the SEC or its staff related to the Proxy Statement. Each of the Parties shall reasonably cooperate with the other Parties and furnish all information concerning itself and its Affiliates, as applicable, to the other Parties that is required by Law to be included in the Proxy Statement as the other Parties may reasonably request in connection with such actions and the preparation of the Proxy Statement.
(b) Parent covenants and agrees that the Proxy Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith) (i) will comply as to form in all material respects with the requirements of applicable U.S. federal securities Laws and the DGCL, and (ii) other than with respect to information supplied by or on behalf of the Company or its Affiliates or Representatives to Parent for inclusion in the Proxy Statement, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company covenants and agrees that the information supplied by or on behalf of the Company to Parent for inclusion in the Proxy Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make such information, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, neither Party makes any covenant, representation or warranty with respect to statements made in the Proxy Statement (and the letter to stockholders, notice of meeting and form of proxy included therewith), if any, based on information provided by the other Party or any of its Representatives regarding such other Party or its Affiliates for inclusion therein.
(c) Parent shall use commercially reasonable efforts to cause the Proxy Statement to be mailed to Parent’s stockholders as promptly as practicable after the Proxy Statement has been filed with the SEC and either (i) the SEC has indicated that it does not intend to review the Proxy Statement or that its review of the Proxy Statement has been completed or (ii) at least ten (10) days shall have passed since the Proxy Statement was filed with the SEC without receiving any correspondence from the SEC commenting upon, or indicating that it intends to review, the Proxy Statement, all in compliance with applicable U.S. federal securities Laws and the DGCL. If at any time before the Parent Stockholders’
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Meeting, (i) Parent, Merger Subs, the Company or the Surviving Entity (A) becomes aware of any event or information that, pursuant to the Securities Act or the Exchange Act, should be disclosed in an amendment or supplement to the Proxy Statement, (B) receives notice of any SEC request for an amendment or supplement to the Proxy Statement or for additional information related thereto or (C) receives SEC comments on the Proxy Statement, or (ii) the information provided in the Proxy Statement has become “stale” and new information should be disclosed in an amendment or supplement to the Proxy Statement, as the case may be, then such Party, as the case may be, shall promptly inform the other Parties thereof and shall cooperate with such other Parties in Parent filing such amendment or supplement with the SEC (and, if appropriate, in mailing such amendment or supplement to Parent’s stockholders) or otherwise addressing such SEC request or comments. Parent shall promptly provide to the Company copies of all written correspondence between it or any of its Representatives, on the one hand, and the SEC or staff of the SEC, on the other hand, with respect to the Proxy Statement and all orders of the SEC relating to the Proxy Statement.
(d) The Company shall reasonably cooperate with Parent and provide, and cause its Representatives to provide, Parent and its Representatives, with all true, correct and complete information regarding the Company that is required by Law to be included in the Proxy Statement or reasonably requested by Parent to be included in the Proxy Statement (collectively, the “Company Required Proxy Information”). Without limiting the foregoing, to the extent required by applicable Law, the Company will use commercially reasonable efforts to cause to be delivered to Parent a consent letter of the Company’s independent accounting firm, dated no later than the date on which the Proxy Statement is filed with the SEC (and reasonably satisfactory in form and substance to Parent), that is customary in scope and substance for consent letters delivered by independent public accountants in connection with proxy statements similar to the Proxy Statement. The Company and its legal counsel shall be given reasonable opportunity to review and comment on the Proxy Statement, including all amendments and supplements thereto, prior to the filing thereof with the SEC, and on the response to any comments of the SEC on the Proxy Statement, prior to the filing thereof with the SEC. Parent may file the Proxy Statement, or any amendment or supplement thereto, without the prior consent of the Company, provided that Parent has included the Company Required Proxy Information in the Proxy Statement in substantially the same form as it was provided to Parent by the Company pursuant to this Section 5.2; provided, further, that if the prior consent of the Company is not obtained then, notwithstanding anything else herein, the Company makes no covenant or representation regarding the portion of such information supplied by or on behalf of the Company to Parent for inclusion in such Proxy Statement that the Company reasonably identifies prior to such filing of the Proxy Statement.
(e) The Company will use commercially reasonable efforts to, as promptly as reasonably practicable following the date of this Agreement, furnish to Parent (i) audited financial statements for each of its fiscal years required to be included in the Proxy Statement or in any Current Report on Form 8-K required to be filed by Parent in connection with the Contemplated Transactions (the “Company Audited Financial Statements”), if any, and (ii) unaudited interim financial statements for each interim period that would be required to be included in the Proxy Statement or any such Current Report on Form 8-K (the “Company Interim Financial Statements”), if any. Each of the Company Audited Financial Statements and the Company Interim Financial Statements will be suitable for inclusion in the Proxy Statement and prepared in accordance with GAAP as applied on a consistent basis during the periods involved (except in each case as described in the notes thereto) and on that basis will present fairly, in all material respects, the financial position and the results of operations, changes in stockholders’ equity and cash flows of the Company as of the dates of and for the periods referred to in the Company Audited Financial Statements or the Company Interim Financial Statements, as the case may be. The Company further agrees to make available to Parent and its auditor such additional financial information and supporting materials as Parent may reasonably request in respect of disclosure in the Proxy Statement or in connection with the preparation of any pro forma financial statements for inclusion in the Proxy Statement,
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including books and records, schedules, work papers, accounting policies, and tax, capitalization and transaction expense information reasonably necessary to support any pro forma adjustments and as required under the Securities Act or the Exchange Act or reasonably requested in connection with any comments or requests of the SEC or its staff.
5.3 Reservation of Parent Common Stock; Issuance of Shares of Parent Common Stock. For as long as any Parent Preferred Stock Payment Shares remain outstanding, Parent shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Parent Common Stock or shares of Parent Common Stock held in treasury by Parent, for the purpose of effecting the conversion of the Parent Preferred Stock Payment Shares, the full number of shares of Parent Common Stock then issuable upon the conversion of all Parent Preferred Stock Payment Shares then outstanding. All shares of Parent Common Stock delivered upon conversion of the Parent Preferred Stock Payment Shares shall be newly issued shares or shares held in treasury by Parent, shall have been duly authorized and validly issued and shall be fully paid and nonassessable, and shall be free from preemptive rights and free of any Encumbrance.
5.4 Employee Benefits.
(a) For purposes of vesting, eligibility to participate, and level of benefits (other than for purposes of determining awards under an equity incentive plan or accrued benefits under any defined benefit pension plan) under the benefit plans, programs, Contracts or arrangements of Parent or any of its Subsidiaries (including, following the Closing, the Surviving Entity and its Subsidiaries) (the “Post-Closing Plans”), Parent shall use reasonable best efforts to cause each employee of the Company who remains employed by Parent or the Surviving Entity, or any of their respective Subsidiaries following the Closing, (together, the “Continuing Employees”) to be credited with his or her years of service with the Company or any of its predecessors; provided that the foregoing shall not apply to the extent that its application would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing, for purposes of each Post-Closing Plan providing medical, dental, pharmaceutical and/or vision benefits to a Continuing Employee, Parent shall use reasonable best efforts to cause all pre-existing condition exclusions and actively-at-work requirements of such Post-Closing Plan to be waived for such Continuing Employee and his or her covered dependents to the extent and unless such conditions would have been waived or satisfied under the employee benefit plan whose coverage is being replaced under the Post-Closing Plan, and Parent shall use its reasonable best efforts to cause any eligible expenses incurred by a Continuing Employee and his or her covered dependents during the portion of such plan year in which coverage is replaced with coverage under a Post-Closing Plan to be taken into account under such Post-Closing Plan with respect to the plan year in which participation in such Post-Closing Plan begins for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for such plan year as if such amounts had been paid in accordance with such Post-Closing Plan. For employees of Parent who are not Continuing Employees and who are entitled to severance under their applicable employment agreements, Parent shall prepay for medical, dental, pharmaceutical and/or vision benefits for such employees, if the provider of such benefits is under an individual plan.
(b) Parent shall, or shall cause one of its Affiliates to, (i) provide Continuing Employees with base salary or hourly wage rate, as applicable, that are no less than the base salary or hourly wage rate, as applicable, in effect as of immediately prior to the First Effective Time through December 31, 2027 and, (ii) at all times from the First Effective Time through December 31, 2027, honor all severance commitments of the Company in effect as of immediately prior to the First Effective Time that pertain to the Continuing Employees (the “Existing Severance Plan”).
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(c) Prior to the execution of this Agreement, Parent has taken all actions necessary so that, in lieu of any change of control, severance or similar payments or benefits that would otherwise become payable to any executive officer of Parent set forth on Section 5.4(c) of the Parent Disclosure Schedule (each, a “Parent Executive”) in connection with the Contemplated Transactions (whether or not triggered by the Closing), each Parent Executive shall be eligible to receive a cash retention bonus in the amount set forth opposite such Parent Executive’s name on Section 5.4(c) of the Parent Disclosure Schedule (each, a “Retention Bonus”), which Retention Bonus shall be payable in a lump sum through Parent’s payroll within ten (10) Business Days following the date on which the Required Parent Stockholder Vote is obtained, subject to such Parent Executive’s continued service with Parent through such date. Each Parent Executive has executed and delivered to Parent and the Company a written acknowledgment, in form and substance reasonably acceptable to the Company, pursuant to which such Parent Executive has agreed that such Parent Executive’s Retention Bonus is in full satisfaction of any change of control, severance or similar payments or benefits to which such Parent Executive may otherwise be entitled in connection with the Contemplated Transactions. The aggregate amount of all Retention Bonuses, together with the employer portion of any payroll Taxes associated therewith, has been deducted in the calculation of Parent Net Cash as set forth in the Parent Net Cash Schedule.
(d) [Reserved]
(e) The provisions of this Section 5.4 are for the sole benefit of Parent and the Company and no provision of this Agreement shall (i) create any third-party beneficiary or other rights in any Person, including rights in respect of any benefits that may be provided, directly or indirectly, under any Company Benefit Plan, Parent Benefit Plan or Post-Closing Plan or rights to continued employment or service with the Company or the Parent (or any Subsidiary thereof), (ii) be construed as an amendment, waiver or creation of or limitation on the ability to terminate any Company Benefit Plan, Parent Benefit Plan or Post-Closing Plan, or (iii) limit the ability of the Parent to terminate the employment of any Continuing Employee or modify the at-will status of any Continuing Employees.
5.5 Indemnification of Officers and Directors.
(a) From the First Effective Time through the sixth anniversary of the date on which the First Effective Time occurs, each of Parent and the Surviving Entity shall indemnify and hold harmless each person who is now, or has been at any time prior to the date hereof, or who becomes prior to the First Effective Time, a director or officer of Parent or the Company or any of their respective Subsidiaries, respectively (the “D&O Indemnified Parties”), against all claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including attorneys’ fees and disbursements, incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that the D&O Indemnified Party is or was a director or officer of Parent or of the Company, or any Subsidiary thereof, asserted or claimed prior to the First Effective Time, in each case, to the fullest extent permitted under applicable Law. Except in the case of fraud, each D&O Indemnified Party will be entitled to advancement of expenses incurred in the defense of any such claim, action, suit, proceeding or investigation from each of Parent and the Surviving Entity, jointly and severally, upon receipt by Parent or the Surviving Entity from the D&O Indemnified Party of a request therefor; provided that any such person to whom expenses are advanced provides an undertaking to Parent, to the extent then required by the DGCL or DLLCA, as applicable, to repay such advances if it is ultimately determined that such person is not entitled to indemnification.
(b) The provisions of the certificate of incorporation and bylaws of Parent with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers of Parent that are presently set forth in the certificate of incorporation and bylaws of Parent shall not be amended, modified or repealed for a period of six years from the First Effective Time in a
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manner that would adversely affect the rights thereunder of individuals who, at or prior to the First Effective Time, were officers or directors of Parent, unless such modification is required by applicable Law. The certificate of formation and limited liability company agreement of the Surviving Entity shall contain, and Parent shall cause the certificate of formation and limited liability company agreement of the Surviving Entity to so contain, provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers as those presently set forth in the certificate of incorporation and bylaws of Parent.
(c) From and after the First Effective Time, (i) the Surviving Entity shall fulfill and honor in all respects the obligations of the Company to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under the Company’s Organizational Documents and pursuant to any indemnification agreements between the Company and such D&O Indemnified Parties, with respect to claims arising out of matters occurring at or prior to the First Effective Time and (ii) Parent shall fulfill and honor in all respects the obligations of Parent to its D&O Indemnified Parties as of immediately prior to the Closing pursuant to any indemnification provisions under Parent’s Organizational Documents and pursuant to any indemnification agreements between Parent and such D&O Indemnified Parties, with respect to claims arising out of matters occurring at or prior to the First Effective Time.
(d) From and after the First Effective Time, Parent shall continue to maintain directors’ and officers’ liability insurance policies, with an effective date as of the Closing Date, on commercially available terms and conditions and with coverage limits customary for U.S. public companies similarly situated to Parent. From and after the First Effective Time, Parent shall pay all expenses, including reasonable attorneys’ fees, that are incurred by the persons referred to in this Section 5.5 in connection with their successful enforcement of the rights provided to such persons in this Section 5.5.
(e) The provisions of this Section 5.5 are intended to be in addition to the rights otherwise available to the current and former officers and directors of Parent and the Company by Law, charter, statute, bylaw or agreement, and shall operate for the benefit of, and shall be enforceable by, each of the D&O Indemnified Parties, their heirs and their representatives.
(f) In the event Parent or the Surviving Entity or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Entity, as the case may be, shall succeed to the obligations set forth in this Section 5.5. Parent shall cause the Surviving Entity to perform all of the obligations of the Surviving Entity under this Section 5.5.
5.6 Additional Agreements. The Parties shall use reasonable best efforts to cause to be taken all actions necessary to consummate the Contemplated Transactions. Without limiting the generality of the foregoing, each Party to this Agreement: (a) shall make all filings and other submissions (if any) and give all notices (if any) required to be made and given by such Party in connection with the Contemplated Transactions; (b) shall use reasonable best efforts to obtain each Consent (if any) reasonably required to be obtained (pursuant to any applicable Law or Contract, or otherwise) by such Party in connection with the Contemplated Transactions or for such Contract to remain in full force and effect; (c) shall use reasonable best efforts to lift any injunction prohibiting, or any other legal bar to, the Contemplated
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Transactions; and (d) shall use reasonable best efforts to satisfy the conditions precedent to the consummation of this Agreement.
5.7 Listing. Parent shall use its reasonable best efforts to (a) maintain its existing listing on Nasdaq; and (b) prepare and submit to Nasdaq a notification form for the listing of the shares of Parent Common Stock issuable pursuant to the Securities Purchase Agreement and the Parent Common Stock to be issued upon conversion of the Parent Convertible Preferred Stock to be issued in connection with the Contemplated Transactions. Without limiting the foregoing, Parent shall, to the extent required by Nasdaq rules and regulations (including Nasdaq Listing Rule 5110(a) in connection with the reconstitution of the Parent Board contemplated by Section 5.10), file an initial listing application for the Parent Common Stock on Nasdaq (the “Nasdaq Listing Application”) within 10 days following the date of this Agreement, which Nasdaq Listing Application shall be prepared in cooperation with the Company, and to cause such Nasdaq Listing Application to be conditionally approved as promptly as practicable following the First Effective Time and in any event prior to the Approval Time. The Parties will use reasonable best efforts to coordinate with respect to compliance with Nasdaq rules and regulations. Each Party will promptly inform the other Party of all verbal or written communications between Nasdaq and such Party or its representatives. The Company will cooperate with Parent as reasonably requested by Parent with respect to the Nasdaq Listing Application and promptly furnish to Parent all information concerning the Company and its stockholders that may be required or reasonably requested in connection with any action contemplated by this Section 5.7.
5.8 Tax Matters. For U.S. federal income Tax purposes, (i) the Parties intend that the First Merger and the Second Merger, taken together, constitute an integrated transaction described in Rev. Rul. 2001-46, 2001-2 C.B. 321 that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder (the “Intended Tax Treatment”), and (ii) this Agreement is intended to be, and is hereby adopted as, a “plan of reorganization” for purposes of Sections 354 and 361 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a), to which the Parent, Merger Subs and the Company are parties under Section 368(b) of the Code. The Parties shall treat and shall not take any tax reporting position (including during the course of any audit, litigation or other proceeding with respect to Taxes) inconsistent with the treatment of the Merger as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal, state and other relevant Tax purposes, unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code. The Parties shall (and shall cause their Affiliates to) not take any action or cause any action to be taken, or fail to take or cause to be taken any action, which action or failure to act would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.
5.9 Legends. Parent shall be entitled to place appropriate legends, including the legend noted in Section 5.16, on the book entries and/or certificates evidencing any shares of Parent Common Stock or Parent Convertible Preferred Stock to be received in the Merger by equity holders of the Company who may be considered “affiliates” of Parent for purposes of Rules 144 and 145 under the Securities Act reflecting the restrictions set forth in Rules 144 and 145 and to issue appropriate stop transfer instructions to the transfer agent for Parent Common Stock and Parent Convertible Preferred Stock.
5.10 Directors and Officers.
(a) The Parties shall take all necessary action so that immediately after the Second Effective Time, (i) the Parent Board is comprised of five members, with four such members being incumbent members of the Parent Board as set forth on Section 5.10 of the Parent Disclosure Schedule, and one such member designated by the Company and set forth on Section 5.10 of the Company Disclosure Schedule (the “Company Designee”) and (ii) the Persons set forth on Section 5.10 of the Parent Disclosure Schedule under the heading “Officers” are elected or appointed, as applicable, to the positions of officers
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of Parent, as set forth therein, to serve in such positions effective as of the Second Effective Time until successors are duly appointed and qualified in accordance with applicable Law. Three of the incumbent members of the Parent Board shall qualify as “independent directors” under applicable SEC rules. Concurrently with the Closing, the newly constituted Parent Board shall ensure that the various committees of the Parent Board are constituted in the manner set forth on Section 5.10 of the Parent Disclosure Schedule.
(b) At or prior to the Closing, Parent shall cause not fewer than three of the incumbent members of the Parent Board referred to in Section 5.10(a)(i), as identified on Section 5.10 of the Parent Disclosure Schedule (the “Resigning Directors”), to execute and deliver to Parent, with a copy to the Company and the Consenting Holders, a written resignation from the Parent Board and each committee thereof, in form and substance reasonably satisfactory to the Company and the Consenting Holders (each, a “Resignation Letter”). Each Resignation Letter shall (i) be conditioned only upon, and become effective automatically and without any further action by any Person immediately upon, the Required Parent Stockholder Vote having been obtained (the time at which the Required Parent Stockholder Vote is obtained, the “Approval Time”), (ii) apply to such Resigning Director’s then-current term and to any subsequent term to which such Resigning Director is elected or appointed prior to the Approval Time, (iii) provide that it is irrevocable to the fullest extent permitted by applicable Law, and (iv) include the agreement of such Resigning Director that, if for any reason such resignation does not become effective at the Approval Time, such Resigning Director shall, within two (2) Business Days following the written request of the Consenting Holders, resign from the Parent Board and each committee thereof, effective immediately.
(c) The Consenting Holders shall be entitled to designate, by written notice to Parent, three individuals (the “Consenting Holder Designees”) to fill three of the vacancies on the Parent Board resulting from the resignations of the Resigning Directors; provided that the Consenting Holders shall designate such individuals such that, immediately following the appointment of the Consenting Holder Designees pursuant to Section 5.10(d) (and after giving effect to the resignations of the Resigning Directors), the composition of the Parent Board and each committee thereof will comply with the listing requirements of Nasdaq applicable to the composition of the board of directors and board committees of a Nasdaq-listed company (including those relating to director independence and committee composition) and the applicable rules and regulations of the SEC. The Consenting Holders may replace any Consenting Holder Designee by written notice to Parent at any time prior to the Approval Time. If Parent reasonably determines in good faith that the appointment of any Consenting Holder Designee would not satisfy the foregoing proviso, Parent shall, within five (5) Business Days following its receipt of the applicable designation, notify the Consenting Holders in writing, setting forth in reasonable detail the basis for such determination, and the Consenting Holders shall be entitled to designate a replacement. Each Consenting Holder Designee shall furnish to Parent such information regarding such individual as Parent may reasonably request for inclusion in the Proxy Statement or to determine such individual’s independence and eligibility to serve on the committees of the Parent Board. Parent shall provide the Consenting Holders with not less than ten (10) Business Days’ prior written notice of the anticipated date of filing of the preliminary Proxy Statement with the SEC. The Consenting Holders shall identify, by written notice to Parent, one of the Consenting Holder Designees to serve as a Preferred Director (as defined in the Series B Certificate of Designation) (such Consenting Holder Designee, the “Series B Designee” and, together with the Company Designee, the “Preferred Designees”), and may change such identification by written notice to Parent at any time prior to the Approval Time.
(d) Promptly (and in any event within five (5) Business Days) following the designation of any Consenting Holder Designee pursuant to Section 5.10(c) (and, in the case of any such designation made prior to the filing of the definitive Proxy Statement with the SEC, prior to such filing), Parent shall cause the Parent Board to adopt resolutions in accordance with Section 223 of the DGCL
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(including Section 223(d) thereof, to the extent applicable) appointing such Consenting Holder Designee to the Parent Board to fill a vacancy resulting from the resignation of a Resigning Director, with such appointment to take effect automatically upon the effectiveness of such resignation at the Approval Time (or, if such resolutions are adopted following the Approval Time, immediately upon their adoption). Parent shall not, and shall cause the Parent Board not to, revoke, rescind or modify any such resolutions without the prior written consent of the Consenting Holders. Parent shall cause the Proxy Statement to include disclosure regarding the Resignation Letters and the appointment of the Consenting Holder Designees to the Parent Board effective as of the Approval Time, including the information contemplated by Rule 14f-1 under the Exchange Act. Parent shall take all actions necessary so that, immediately following the Approval Time, (i) the Company Designee and the Consenting Holder Designees constitute four of the five members of the Parent Board, (ii) the committees of the Parent Board are reconstituted as directed by the Consenting Holders, subject to the applicable listing requirements of Nasdaq and the rules and regulations of the SEC, and (iii) the Preferred Designees constitute the initial Preferred Directors (as defined in the Series B Certificate of Designation).
(e) From the Closing until the Approval Time, Parent shall not, and shall cause the Parent Board not to, without the prior written consent of the Consenting Holders, accept or give effect to any revocation, withdrawal or modification of any Resignation Letter or take any other action that would reasonably be expected to cause any Resignation Letter not to become effective at the Approval Time in accordance with its terms. If, prior to the Approval Time, (i) any Resigning Director ceases to serve as a member of the Parent Board for any reason, Parent shall not permit any individual to be appointed or nominated to fill the resulting vacancy unless such individual has first executed and delivered a Resignation Letter, whereupon such individual shall be deemed a Resigning Director for all purposes of this Agreement, or (ii) the Company Designee ceases to serve as a member of the Parent Board for any reason, the Consenting Holders shall be entitled to designate a replacement (subject to the proviso in Section 5.10(c), mutatis mutandis), and Parent shall cause the Parent Board to appoint such replacement promptly (and in any event within five (5) Business Days) following such designation, and such replacement shall thereafter be deemed the Company Designee for all purposes of this Agreement.
(f) Parent shall cause the Redomestication to provide that, from and after the effectiveness thereof, (i) the Parent Series B Convertible Preferred Stock and the Parent Series C Convertible Preferred Stock (in each case, to the extent then outstanding) shall each be converted into or continued as a separate class or series of preference shares of Parent (as so redomesticated) having powers, preferences and rights, and qualifications, limitations and restrictions, as set forth in the memorandum and articles of association of Parent (as so redomesticated), substantially identical to those set forth in the Series B Certificate of Designation or the Series C Certificate of Designation, as applicable (with only such changes as are required by the Laws of the Cayman Islands), (ii) for so long as the holders of such class or series of preference shares are entitled to elect the Preferred Directors (as defined in the Series B Certificate of Designation), each Preferred Director shall be entitled to three (3) votes on each matter presented to the board of directors of Parent (as so redomesticated) or any committee thereof, and (iii) the directors of Parent (as so redomesticated) shall be divided into three (3) classes, which shall (A) be designated Class I, Class II and Class III, (B) be as nearly equal in number as possible, and (C) have terms of office that expire at the first, second and third annual general meeting of shareholders, respectively, following the effectiveness of the Redomestication. Parent shall not effect any redomestication of Parent that does not satisfy the requirements of this Section 5.10(f) without the prior written consent of the Consenting Holders. If the Redomestication is approved by the stockholders of Parent, Parent shall cause the Redomestication to become effective substantially concurrently with the Approval Time (or, if such approval is obtained following the Approval Time, as promptly as practicable following such approval), in connection with the Nasdaq Listing Application.
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(g) The Consenting Holders are express third-party beneficiaries of this Section 5.10 and shall be entitled to enforce this Section 5.10 directly against Parent, including, subject to Section 9.5, by seeking an injunction, specific performance or other equitable relief in accordance with Section 9.11.
5.11 Section 16 Matters. Prior to the First Effective Time, Parent and the Company shall take all such steps as may be required (to the extent permitted under applicable Laws) to cause any acquisitions of Parent Common Stock, restricted stock awards to acquire Parent Common Stock and any Parent Options to purchase Parent Common Stock in connection with the Contemplated Transactions, by each individual who is reasonably expected to become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Parent, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
5.12 Cooperation. Each Party shall cooperate reasonably with the other Party and shall provide the other Party with such assistance as may be reasonably requested for the purpose of facilitating the performance by each Party of its respective obligations under this Agreement and to enable the combined entity to continue to meet its obligations following the First Effective Time.
5.13 Closing Certificates.
(a) The Company will prepare and deliver to Parent prior to the Closing a certificate signed by the President of the Company in a form reasonably acceptable to Parent setting forth, as of immediately prior to the First Effective Time (i) each holder of Company Common Stock, Company Preferred Stock and Company Options, (ii) such holder’s name and address, (iii) the number and type of Company Common Stock held and/or underlying the Company Options as of immediately prior to the First Effective Time for each such holder, and the number and type of Company Preferred Stock held, and (iv) the number of shares of Parent Common Stock and/or Parent Convertible Preferred Stock to be issued to such holder, or to underlie any Parent Option to be issued to such holder, pursuant to this Agreement in respect of the Company Capital Stock, Company Preferred Stock or Company Options held by such holder as of immediately prior to the First Effective Time (the “Allocation Certificate”).
(b) Parent shall prepare and deliver to the Company prior to the Closing a certificate signed by the Chief Executive Officer of Parent in a form reasonably acceptable to the Company, setting forth, as of immediately prior to the First Effective Time (A) the number of shares of Parent Common Stock outstanding and (B) (i) each record holder of Parent Common Stock, Parent Options or Parent RSUs, (ii) such record holder’s name and address, and (iii) the number of shares of Parent Common Stock underlying the Parent Options or Parent RSUs as of the First Effective Time for such holder (the “Parent Outstanding Shares Certificate”).
5.14 Takeover Statutes. If any Takeover Statute is or may become applicable to the Contemplated Transactions, each of the Company, the Company Board, Parent and the Parent Board, as applicable, shall grant such approvals and take such actions as are necessary so that the Contemplated Transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement
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and otherwise act to eliminate or minimize the effects of such statute or regulation on the Contemplated Transactions.
5.15 Obligations of Merger Subs. Parent shall take all action necessary to cause Merger Subs to perform their obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement.
5.16 Private Placement. Each of the Company and Parent shall take all reasonably necessary action on its part such that the issuance of Parent Preferred Stock Payment Shares pursuant to this Agreement constitutes a transaction exempt from registration under the Securities Act in compliance with Rule 506 of Regulation D promulgated thereunder. Each certificate representing the Parent Preferred Stock Payment Shares comprising Merger Consideration shall, until such time that such shares are not so restricted under the Securities Act, bear a legend identical or similar in effect to the following legend (together with any other legend or legends required by applicable state securities applicable Law or otherwise, if any):
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ‘ACT’) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.”
5.17 Registration Rights. Parent shall (a) not later than the thirtieth (30th) calendar day following the closing of the Parent Financing, prepare and file with the SEC a registration statement on Form S-1 or Form S-3 (or any successor form) (the “Resale Registration Statement”) registering for resale the shares of Parent Common Stock issued pursuant to the Securities Purchase Agreement and the shares of Parent Common Stock issuable upon conversion of the Parent Preferred Stock Payment Shares, together with the shares of Parent Common Stock issuable upon conversion of the shares of Parent Series C Convertible Preferred Stock issued in the Parent Financing (collectively, the “Registrable Securities”), (b) use its commercially reasonable efforts to cause the Resale Registration Statement to be declared effective under the Securities Act not later than the earlier of (i) the sixtieth (60th) calendar day following the initial filing date of the Resale Registration Statement if the SEC notifies Parent that it will “review” the Resale Registration Statement and (ii) the fifth (5th) Business Day after the date Parent is notified (orally or in writing, whichever is earlier) by the SEC that the Resale Registration Statement will not be “reviewed” or will not be subject to further review, and (c) use its commercially reasonable efforts to keep the Resale Registration Statement continuously effective until the earlier of (i) the date on which all Registrable Securities covered thereby have been sold and (ii) the date on which all such Registrable Securities may be sold without restriction pursuant to Rule 144 under the Securities Act. The holders of Registrable Securities shall be entitled to customary demand, underwritten takedown and piggyback registration rights on terms reasonably acceptable to the Company.
5.18 Operating Plan.
(a) From and after the Closing until the earliest of (i) the date on which the Required Parent Stockholder Vote has been obtained and all outstanding shares of Parent Series B Convertible Preferred Stock have converted into Parent Common Stock, (ii) the date that is twelve (12) months following the Closing Date and (iii) the date on which the Consenting Holders so agree in writing (the “Operating Plan Period”), Parent shall, and shall cause each of its Subsidiaries (including the Surviving Entity) to, conduct the research, development and related activities with respect to the Company Programs in all material respects in accordance with the development plan and operating budget set forth
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on Section 5.18 of the Company Disclosure Schedule (as it may be amended in accordance with Section 5.18(c), the “Operating Plan”).
(b) Without limiting Section 5.18(a), during the Operating Plan Period, Parent shall not, and shall cause each of its Subsidiaries not to, without the prior written consent of the Consenting Holders, take any action that would constitute a material deviation from the Operating Plan, including:
(i) discontinuing, suspending or materially delaying the development of any Company Program;
(ii) reallocating more than 1% of the amount budgeted for any Company Program to any other program or purpose without the consent of the Consenting Holders;
(iii) commencing any new research or development program, or acquiring or in-licensing any product candidate, in each case not contemplated by the Operating Plan;
(iv) selling, assigning, exclusively licensing, abandoning or otherwise disposing of any material rights in or to any Company Program;
(v) incurring costs in connection with the Parent Legacy Business (including the development of ALN1003) in excess of the amounts set forth in the Parent Net Cash Schedule; or
(vi) agreeing or committing to do any of the foregoing.
(c) The Operating Plan may be amended or supplemented only with the approval of the Parent Board and the prior written consent of the Consenting Holders.
(d) Notwithstanding the foregoing, nothing in this Section 5.18 shall restrict Parent or any of its Subsidiaries from taking any action that is reasonably necessary to (i) comply with applicable Law or any order or directive of a Governmental Body, including the U.S. Food and Drug Administration or any comparable foreign Governmental Body; or (ii) respond to any material adverse development with respect to the safety or efficacy of any Company Program, provided that, in each case, Parent shall notify and consult with the Consenting Holders prior to taking any such action.
(e) The Consenting Holders are express third-party beneficiaries of this Section 5.18 and shall be entitled to enforce this Section 5.18 directly against Parent and its Subsidiaries (including the Surviving Entity), including, subject to Section 9.5, by seeking an injunction, specific performance or other equitable relief in accordance with Section 9.11. Parent shall promptly provide to the Consenting Holders such information regarding the conduct of the Company Programs and expenditures against the Operating Plan as they may reasonably request, subject to customary confidentiality obligations.
Section 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of each Party to effect the Merger and otherwise consummate the Contemplated Transactions to be consummated at the Closing are subject to the satisfaction or, to the extent permitted by applicable Law, the written waiver by each of the Parties, at or prior to the Closing Date, of each of the following conditions:
6.1 No Restraints. No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Contemplated Transactions shall have been
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issued by any court of competent jurisdiction or other Governmental Body of competent jurisdiction and remain in effect and there shall not be any Law which has the effect of making the consummation of the Contemplated Transactions illegal.
6.2 Certificates of Designation. Parent shall have filed the Certificates of Designation with the Secretary of State of the State of Delaware.
6.3 Parent Financing. The Securities Purchase Agreement shall be in full force and effect and proceeds not less than the Concurrent Investment Amount shall have been received by Parent, or will be received by Parent substantially simultaneously with the Closing, in connection with the consummation of the transactions contemplated by the Securities Purchase Agreement.
Section 7. CLOSING DELIVERIES OF THE COMPANY
The obligations of Parent and Merger Subs to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to the satisfaction or the written waiver by Parent, at or prior to the Closing, of each of the following conditions:
7.1 Documents. Parent shall have received the following documents, each of which shall be in full force and effect:
(a) a written resignation, in a form reasonably satisfactory to Parent, dated as of the Closing Date and effective as of the Closing, executed by each of the directors of the Company listed in Section 7.1(a) of the Company Disclosure Schedule; and
(b) the Allocation Certificate.
7.2 FIRPTA Certificate. Parent shall have received (i) an original signed statement from the Company that the Company is not, and has not been at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a “United States real property holding corporation,” as defined in Section 897(c)(2) of the Code, conforming to the requirements of Treasury Regulations Section 1.1445-2(c)(3) and 1.897-2(h), and (ii) an original signed notice to be delivered to the IRS in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2), together with written authorization for Parent to deliver such notice to the IRS on behalf of the Company following the Closing, each dated as of the Closing Date, duly executed by an authorized officer of the Company, and in form and substance reasonably acceptable to Parent; provided, that the Parent’s sole remedy for the Company’s failure to deliver such documentation shall be to withhold pursuant to Section 2.11.
7.3 Company Lock-Up Agreements. Parent shall have received the Lock-Up Agreements duly executed by each of the Company Signatories, each of which shall be in full force and effect.
Section 8. CLOSING DELIVERIES OF PARENT
The obligations of the Company to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to the satisfaction or the written waiver by the Company, at or prior to the Closing, of each of the following conditions:
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8.1 Documents. The Company shall have received the following documents, each of which shall be in full force and effect:
(a) the Parent Outstanding Shares Certificate;
(b) the Parent Net Cash Schedule, together with the certificate of Parent’s chief financial officer contemplated by Section 2.12;
(c) a written resignation, in a form reasonably satisfactory to the Company, dated as of the Closing Date and effective as of the Closing, executed by each of the officers and directors of Parent who are not to continue as officers or directors, as the case may be, of Parent after the Closing pursuant to Section 5.10(a) hereof;
(d) certified copies of the resolutions duly adopted by the Parent Board and in full force and effect as of the Closing authorizing the appointment of the directors and officers set forth in Section 5.10(a); and
(e) the Resignation Letters, duly executed by each of the Resigning Directors.
8.2 Listing. Parent shall have filed with Nasdaq a Notification Form: Listing of Additional Shares for the listing of the shares of Parent Common Stock issuable pursuant to the Securities Purchase Agreement and the Parent Common Stock to be issued upon conversion of the Parent Convertible Preferred Stock to be issued in connection with the Contemplated Transactions and shall not have received any objections from Nasdaq to the transactions contemplated in this Agreement.
8.3 Parent Lock-Up Agreements. The Company shall have received the Lock-Up Agreements duly executed by each of the Parent Signatories, each of which shall be in full force and effect.
Section 9. MISCELLANEOUS PROVISIONS
9.1 Non-Survival of Representations and Warranties. The representations and warranties of the Company, Parent and Merger Subs contained in this Agreement or any certificate or instrument delivered pursuant to this Agreement shall terminate at the First Effective Time, and only the covenants that by their terms survive the First Effective Time and this Section 9. shall survive the First Effective Time. Without limiting the foregoing, the covenants in Section 5.18 shall survive the First Effective Time until the expiration of the Operating Plan Period. Any claim for breach of Section 5.18 asserted in writing before that expiration shall survive until it is finally resolved. The covenants in Section 5.10 shall survive the First Effective Time until fully performed in accordance with their terms.
9.2 Amendment. This Agreement may be amended with the approval of the respective boards of directors (or managers as applicable) of the Surviving Entity and Parent at any time; provided, however, that after any such approval of this Agreement by a Party’s stockholders, no amendment shall be made which by Law requires further approval of such stockholders without the further approval of such stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Surviving Entity and Parent. Notwithstanding the foregoing, from and after the First Effective Time, Section 5.10, Section 5.18 and the related provisions may not be amended, modified or supplemented without the prior written consent of the Consenting Holders, including (i) the definitions used in Section 5.10 or Section 5.18, (ii) this proviso, (iii) the last sentence of Section 9.3, (iv) the last sentence
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of Section 9.11, and (v) Section 9.12, in each case, to the extent relating to the rights of the Consenting Holders.
9.3 Waiver.
(a) No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
(b) No Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Party and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.
(c) From and after the First Effective Time, no waiver of, or consent to depart from, any provision of Section 5.10 or Section 5.18 shall be effective unless it is in writing and executed by the Consenting Holders.
9.4 Entire Agreement; Counterparts; Exchanges by Electronic Transmission. This Agreement and the other schedules, exhibits, certificates, instruments and agreements referred to in this Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among or between any of the Parties with respect to the subject matter hereof and thereof; provided, however, that the Confidentiality Agreement shall not be superseded and shall remain in full force and effect in accordance with its terms. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
9.5 Applicable Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws. In any action or proceeding between any of the Parties arising out of or relating to this Agreement or any of the Contemplated Transactions, each of the Parties: (a) irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware or, to the extent such court does not have subject matter jurisdiction, the United States District Court for the District of Delaware or, to the extent that neither of the foregoing courts has jurisdiction, the Superior Court of the State of Delaware; (b) agrees that all claims in respect of such action or proceeding shall be heard and determined exclusively in accordance with clause (a) of this Section 9.5; (c) waives any objection to laying venue in any such action or proceeding in such courts; (d) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over any Party; (e) agrees that service of process upon such Party in any such action or proceeding shall be effective if notice is given in accordance with Section 9.8 of this Agreement; and (f) irrevocably and unconditionally waives the right to trial by jury.
9.6 Attorneys’ Fees. In any action at law or suit in equity to enforce this Agreement or the rights of any of the Parties, the prevailing Party in such action or suit (as determined by a court of
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competent jurisdiction) shall be entitled to recover its reasonable out-of-pocket attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.
9.7 Assignability. This Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit of, the Parties and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any of a Party’s rights or obligations hereunder may be assigned or delegated by such Party without the prior written consent of the other Party, and any attempted assignment or delegation of this Agreement or any of such rights or obligations by such Party without the other Party’s prior written consent shall be void and of no effect.
9.8 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly delivered and received hereunder (a) one Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable international overnight courier service, (b) upon delivery in the case of delivery by hand, or (c) on the date delivered in the place of delivery if sent by email (with a written or electronic confirmation of delivery) prior to 5:00 p.m. Pacific Time, otherwise on the next succeeding Business Day, in each case to the intended recipient as set forth below:
if to Parent or Merger Subs:
Alaunos Therapeutics, Inc.
501 E. Las Olas Blvd., Suite 300
Fort Lauderdale, FL 33301
Attention: Holger Weis, Chief Executive Officer; Ferdinand Groenewald, VP Finance
Email Address: hweis@alaunos.com; fgroenewald@alaunos.com
with a copy to (which shall not constitute notice):
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Attention: Gregory Sichenzia, Marcelle Balcombe
Email Address: gsichenzia@srfc.law; mbalcombe@srfc.law
if to the Company:
Velaris Therapeutics, Inc.
221 Crescent Street
Building 23, Suite 105
Waltham MA 02453
Attention: General Counsel
Email Address: legal@velaristx.com
with a copy to (which shall not constitute notice):
Gibson, Dunn & Crutcher LLP
One Embarcadero Center
San Francisco, CA 94111
Attention: Ryan Murr, Branden Berns, Evan Shepherd
Email Address: rmurr@gibsondunn.com; bberns@gibsondunn.com; eshepherd@gibsondunn.com
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9.9 Cooperation. Each Party agrees to cooperate fully with the other Party and to execute and deliver such further documents, certificates, agreements and instruments and to take such other actions as may be reasonably requested by the other Party to evidence or reflect the Contemplated Transactions and to carry out the intent and purposes of this Agreement.
9.10 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the Parties agree that the court making such determination shall have the power to limit such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the Parties agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.
9.11 Other Remedies; Specific Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that any Party does not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate this Agreement) in accordance with its specified terms or otherwise breaches such provisions. Accordingly, the Parties acknowledge and agree that the Parties shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief on the basis that any other Party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity. Any Party seeking an injunction or injunctions to prevent breaches of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction. The provisions of this Section 9.11 shall apply, mutatis mutandis, to the Consenting Holders with respect to the enforcement of Section 5.10 and Section 5.18, as if the Consenting Holders were a Party.
9.12 No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties and the D&O Indemnified Parties to the extent of their respective rights pursuant to Section 5.5, and the Consenting Holders to the extent of their rights pursuant to Section 5.10 and Section 5.18) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
9.13 Expenses. Except as otherwise expressly provided in this Agreement, all expenses incurred in connection with this Agreement and the Contemplated Transactions will be paid by the Party incurring such expenses.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first above written.
ALAUNOS THERAPEUTICS, INC.
By: ______________________________
Name:
Title:
VALKYRIE Merger Sub I, Inc.
By: ______________________________
Name:
Title:
VALKYRIE Merger Sub II, LLC
By: ______________________________
Name:
Title:
VELARIS THERAPEUTICS, INC.
By: ______________________________
Name:
Title:
Exhibit A
Form of Lock-Up Agreement
Exhibit B-1
Form of Series B Certificate of Designation
Exhibit B-2
Form of Series C Certificate of Designation
Exhibit C
Form of Parent Support Agreement
Exhibit D
Form of Parent Net Cash Certificate
The undersigned, Ferdinand Groenewald, the VP Finance of Alaunos Therapeutics, Inc., a Delaware corporation (“Parent”), hereby certifies, solely in such capacity and not in any individual capacity, on behalf of Parent pursuant to Section 2.12 of that certain Agreement and Plan of Merger, dated as of October 13, 2026 (the “Merger Agreement”), by and among Parent, Valkyrie Merger Sub I, Inc., Valkyrie Merger Sub II, LLC and Velaris Therapeutics, Inc., that:
1. Attached hereto as Annex A is the Parent Net Cash Schedule, which sets forth in reasonable detail Parent’s good faith calculation of Parent Net Cash (including each of the components thereof) as of the Cash Determination Time.
2. The Parent Net Cash Schedule was prepared in good faith and in accordance with the Merger Agreement (including the definition of Parent Net Cash).
3. The Parent Net Cash Schedule accurately reflects, in all material respects, Parent Net Cash as of the Cash Determination Time.
Capitalized terms used but not defined herein have the meanings given to them in the Merger Agreement.
6018462467.10
Confidential
Proposed Final Form
ALAUNOS THERAPEUTICS, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
THE UNDERSIGNED DOES HEREBY CERTIFY, on behalf of Alaunos Therapeutics, Inc., a Delaware corporation (the “Corporation”), that the following resolution was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”), in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), at a meeting duly called and held on October 12, 2026, which resolution provides for the creation of a series of the Corporation’s Preferred Stock, par value $0.001 per share, which is designated as “Series B Non-Voting Convertible Preferred Stock,” with the preferences, rights and limitations set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation.
WHEREAS: the Third Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”), provides for a class of its authorized stock known as Preferred Stock, consisting of 30,000,000 shares, $0.001 par value per share (the “Preferred Stock”), issuable from time to time in one or more series.
RESOLVED: that, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation, (i) a new series of Preferred Stock of the Corporation be, and hereby is authorized by the Board of Directors, (ii) the Board of Directors hereby authorizes the issuance of 105,286 shares of “Series B Non-Voting Convertible Preferred Stock” pursuant to the terms of the Agreement and Plan of Merger, dated as of the date hereof, by and among the Corporation, Valkyrie Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Corporation, Valkyrie Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Corporation, and Velaris Therapeutics, Inc., a Delaware corporation (the “Merger Agreement”), and (iii) the Board of Directors hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares of Preferred Stock, in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series, as follows:
TERMS OF SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act of 1933, as amended.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Buy-In” shall have the meaning set forth in Section 6.5.4.
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security immediately prior to 4:00 p.m., New York City time, on the principal Trading Market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series B Non-Voting Preferred Stock in accordance with the terms hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Holder” means a holder of shares of Series B Non-Voting Preferred Stock.
“Operating Plan” means the “Operating Plan” as defined in the Merger Agreement, as the same may be amended or supplemented from time to time in accordance with the terms of the Merger Agreement, a copy of which is on file at the principal executive offices of the Corporation and will be furnished by the Corporation to any Holder upon request.
“Parent Legacy Business” has the meaning set forth in the Merger Agreement.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Trading Day” means a day on which the principal Trading Market is open for business.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
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IN WITNESS WHEREOF, Alaunos Therapeutics, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series B Non-Voting Convertible Preferred Stock to be duly executed by its Chief Executive Officer on October 13, 2026.
ALAUNOS THERAPEUTICS, INC.
By:
Name: Holger Weis
Title: Chief Executive Officer
ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK OR, IF APPLICABLE, TO ELECT CASH SETTLEMENT OF SUCH SHARES)
The undersigned Holder hereby irrevocably elects to convert the number of shares of Series B Non-Voting Preferred Stock indicated below, represented in book-entry form, into shares of common stock, par value $0.001 per share (the “Common Stock”), of Alaunos Therapeutics, Inc., a Delaware corporation (the “Corporation”), as of the date written below or, if applicable, elects cash settlement of such shares pursuant to Section 6.5.3 of the Certificate of Designation. If securities are to be issued in the name of (or cash is to be paid to) a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series B Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Delaware on October 13, 2026.
As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned Holder (together with such Holder’s Attribution Parties), including the number of shares of Common Stock issuable upon conversion of the Series B Non-Voting Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series B Non-Voting Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6.4 of the Certificate of Designation, does not exceed the Beneficial Ownership Limitation applicable to the undersigned Holder. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission.
CONVERSION CALCULATIONS:
Date to Effect Conversion: |
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Number of shares of Series B Non-Voting Preferred Stock owned prior to Conversion: |
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Number of shares of Series B Non-Voting Preferred Stock to be Converted: |
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Number of shares of Common Stock to be Issued: |
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Address for delivery of physical certificates: |
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For DWAC Delivery, please provide the following:
Broker No.:
Account No.:
[HOLDER]
By:
Name:
Title:
6018511265.6
Confidential
Final Form
ALAUNOS THERAPEUTICS, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
THE UNDERSIGNED DOES HEREBY CERTIFY, on behalf of Alaunos Therapeutics, Inc., a Delaware corporation (the “Corporation”), that the following resolution was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”), in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), at a meeting duly called and held on October 12, 2026, which resolution provides for the creation of a series of the Corporation’s Preferred Stock, par value $0.001 per share, which is designated as “Series C Non-Voting Convertible Preferred Stock,” with the preferences, rights and limitations set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation.
WHEREAS: the Third Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”), provides for a class of its authorized stock known as Preferred Stock, consisting of 30,000,000 shares, $0.001 par value per share (the “Preferred Stock”), issuable from time to time in one or more series.
RESOLVED: that, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation, (i) a new series of Preferred Stock of the Corporation be, and hereby is authorized by the Board of Directors, (ii) the Board of Directors hereby authorizes the issuance of 276,117 shares of “Series C Non-Voting Convertible Preferred Stock” pursuant to the terms of (A) the Agreement and Plan of Merger, dated as of the date hereof, by and among the Corporation, Valkyrie Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Corporation, Valkyrie Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Corporation, and Velaris Therapeutics, Inc., a Delaware corporation (the “Merger Agreement”), and (B) the Securities Purchase Agreement, dated as of the date hereof, by and among the Corporation and the initial Holders (as defined below) (the “Purchase Agreement”), and (iii) the Board of Directors hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares of Preferred Stock, in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series, as follows:
TERMS OF SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act of 1933, as amended.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security immediately prior to 4:00 p.m., New York City time, on the principal Trading Market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series C Non-Voting Preferred Stock in accordance with the terms hereof.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Holder” means a holder of shares of Series C Non-Voting Preferred Stock.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Trading Day” means a day on which the principal Trading Market is open for business.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
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IN WITNESS WHEREOF, Alaunos Therapeutics, Inc. has caused this Certificate of Designation of Preferences, Rights and Limitations of Series C Non-Voting Convertible Preferred Stock to be duly executed by its Chief Executive Officer on October 13, 2026.
ALAUNOS THERAPEUTICS, INC.
By:
Name: Holger Weis
Title: Chief Executive Officer
ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK OR, IF APPLICABLE, TO ELECT CASH SETTLEMENT OF SUCH SHARES)
The undersigned Holder hereby irrevocably elects to convert the number of shares of Series C Non-Voting Preferred Stock indicated below, represented in book-entry form, into shares of common stock, par value $0.001 per share (the “Common Stock”), of Alaunos Therapeutics, Inc., a Delaware corporation (the “Corporation”), as of the date written below or, if applicable, elects cash settlement of such shares pursuant to Section 6.5.3 of the
Certificate of Designation. If securities are to be issued in the name of (or cash is to be paid to) a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series C Non-Voting Convertible Preferred Stock (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Delaware on October 13, 2026.
As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned Holder (together with such Holder’s Attribution Parties), including the number of shares of Common Stock issuable upon conversion of the Series C Non-Voting Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series C Non-Voting Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6.4 of the Certificate of Designation, does not exceed the Beneficial Ownership Limitation applicable to the undersigned Holder. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable rules and regulations of the Commission.
CONVERSION CALCULATIONS:
Date to Effect Conversion: |
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Number of shares of Series C Non-Voting Preferred Stock owned prior to Conversion: |
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Number of shares of Series C Non-Voting Preferred Stock to be Converted: |
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Number of shares of Common Stock to be Issued: |
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Address for delivery of physical certificates: |
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For DWAC Delivery, please provide the following:
Broker No.:
Account No.:
[HOLDER]
By:
Name:
Title:
6018511266.7
Confidential
Proposed Execution Version
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of October 13, 2026, by and among Alaunos Therapeutics, Inc., a Delaware corporation (the “Company”), and each of the Persons listed on Exhibit A attached to this Agreement (each, an “Investor” and together, the “Investors”).
WHEREAS, the Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the U.S. Securities Act of 1933, as amended (the “Securities Act”);
WHEREAS, the Company desires to sell to the Investors, and each Investor desires to purchase from the Company, severally and not jointly, upon the terms and subject to the conditions stated in this Agreement, shares (the “Common Shares”) of common stock, par value $0.001 per share, of the Company and shares (the “Preferred Shares,” and together with the Common Shares, the “Purchased Shares”) of Series C Non-Voting Convertible Preferred Stock, par value $0.001 per share (and including any other class of securities into which the Series C Non-Voting Convertible Preferred Stock may hereafter be reclassified or changed, the “Preferred Stock”) of the Company, having the designation, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions as specified in the Certificate of Designation attached hereto as Exhibit B (the “Certificate of Designation”), at a per Common Share purchase price equal to the Common Share Price and a per Preferred Share purchase price equal to the Preferred Share Price, as the case may be, as set forth in Exhibit A hereto;
WHEREAS, contemporaneously with the sale of the Purchased Shares, the Company and the Investors will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit C, pursuant to which the Company will agree to provide certain registration rights, including in respect of the Common Shares and the Conversion Shares (as defined below), under the Securities Act and applicable state securities laws; and
WHEREAS, the Company is party to that certain Agreement and Plan of Merger by and among the Company, Velaris Therapeutics, Inc., a Delaware corporation (“Velaris”), Valkyrie Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“First Merger Sub”), and Valkyrie Merger Sub II, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Second Merger Sub”), dated the date hereof (as amended from time to time, the “Merger Agreement”), pursuant to which (i) First Merger Sub will merge with and into Velaris, with Velaris surviving and becoming a wholly-owned subsidiary of the Company, (ii) Velaris will merge with and into Second Merger Sub, with Second Merger Sub being the surviving entity and a wholly-owned subsidiary of the Company ((i) and (ii) together, the “Merger”), and (iii) following that time, in accordance with the Merger Agreement, the Company will change its name to “Velaris Therapeutics, Inc.”
NOW, THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the Company and each Investor, severally and not jointly, agree as follows:
“2025 SEC Reports” means (a) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as amended by Amendment No. 1 thereto on Form 10-K/A, and (b) any Quarterly Reports on Form 10-Q or any Current Reports on Form 8-K filed or furnished (as applicable) by the Company after January 1, 2026 and prior to the Business Day immediately preceding the date hereof, together in each case with any documents incorporated by reference therein or exhibits thereto.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person.
“Aggregate Purchase Amount” has the meaning set forth in Section 2.2 hereof.
“Agreement” has the meaning set forth in the recitals hereof.
“Benefit Plan” or “Benefit Plans” means employee benefit plans as defined in Section 3(3) of ERISA and all other employee benefit practices or arrangements, including, without limitation, any such practices or arrangements providing severance pay, sick leave, vacation pay, salary continuation for disability, retirement benefits, deferred compensation, bonus pay, incentive pay, stock options or other stock-based compensation, hospitalization insurance, medical insurance, life insurance, scholarships or tuition reimbursements, maintained by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is obligated to contribute for employees or former employees of the Company and its Subsidiaries.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Bylaws” means the Second Amended and Restated Bylaws of the Company, as currently in effect and as in effect on the Closing Date.
“Certificate of Designation” has the meaning set forth in the recitals hereof.
“Certificate of Incorporation” means the Third Amended and Restated Certificate of Incorporation of the Company, as amended, as currently in effect and as in effect on the Closing Date.
“Closing” has the meaning set forth in Section 2.2 hereof.
“Closing Date” has the meaning set forth in Section 2.2 hereof.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Common Share Price” means an amount equal to $1.4357.
“Common Shares” has the meaning set forth in the recitals hereof.
“Common Stock” means the common stock, par value $0.001 per share, of the Company.
“Company” means Alaunos Therapeutics, Inc., a Delaware corporation, for all periods, including following the effective time of the transactions contemplated by the Merger Agreement and any change of its name to “Velaris Therapeutics, Inc.” in accordance with the Merger Agreement.
“Confidential Data” has the meaning set forth in Section 3.30 hereof.
“Conversion Shares” has the meaning set forth in Section 3.4 hereof.
“DGCL” means the Delaware General Corporation Law, as amended or superseded from time to time.
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“Disclosure Document” has the meaning set forth in Section 5.3 hereof.
“Disclosure Time” has the meaning set forth in Section 5.3 hereof.
“Drug Regulatory Agency” means the U.S. Food and Drug Administration (“FDA”) or other foreign, state, local or comparable governmental authority responsible for regulation of the research, development, testing, manufacturing, processing, storage, labeling, sale, marketing, advertising, distribution and importation or exportation of drug or biological products and drug or biological product candidates.
“Engagement Letter” means that certain letter agreement, dated as of October 12, 2026, by and among Velaris, the Company and the Placement Agents.
“Environmental Laws” has the meaning set forth in Section 3.15 hereof.
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder.
“Financial Statements” has the meaning set forth in Section 3.8 hereof.
“Funding Notice” has the meaning set forth in Section 2.2 hereof.
“Fundamental Representations” means the representations and warranties made by the Company in Sections 3.1 (Organization and Power), 3.2 (Capitalization), 3.4 (Authorization), 3.5 (Valid Issuance), 3.6 (No Conflict) and 3.26 (Brokers and Finders).
“GAAP” has the meaning set forth in Section 3.8 hereof.
“GDPR” has the meaning set forth in Section 3.31 hereof.
“Governmental Authorizations” has the meaning set forth in Section 3.11 hereof.
“Health Care Laws” has the meaning set forth in Section 3.21 hereof.
“HIPAA” has the meaning set forth in Section 3.30 hereof.
“Indemnified Persons” has the meaning set forth in Section 5.10(a).
“Insolvent” means, with respect to any Person, (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total indebtedness, (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
“Intellectual Property” has the meaning set forth in Section 3.12 hereof.
“Investor” and “Investors” have the meanings set forth in the recitals hereof.
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“IT Systems” has the meaning set forth in Section 3.30 hereof.
“Lead Investor” means Fairmount Healthcare Fund II, L.P.
“Material Adverse Effect” means any change, event, circumstance, development, condition, occurrence or effect that, individually or in the aggregate, (a) was, is, or would reasonably be expected to be, materially adverse to the business, condition (financial or otherwise), properties, assets, liabilities, stockholders’ equity or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) materially delays or materially impairs the ability of the Company to timely comply, or prevents the Company from complying, with its obligations under this Agreement, the other Transaction Agreements or the Merger Agreement, or with respect to the Closing, or would reasonably be expected to do so; provided, however, that none of the following will be deemed in themselves, either alone or in combination, to constitute, and that none of the following will be taken into account in determining whether there has been or will be, a Material Adverse Effect under subclause (a) of this definition:
“Nasdaq” means the Nasdaq Stock Market LLC.
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“National Exchange” means (i) on and prior to the Closing Date, The Nasdaq Capital Market, and (ii) following the Closing Date, any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question, together with any successor thereto: the NYSE American, The New York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global Select Market and The Nasdaq Capital Market.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or any other entity or organization.
“Personal Data” has the meaning set forth in Section 3.30 hereof.
“Placement Agent” means each of Jefferies LLC, Stifel, Nicolaus & Company, Incorporated and UBS Securities LLC (collectively, the “Placement Agents”).
“Preferred Shares” has the meaning set forth in the recitals hereof.
“Preferred Share Price” means an amount equal to $1,435.70.
“Privacy Laws” has the meaning set forth in Section 3.31 hereof.
“Privacy Statements” has the meaning set forth in Section 3.31 hereof.
“Process” or “Processing” has the meaning set forth in Section 3.31 hereof.
“Purchased Shares” has the meaning set forth in the recitals hereof.
“Registration Rights Agreement” has the meaning set forth in Section 6.1(j) hereof.
“Regulatory Agencies” has the meaning set forth in Section 3.20 hereof.
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such rule.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” has the meaning set forth in the recitals hereof.
“Shares” means the Preferred Shares, the Common Shares and the Conversion Shares.
“Short Sales” include, without limitation, (i) all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and (ii) sales and other transactions through non-U.S. broker dealers or non-U.S. regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock), in each case, solely to the extent it has the same economic effect as a “short sale” (as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act).
“Subsidiaries” has the meaning set forth in Section 3.1 hereof.
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“Tax” or “Taxes” means any and all federal, state, local, foreign and other taxes, levies, fees, imposts, duties and charges of whatever kind (including any interest, penalties or additions to the tax imposed in connection therewith or with respect thereto), whether or not imposed on the Company, including, without limitation, taxes imposed on, or measured by, income, franchise, profits or gross receipts, and also ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains taxes and customs duties.
“Tax Returns” means returns, reports, information statements and other documentation (including any additional or supporting material) filed or maintained, or required to be filed or maintained, in connection with the calculation, determination, assessment or collection of any Tax and shall include any amended returns required as a result of examination adjustments made by the Internal Revenue Service or other Tax authority.
“Transaction Agreements” means this Agreement, the Certificate of Designation, the Registration Rights Agreement and any other documents or agreements explicitly contemplated hereunder.
“Transfer Agent” means, with respect to the Common Stock, Equiniti Trust Company, LLC, or such other financial institution that provides transfer agent services as the Company may engage from time to time.
“Transfer Taxes” means all real property transfer, sales, use, value added, stamp, documentary, recording, registration, conveyance, stock transfer, intangible property transfer, personal property transfer, gross receipts, duty, securities transactions or similar fees or Taxes (together with any interest, penalty, or addition thereto) incurred in connection with the transactions contemplated by this Agreement.
“Wire” has the meaning set forth in Section 2.2 hereof.
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Each Investor acknowledges that such Investor (i) is a sophisticated investor, experienced in investing in private placements of equity securities and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities and (ii) has exercised independent judgment in evaluating its participation in the purchase of the Purchased Shares. Each Investor acknowledges that such Investor is aware that there are substantial risks incident to the purchase and ownership of the Purchased Shares, including those set forth in the Company’s filings with the SEC. Alone, or together with any professional advisor(s), such Investor has adequately analyzed and fully considered the risks of an investment in the Purchased Shares and determined that the Purchased Shares are a suitable investment for the Investor. Each Investor is, at this time and in the foreseeable future, able to afford the loss of such Investor’s entire investment in the Purchased Shares and such Investor acknowledges specifically that a possibility of total loss exists.
Each Investor understands that any certificates or book entry notations evidencing the Purchased Shares may bear one or more legends in substantially the following form and substance:
“THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD,
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PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY AND ITS TRANSFER AGENT SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND THE TRANSFER AGENT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, (I) THE SECURITIES MAY BE TRANSFERRED WITHOUT CASH CONSIDERATION TO AN AFFILIATE OF SUCH HOLDER OR A CUSTODIAL NOMINEE AND (II) THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
In addition, the Purchased Shares may bear a legend regarding affiliate status of the Investor, if applicable, provided that the Company will notify the Investor in advance of Closing if such a legend is to be placed on its Purchased Shares.
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provided, however, that, in the case of clauses (ii) through (iv) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in the Transaction Agreements if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.
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Alaunos Therapeutics, Inc.
501 E. Las Olas Blvd., Suite 300, Fort Lauderdale, FL 33301
Attention: Holger Weis, Chief Executive Officer
Email: hweis@alaunos.com
with a copy to (which shall not constitute notice):
Gibson, Dunn & Crutcher LLP
One Embarcadero Center, Suite 2600
San Francisco, CA 94111
Attention: Ryan Murr, Branden Berns, Evan Shepherd
Email: rmurr@gibsondunn.com, bberns@gibsondunn.com, eshepherd@gibsondunn.com
Any Person may change the address to which notices and communications to it are to be addressed by notification as provided for herein.
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[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
COMPANY:
ALAUNOS THERAPEUTICS, INC.
By:
Name:
Title:
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
INVESTOR:
[NAME]
By:
Name:
Title:
Beneficial Ownership Limitation: [●]
[Signature Page to Securities Purchase Agreement]
EXHIBIT A
INVESTORS
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
Confidential
Proposed Execution Version
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 14, 2026, is entered into by and among Alaunos Therapeutics, Inc., a Delaware corporation (“Alaunos”), the several investors signatory hereto and each Merger Holder that becomes a party hereto in accordance with Section 10(b) (individually as an “Investor” and collectively, together with their respective permitted assigns, the “Investors”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement by and among Alaunos and the Investors party thereto, dated on or around the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”).
WHEREAS:
Alaunos is party to that certain Agreement and Plan of Merger by and among Alaunos, Velaris Therapeutics, Inc., a Delaware corporation (“Velaris”), Valkyrie Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of Alaunos (“First Merger Sub”), and Valkyrie Merger Sub II, LLC, a Delaware limited liability company and wholly-owned subsidiary of Alaunos (“Second Merger Sub”), dated on or around the date hereof (as amended from time to time, the “Merger Agreement”), pursuant to which (i) First Merger Sub will merge with and into Velaris, with Velaris surviving and becoming a wholly-owned subsidiary of Alaunos, (ii) Velaris will merge with and into Second Merger Sub, with Second Merger Sub being the surviving entity and a wholly-owned subsidiary of Alaunos ((i) and (ii) together, the “Merger”), and (iii) following that time in accordance with the Merger Agreement, Alaunos will change its name to “Velaris Therapeutics, Inc.”
Upon the terms and subject to the conditions of the Purchase Agreement, Alaunos has agreed to issue to the Investors, and the Investors have agreed to purchase, severally and not jointly, an aggregate of up to $350,000,000 of shares of Common Stock (the “Common Shares”) and Series C Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Preferred Shares”), of Alaunos, having the designation, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions as specified in the Certificate of Designation pursuant to the Purchase Agreement. The Common Shares and the shares of Common Stock issuable upon conversion of the Preferred Shares, without giving effect to any limitations on conversion of the Preferred Shares set forth in the Certificate of Designation, are collectively referred to herein as the “Shares.”
Pursuant to the Merger Agreement, certain holders of capital stock of Velaris (each, a “Merger Holder”) have received shares of Series B Non-Voting Convertible Preferred Stock and/or Series C Non-Voting Convertible Preferred Stock of Alaunos, and Alaunos has agreed to provide each Merger Holder that becomes a party hereto with the registration rights set forth herein.
To induce the Investors to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), and applicable state securities laws.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Alaunos and the Investors hereby agree as follows:
“Company” means Alaunos for all periods, including following the effective time of the transactions contemplated by the Merger Agreement and any change of its name to “Velaris Therapeutics, Inc.” in accordance with the Merger Agreement.
“Filing Deadline” means, with respect to the Initial Registration Statement required hereunder, the 30th calendar day following the Closing Date and, with respect to any New Registration Statements or other Registration Statement filed hereunder, the 30th calendar day following the later of (i) the date on which the Company is permitted by SEC Guidance to file such New Registration Statement related to the Registrable Securities and (ii) the date on which the Company becomes aware of the necessity of filing such New Registration Statement related to the Registrable Securities.
“Merger Holder” has the meaning set forth in the recitals hereof. Each Merger Holder that executes a counterpart signature page to this Agreement or a joinder hereto in the form attached hereto as Exhibit C shall be deemed an “Investor” for all purposes of this Agreement.
“Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, other entity or organization, any governmental agency or any governmental or political subdivision thereof.
“Register,” “Registered,” and “Registration” refer to a registration effected by preparing and filing one or more registration statements of the Company in compliance with the Securities Act and providing for offering securities on a continuous basis, and the declaration or ordering of effectiveness of such registration statement(s) by the U.S. Securities and Exchange Commission (the “SEC”).
“Registrable Securities” means (i) the Shares, (ii) any shares of Common Stock issued to an Investor (including any Merger Holder) pursuant to the Merger Agreement, including any shares of Common Stock issuable upon conversion of the shares of Series B Non-Voting Convertible Preferred Stock or Series C Non-Voting Convertible Preferred Stock issued thereunder, and (iii) any Common Stock issued or issuable with respect to the foregoing as a result of any stock split or subdivision, stock dividend, recapitalization, exchange or similar event. Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) upon the earliest to occur of (A) the date on which such Investor shall have resold such Registrable Securities covered by the Registration Statement, (B) such Registrable Securities have been previously sold by such Investor in accordance with Rule 144, (C) such securities become eligible for resale by such Investor without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 and (D) the later of (x) five (5) years after the date of this Agreement and (y) such time as such Investor is no longer an affiliate of the Company for purposes of Rule 144.
“Registration Expenses” means all registration and filing fee expenses incurred by the Company in effecting any registration pursuant to this Agreement, including (i) all registration, qualification, and filing fees, printing expenses, and any other fees and expenses associated with filings required to be made with the SEC, FINRA or any other regulatory authority, (ii) all fees and expenses in connection with compliance with or clearing the Registrable Securities for sale under any securities or “Blue Sky” laws, (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses, and (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company (including the expenses of any special audit and cold comfort letters required by or incident to such performance); provided that in no event shall the Company be responsible for any underwriting, broker or similar fees or commissions of any Investor or, except to the extent provided for in the Purchase Agreement or this Agreement, any legal fees or other costs of the Investors.
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“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, that Registers Registrable Securities, including the related preliminary or final prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement as may be necessary to comply with applicable securities laws. “Registration Statement” shall also include a New Registration Statement, as amended when each became effective, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a prospectus subsequently filed with the SEC.
“Required Investors” means the Investors holding a majority of the Registrable Securities then outstanding (determined as if all of the Preferred Shares and all shares of Series B Non-Voting Convertible Preferred Stock and Series C Non-Voting Convertible Preferred Stock issued pursuant to the Merger Agreement then outstanding have been converted in full without regard to any limitations on the conversion thereof, including the requirement to obtain the approval of the stockholders of Alaunos) (voting together as a single class).
“SEC Guidance” means (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff (whether or not publicly-available); provided, that any such oral guidance, comments, requirements or requests are reduced to writing by the SEC (and shared with the Investors upon request if not publicly available) and (ii) the Securities Act.
“Selling Expenses” means all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all similar fees and commissions relating to an Investor’s disposition of its Registrable Securities.
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With respect to the Registration Statement and whenever any Registrable Securities are to be Registered pursuant to Section 2, including on the Initial Registration Statement or on any New Registration Statement, the Company shall use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
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All Registration Expenses incurred in connection with registrations pursuant to this Agreement shall be borne by the Company. All Selling Expenses relating to securities registered on behalf of an Investor shall be borne by the Investor incurring the relevant Selling Expenses.
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To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds (net of all expenses paid by such seller in connection with any claim relating to this Section 7 and the amount of any damages such seller has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by such seller from the sale of such Registrable Securities giving rise to such contribution obligation.
The Company shall not assign this Agreement or any rights or obligations hereunder (whether by operation of law or otherwise) without the prior written consent of the Required Investors; provided, however, that in any transaction, whether by merger, reorganization, restructuring, consolidation, financing or otherwise, to which the Company is a party and in which the Registrable Securities are converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors after giving effect to such transaction, and the prior written consent of the Required Investors shall not be required for such transaction. No Investor may assign its rights under this Agreement, other than to an affiliate of such Investor or to any other investment funds or accounts managed or advised by the investment manager who acts on behalf of such Investor, without the prior written consent of the Company. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
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The provisions of this Agreement, including the provisions of this sentence, may be amended, modified or supplemented, or waived only by a written instrument executed by (a) the Company and (b) the Required Investors, provided that (i) any party may give a waiver as to itself, (ii) any amendment, modification, supplement or waiver that disproportionately and adversely affects the rights and obligations of any Investor relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected Investor or each Investor, as applicable, and (iii) any amendments to Section 6, Section 7 or this Section 9 or to the definitions of “Filing Deadline,” “Effectiveness Deadline,” or “Registration Period” shall require the written consent of each Investor. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of one or more Investors and that does not directly or indirectly adversely affect the rights of other Investors may be given by Investors holding a majority of the Registrable Securities (determined as if all of the Preferred Shares and all shares of Series B Non-Voting Convertible Preferred Stock and Series C Non-Voting Convertible Preferred Stock issued pursuant to the Merger Agreement then outstanding have been converted in full without regard to any limitations on the conversion thereof, including the requirement to obtain the approval of the stockholders of Alaunos) to which such waiver or consent relates; provided that such consenting Investors shall not in any event be paid any separate consideration in connection with any such amendment or waiver.
If to the Company, addressed as follows:
Alaunos Therapeutics, Inc.
501 E. Las Olas Blvd., Suite 300
Fort Lauderdale, FL 33301
Attention: Holger Weis, Chief Executive Officer; Ferdinand Groenewald, VP Finance
Email Address: hweis@alaunos.com; fgroenewald@alaunos.com
with a copy (which shall not constitute notice):
Gibson, Dunn & Crutcher LLP
One Embarcadero Center, Suite 2600
San Francisco, CA 94111
Attention: Ryan Murr, Branden Berns, Evan Shepherd
Email: rmurr@gibsondunn.com, bberns@gibsondunn.com, eshepherd@gibsondunn.com
If to any Investor, at its e-mail address or address set forth on Exhibit A to the Purchase Agreement (or, in the case of a Merger Holder, on its counterpart signature page or joinder hereto) or to such other
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e-mail address or address as subsequently modified by written notice given in accordance with this Section 10(a).
Any Person may change the address to which notices and communications to it are to be addressed by notification as provided for herein.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first written above.
ALAUNOS:
ALAUNOS THERAPEUTICS, INC.
By:
Name:
Title:
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first written above.
INVESTOR:
[NAME]
By:
Name:
Title:
[Signature Page to Registration Rights Agreement]
Exhibit A
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling stockholders for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.
The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule, or another available exemption from the registration requirements under the Securities Act.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act (it being understood that the selling stockholders shall not be deemed to be underwriters solely as a result of their participation in this offering). Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(a)(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to use commercially reasonable efforts to cause the registration statement of which this prospectus constitutes a part to become effective and to remain continuously effective until the earlier of: (i) the date on which the selling stockholders shall have resold or otherwise disposed of all the shares covered by this prospectus and (ii) the date on which the shares covered by this prospectus no longer constitute “Registrable Securities” as such term is defined in the Registration Rights Agreement, such that they may be resold by the selling stockholders without registration and without regard to any volume or manner-of-sale limitations and without current public information pursuant to Rule 144 under the Securities Act or any other rule of similar effect.
Exhibit B
Investor Questionnaire
The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
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Telephone: |
E-Mail: _____________________________________________________________________ |
Contact Person: |
Yes No
Yes No
Note: If “no” to Item 3(b), the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
Yes No
Yes No
Note: If “no” to Item 3(d), the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.
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Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% or more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
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The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.
By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.
Date: Investor:
By:
Name:
Title:
PLEASE EMAIL A .PDF COPY OF THE COMPLETED AND EXECUTED QUESTIONNAIRE TO:
[Gibson, Dunn & Crutcher LLP, Attention: Anika Gidwani, Email: GDProjValkyrie@gibsondunn.com]
Exhibit C
FORM OF JOINDER
The undersigned, a holder of capital stock of Velaris Therapeutics, Inc. that received shares of Series B Non-Voting Convertible Preferred Stock and/or Series C Non-Voting Convertible Preferred Stock of Alaunos Therapeutics, Inc. (the “Company”) pursuant to the Merger Agreement, hereby agrees, effective as of the date set forth below, to become a party to that certain Registration Rights Agreement, dated as of October 14, 2026 (the “Agreement”), by and among the Company and the Investors party thereto, as an “Investor” and a “Merger Holder” thereunder, and to be bound by, and entitled to the benefits of, all of the terms and conditions of the Agreement applicable to an Investor. Capitalized terms used but not defined herein have the meanings given to them in the Agreement. The undersigned shall deliver a completed Investor Questionnaire in the form attached to the Agreement as Exhibit B together with this Joinder.
Date: ____
[MERGER HOLDER]
By: _______________________________
Name:
Title:
Address for Notices:
SHARE REPURCHASE AND VOTING AGREEMENT
This Share Repurchase and Voting Agreement (this “Agreement”) is entered into as of October 13, 2026, by and among Alaunos Therapeutics, Inc., a Delaware corporation (“Parent”), Water Mill Asset Management Corp., a New York corporation (“Water Mill”), Robert W. Postma (“Postma” and, together with Water Mill, the “Postma Holders”), Jaime W. Vieser (“Vieser”) and, solely for purposes of Section 4(d), Velaris Therapeutics, Inc., a Delaware corporation (“Velaris”). Each of (a) the Postma Holders, together, and (b) Vieser is a “Holder”; each of Water Mill, Postma and Vieser is a “Holder Party”; and Postma and Vieser are each the “Holder Director” of his respective Holder.
Concurrently herewith, Parent, Valkyrie Merger Sub I, Inc., Valkyrie Merger Sub II, LLC and Velaris are entering into an Agreement and Plan of Merger (the “Merger Agreement”), and Parent and the Investors are entering into the Securities Purchase Agreement. The Holders own all of the outstanding shares of Parent’s Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred”) and Series A-2 Convertible Preferred Stock (the “Series A-2 Preferred” and, together with the Series A-1 Preferred, the “Existing Preferred”), as set forth on Schedule A. As an inducement to Velaris and the Investors to enter into the Merger Agreement and the Securities Purchase Agreement, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined herein have the meanings given in the Merger Agreement. In addition:
“Accreted Value” of a Preferred Share as of any date means the product of (i) $1,000, (ii) for each Dividend Payment Date after its Date of Issuance and on or before such date, (1 + (0.10 × D ÷ 365)), and (iii) (1 + (0.10 × S ÷ 365)), where D is the number of days from (but excluding) the preceding Dividend Payment Date (or the Date of Issuance) through (and including) such Dividend Payment Date, and S is the number of days from (but excluding) the last such Dividend Payment Date (or, if none, the Date of Issuance) through (and including) such date, without rounding any intermediate amount. “Dividend Payment Date” and “Date of Issuance” have the meanings given in the applicable Certificate of Designation. The Accreted Value is intended to equal the Liquidation Value (as so defined) plus accrued and accumulated dividends under Section 4.1 of the applicable Certificate of Designation as if such share had remained outstanding notwithstanding its conversion, and this definition controls for purposes of this Agreement.
“Certificates of Designation” means the Certificates of Designation of the Series A-1 Preferred and the Series A-2 Preferred, filed with the Delaware Secretary of State on April 11, 2025 and June 24, 2025, respectively.
“Conversion Shares” means the shares of Parent Common Stock issued upon conversion of any shares of Existing Preferred held by a Holder.
“Lead Investor” has the meaning given in the Securities Purchase Agreement.
“Lock-Up Agreement” means the lock-up agreement entered into by a Holder Director or Holder Party, as applicable, in connection with the Merger Agreement.
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“Preferred Shares” means the shares of Existing Preferred held by a Holder as of the date hereof, as set forth on Schedule A, whether or not subsequently converted.
“Purchased Securities” means a Holder’s Conversion Shares and all shares of Existing Preferred then held by it (including its Unconverted Shares and any shares issued as dividends).
“Stockholder Approval” means the approval of the Preferred Stock Conversion Proposal by the Required Parent Stockholder Vote, and “Approval Date” means the date on which the Stockholder Approval is obtained.
“Subject Shares” means all shares of capital stock of Parent held of record or beneficially by a Holder from time to time.
“Transfer” means any direct or indirect sale, assignment, pledge, hedge, encumbrance or other disposition, or any agreement to do any of the foregoing.
2. Conversion.
(a) Water Mill hereby notifies Parent, pursuant to Section 8.2(d) of the Certificate of Designation of the Series A-1 Preferred, that the Maximum Percentage (as defined therein) applicable to it and its Attribution Parties is increased to 9.99%, effective on the sixty-first day after the date hereof.
(b) No later than the fifth Business Day before the record date for the Parent Stockholders’ Meeting, each Holder shall elect, under Section 8.1(a) of the applicable Certificate of Designation, to convert (i) first, the maximum number of its shares of Series A-1 Preferred that may be converted without exceeding the Maximum Percentage then in effect and (ii) second, all of its shares of Series A-2 Preferred, in each case together with all accrued and unpaid dividends thereon. Parent shall notify the Holders of such record date at least fifteen Business Days in advance. Any Preferred Shares not converted solely as a result of such limitation (“Unconverted Shares”) shall be sold to Parent under Section 3 and may be converted earlier to the extent permitted. Each such conversion is irrevocable.
3. Repurchase.
(a) On the second Business Day after the Approval Date (each, a “Repurchase Closing”), each Holder shall sell to Parent, and Parent shall purchase, all of such Holder’s Purchased Securities, free and clear of all liens (other than under applicable securities Laws), for a cash amount (its “Repurchase Price”) equal to the sum of the Accreted Values of its Preferred Shares as of the Approval Date, each rounded to the nearest cent. Each Repurchase Price is a single aggregate amount for all of the applicable Holder’s Purchased Securities, and the number of Conversion Shares or Unconverted Shares shall not affect it. For the avoidance of doubt, no amount is payable per Conversion Share or Unconverted Share, each Preferred Share (including any share converted in part) shall be counted only once. Schedule A sets forth reference values for convenience; in the event of any conflict, this Agreement controls.
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(b) Parent shall pay each Repurchase Price by wire transfer, less any required withholding, against delivery of customary instruments of transfer and an IRS Form W-9. Parent shall deliver its calculation of each Repurchase Price to the Holders and the Lead Investor at least three Business Days before the scheduled date of the Parent Stockholders’ Meeting.
(c) The obligations of Parent and each Holder at such Holder’s Repurchase Closing are subject to (i) the occurrence of the Closing and the Stockholder Approval, (ii) the absence of any Law or Order prohibiting such purchase and (iii) the representations of the other party being true and correct, and the covenants of the other party having been performed, in each case in all material respects. Each Holder’s Repurchase Closing is independent of the other Holder’s.
4. Voting; Transfers; Lock-Up.
(a) Voting. Until the termination of this Agreement as to it, each Holder shall cause all of its Subject Shares to be present and voted at the Parent Stockholders’ Meeting and any other meeting of, or written consent of, Parent’s stockholders (i) in favor of the Parent Stockholder Matters and any adjournment to solicit additional proxies therefor and (ii) against any proposal that would reasonably be expected to impede, delay or adversely affect the Parent Stockholder Matters or the Contemplated Transactions.
(b) Proxy. Each Holder Party irrevocably appoints Parent and the Lead Investor, and their respective designees, as its proxy to vote its Subject Shares as provided in Section 4(a) if it fails to do so. This proxy is coupled with an interest, revokes any inconsistent prior proxy and terminates upon the termination of this Agreement as to such Holder Party’s Holder.
(c) Transfers. Until the termination of this Agreement as to it, no Holder shall Transfer any Subject Shares, or grant any proxy or enter into any voting arrangement inconsistent with this Agreement, other than its conversion of Preferred Shares and sale of Purchased Securities hereunder and Transfers for estate planning purposes to a transferee that agrees in writing to be bound hereby.
(d) Lock-Up. Parent and Velaris agree that (i) the conversions and sales contemplated hereby are permitted under each Lock-Up Agreement and (ii) each Holder’s Lock-Up Agreement shall terminate upon the effectiveness of its Holder Director’s resignation pursuant to the Resignation Letter delivered by him under Section 5.10(b) of the Merger Agreement. If there is any conflict between this Agreement and a Holder’s Lock-Up Agreement, Parent and Velaris agree that the provisions of this Agreement shall control.
(e) Capacity. Each Holder Director signs this Agreement solely in his capacity as a stockholder, and nothing herein limits his actions as a director of Parent.
5. Consents and Waivers. Each Holder, on its own behalf and, to the extent it holds a majority of the outstanding shares of a series of Existing Preferred, as such majority holder under Section 11 of the applicable Certificate of Designation: (a) consents to the Contemplated Transactions and the transactions contemplated hereby; (b) agrees that neither the Merger Agreement nor the Closing constitutes a Change of Control or Deemed Liquidation (each as
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defined in the Certificates of Designation) and waives any payment under Section 5, and any election under Section 5.1(b) or Section 8.5(b), of either Certificate of Designation in connection with the Contemplated Transactions, such Holder’s sole consideration for its Preferred Shares being its Conversion Shares and Repurchase Price; (c) waives, with respect to the purchases hereunder, the restrictions of Section 4.1 and any dividend under Section 4.2 of each Certificate of Designation; and (d) waives any notice or waiting period under either Certificate of Designation. This Agreement, as executed by Parent and the Holders, constitutes a waiver under Section 11 of each Certificate of Designation.
6. Representations.
(a) Each Holder Party represents, as to itself and its Holder, that (i) it has full power and capacity to enter into and perform this Agreement, which is its valid and binding obligation; (ii) its Holder owns the Subject Shares set forth opposite its name on Schedule A, free and clear of all liens and with sole voting and dispositive power, and will deliver its Purchased Securities free and clear of all liens; (iii) its entry into and performance of this Agreement do not violate any Law or Contract binding on it; and (iv) it is an accredited investor, has had access to all information it considers necessary (acknowledging that Parent, Velaris and the Investors may possess material non-public information) and is relying solely on its own advisors (including as to taxes) and the representations in Section 6(b).
(b) Parent represents that (i) it has the corporate power to enter into and perform this Agreement, which is its valid and binding obligation, and (ii) the Parent Board, including all disinterested directors, has approved this Agreement and the transactions contemplated hereby, including for purposes of Section 144 of the DGCL and Rule 16b-3(e) under the Exchange Act.
7. Termination. This Agreement terminates as to a Holder upon the earliest of (a) its Repurchase Closing, (b) the termination of the Merger Agreement before the Closing, (c) April 13, 2027, if the Stockholder Approval has not then been obtained, and (d) the written agreement of Parent and such Holder with the consent of the Lead Investor; provided, that Sections 4(d), 5 and 8 survive termination under clause (a), and no termination relieves any party of liability for willful breach.
8. Miscellaneous.
(a) This Agreement becomes effective as to each Holder upon execution of the Merger Agreement and execution of this Agreement by Parent and such Holder’s Holder Parties, regardless of whether the other Holder has executed it.
(b) The obligations of each Holder are several and not joint with those of the other Holder (the Postma Holders being jointly and severally liable with each other), and the Holders do not constitute a “group” within the meaning of Section 13(d)(3) of the Exchange Act.
(c) Each Holder Party consents to the disclosure of this Agreement and its holdings in Parent’s filings with the SEC.
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(d) This Agreement may be amended or waived only in a writing signed by Parent and each affected Holder and consented to by the Lead Investor. The Lead Investor is an express third-party beneficiary of this Agreement.
(e) Notices shall be given in the manner provided in Section 9.8 of the Merger Agreement, to Parent at its address set forth therein and to each Holder at the address set forth on its signature page, in each case with a copy to the Lead Investor.
(f) Sections 9.4, 9.5, 9.10 and 9.11 of the Merger Agreement apply to this Agreement, mutatis mutandis. EACH PARTY WAIVES TRIAL BY JURY IN ANY PROCEEDING RELATING TO THIS AGREEMENT.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
ALAUNOS THERAPEUTICS, INC.
By: ______________________________
Name: Holger Weis
Title: Chief Executive Officer
WATER MILL ASSET MANAGEMENT CORP.
By: ______________________________
Name: Robert W. Postma
Title: President/Owner
______________________________
ROBERT W. POSTMA
Address (for the Postma Holders): 141 Mecox Road, PO Box 207, Water Mill, New York 11976
Email: rwpostma1@outlook.com
______________________________
JAIME W. VIESER
Address: 134 Ballantine Rd., Bernardsville, NJ 07924
Email: jwvieser@gmail.com
VELARIS THERAPEUTICS, INC. (solely for purposes of Section 4(d))
By: ______________________________
Name: Michael Henderson
Title: President
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Transaction & Corporate Overview October 2026 Confidential
Disclaimers and forward-looking statements Disclaimer This presentation has been prepared by Velaris Therapeutics, Inc. (“Velaris” or the “Company”). The information contained herein is provided as of the date hereof, is subject to change without notice, and is based on publicly available information, third-party sources and internally developed data. It does not purport to contain all of the information that may be necessary to evaluate an investment in the Company, is not a recommendation that any person make such an investment, and is for information purposes only. Any opinion or belief expressed herein is based on certain assumptions and limitations and is an expression of present belief only. Nothing herein should be construed as legal, financial, accounting or tax advice. This presentation is confidential and is furnished solely to a limited number of parties for the purpose of evaluating a possible transaction with the Company. By accepting this presentation, the recipient agrees that it and its representatives will use it solely for that purpose, will not distribute, reproduce or disclose it or any of its contents to any other person, and will return or destroy it upon the Company’s request. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Company’s securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offer of securities will be made only to accredited investors pursuant to definitive transaction documents, which will supersede this presentation in its entirety. Any securities to be offered in any transaction contemplated hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state or foreign securities laws. Any securities to be offered in any transaction contemplated hereby have not been approved or disapproved by the U.S. Securities and Exchange Commission, any state securities COMMISSION OR OTHER UNITED STATES OR FOREIGN REGULATORY AUTHORITY, AND WILL BE OFFERED AND SOLD SOLELY IN RELIANCE ON THE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS PROVIDED BY THE SECURITIES ACT AND RULES AND REGULATIONS PROMULGATED THEREUNDER. Third-party and market data This presentation contains estimates and other information concerning the Company’s industry, its intended markets and the products of third parties, including estimated patient populations in PAH, secondary PH and other pulmonary indications and projected revenue and peak sales for Winrevair. Such information is derived from published literature, industry publications, analyst consensus estimates and the Company’s own internal estimates. The Company has not independently verified it and makes no representation or warranty as to its accuracy, completeness or timeliness. Estimates of patient populations, market size and revenue are inherently uncertain and subject to change. Information regarding third-party approved or investigational products, including Winrevair, imatinib, HS235 and REGN13335, and the clinical data presented for them, is derived from studies conducted by others under different protocols and in different patient populations. No head-to-head trials have been conducted, none of the Company’s product candidates has been evaluated in humans, and no clinical data of the Company are presented herein. Such information is provided for context only and should not be relied upon as evidence of the safety, efficacy or tolerability of any Company product candidate. Forward-looking statements and other information This presentation contains “forward-looking statements” within the meaning of applicable United States securities laws. Except for statements of historical fact, statements herein are forward-looking, including statements regarding: the Company’s business strategy, including its plan to develop therapies for pulmonary arterial hypertension (PAH), secondary pulmonary hypertension (PH) and other pulmonary disease, to expand into indications including PH-HFpEF, PH-ILD, PH-COPD, IPF, PPF and PH-sarcoidosis, and to develop combination therapies; the potential therapeutic benefit, mechanism of action, efficacy, safety, tolerability, dosing, route of administration and differentiation of VLR199, VLR247, VLR258, VLR360, VLR869 and VLR6109, including as compared to approved or investigational therapies; the Company’s discovery, preclinical and IND-enabling activities, the expected timing of IND or CTA filings, the initiation of clinical development in 2027 and proof-of-concept data in 2028; the expected timing and outcome of third-party catalysts; the anticipated benefits of the Company’s $250 million financing and the expectation that it will fund operations through key inflection points; estimated patient populations, market sizes, peak sales and potential value creation; the Company’s relationship with Paragon Laboratories; the composition of the Company’s management team, including the transition of acting officers to permanent roles; and management’s assessment of future plans and operations. Forward-looking statements are often identified by words such as “may”, “will”, “anticipate”, “believe”, “expect”, “intend”, “potential”, “estimate”, “plan”, “designed to” and “goal” or the negatives thereof. They are neither historical facts nor assurances of future performance, and involve known and unknown risks and uncertainties that may cause actual results to differ materially, including: the Company is a preclinical-stage company with a limited operating history that has not initiated any clinical trial; preclinical and animal model results, and the clinical results of third-party products, may not be predictive of results for the Company’s product candidates in humans; risks arising from regulatory feedback, including disagreement by regulatory authorities with the Company’s preclinical data package, proposed trial designs or interpretation of data; the Company’s dependence on Paragon Laboratories and other third parties for discovery, research, manufacturing and development; the Company’s reliance on an acting management team serving in an interim capacity and its ability to recruit and retain permanent personnel; risks that the financing may not be completed on the anticipated terms or at all; risks related to obtaining and protecting patent rights; the Company’s need to raise substantial additional capital; competition from companies with greater resources, including those developing ActRII-Fc and anti-PDGF-B therapies; macroeconomic conditions and changes in law, tariffs, sanctions or export controls; and the general uncertainties of drug development. All forward-looking statements are qualified by these cautionary statements. Although management believes the expectations conveyed herein are reasonable based on information available on the date such statements are made, there can be no assurance they will prove accurate, and actual results could differ materially. The Company undertakes no obligation to update forward-looking statements except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Trademarks Trade names, trademarks, service marks and logos of other companies appearing in this presentation, including WINREVAIR™, are the property of their respective owners. Such marks may appear without the ® or ™ symbols solely for convenience, and their use is not intended to imply any relationship with, or endorsement or sponsorship of the Company by, the owner. Confidential 1
Transaction highlights Structure: The acquisition of Velaris was structured as a stock-for-stock transaction whereby all of Velaris’ outstanding equity interests were exchanged for a combination of shares of Alaunos common stock and newly created non-voting Series C convertible preferred stock. Financing: Concurrent with the acquisition of Velaris, Alaunos closed a $350 million private placement with a group of institutional accredited investors led by Fairmount and joined by a robust syndicate of dedicated biotechnology investors, as well as additional undisclosed institutional investors. Management and BOD: Peter Harwin from Fairmount is joining the Alaunos Board of Directors. Primary use of Proceeds: The proceeds from the private placement are expected to be primarily used to advance the Velaris pipeline, deliver on the anticipated milestones (POC data for VLR-199 and VLR-360, initial regulatory filings (e.g., IND) for VLR-247 and VLR-258), and to fund business operations. Proceeds may also fund work relating to Alaunos’ legacy preclinical obesity program and are expected to provide cash runway into 2029. Confidential
Capitalization Confidential As of 10/13/2026 Pre-merger Alaunos common stock outstanding (f.d.) 3,797,326 Merger consideration Shares of preferred 138,340 Preferred conversion ratio 1,000 Total common equivalent (Merger) 138,340,000 Concurrent financing Shares of common 687,789 Shares of preferred 243,063 Total common equivalent (Financing) 243,750,789 Deal price ($ per common share) $1.4357 Total capitalization (Common, as converted) 386,856,547 Market cap at deal price $555.41 million Shares of common stock and preferred stock were issued to Velaris security holders in exchange for all of Velaris’ outstanding equity interest. Shares of preferred stock were issued to Velaris shareholders and to investors in the $350 million private placement. Shares of Series C preferred stock will automatically convert into 1,000 shares of common stock, subject to certain beneficial ownership restrictions set by each holder. Please refer to the company’s SEC filings for additional information.
Program Discovery IND-enabling Clinical Ligand trap VLR199 IND or CTA 2H27 VLR247 IND or CTA 1H28* VLR258 Monoclonal antibody VLR360 IND or CTA 2H27 VLR869 Bispecific antibody VLR6109 Velaris is developing a pipeline of potentially transformative therapies for pulmonary hypertension and cardiopulmonary disease Initial focus on PAH where Winrevair (sotatercept-csrk) est. peak sales are $8B+ Expand into secondary PH, where there is substantial unmet need and mounting evidence for the utility of PAH drugs approved in these additional indications Develop combination therapies based on the leading biologics for PH Our Goals PAH: pulmonary arterial hypertension; Winrevair is a trademark of Merck; PH: pulmonary hypertension; *$250M financing supports either VLR247 or VLR258 moving into the clinic. Based on positive preclinical data, external catalysts, and additional capital we may advance both into the clinic. The agents listed above are currently under pre-clinical investigation. Their safety and effectiveness have not yet been established by any regulatory authority. Velaris is the 9th company launched with assets developed by Paragon ActRIIA-Fc: same MoA as Winrevair ActRIIA-Fc with BMP-9/10-sparing PDGF-B Undisclosed Undisclosed ActRIIB-Fc with BMP-9/10-sparing Confidential
Source: VisibleAlpha Winrevair’s rapid growth makes it one of the largest cardiopulmonary launches ever Projected Winrevair revenue in PAH Sales (US $M) Confidential Annualizing $2B two years into launch with current label for PAH alone $8B peak sales estimate in PAH alone ~$8B Winrevair is the only approved ActRII-Fc ligand trap for PAH with no other assets in late-stage development with the same MoA
PAH could be the tip of the iceberg in cardiopulmonary disease Large, untapped opportunity awaits in secondary PH and cardiopulmonary indications Estimated number of US patients No. patients (thousands) Secondary PH and cardiopulmonary disease 60-70K 120Ka 180Ka 250K 500Kb 30-50K PAH PH-ILD IPF PPF PH-COPD PH-HFpEF Winrevair established PoC: Confidential ~$8B Peak Sales Estimate a) all IPF & PPF patients exclusive of PH status (reflects Tyvaso development); b) Combined pre- and post-capillary PH subgroup. PAH: Pulmonary Arterial Hypertension. PH-ILD: Pulmonary Hypertension associated with Interstitial Lung Disease. IPF: Idiopathic pulmonary fibrosis. PPF: Progressive Pulmonary Fibrosis. PH-COPD: Pulmonary Hypertension associated with Chronic Obstructive Pulmonary Disease. HFpEF: heart failure with preserved ejection fraction. Source: Kirson 2011 Curr Med Res Opinion. Jeganathan 2022 ERJ Open. Kacprzak 2023 Diagnostics. Fan 2026 Ann Am Thor Soc. Olson 2021 Adv Ther. Nathan 2024 Eur Resp J. Zhang 2022 Int J COPD; Company estimates
Pulmonary vascular remodeling from imbalanced growth signaling is a shared pathology across PH groups Confidential Interstitial lung disease PH-lung disease (Group 3) PAH (Group 1) (e.g., PH-ILD, PH-COPD, PH-IPF, PH-PPF) PH-HFpEF (Group 2) Healthy PH Left-sided heart failure (e.g., Cpc-PH-HFpEF, Ipc-PH-HFpEF) Distinct etiologies converge on distal pulmonary arterial remodeling Vessels narrow and stiffen, making the heart work harder to push blood through the lungs That remodeling is in part driven by lost signaling balance; pro-proliferative activins overwhelm anti-proliferative BMP-9/10 Ligand traps help restore balance, while PDGF-B inhibition blocks a distinct, complementary proliferative driver PH: pulmonary hypertension, PAH: Pulmonary Arterial Hypertension, PH-ILD: Pulmonary Hypertension associated with Interstitial Lung Disease, IPF: Idiopathic pulmonary fibrosis, PPF: Progressive Pulmonary Fibrosis, PH-COPD: Pulmonary Hypertension associated with Chronic Obstructive Pulmonary Disease. HFpEF: heart failure with preserved ejection fraction, Ipc: isolated precapillary, Cpc: combined pre- and post-capillary
Anti-PDGF-B is a distinct MoA from Winrevair’s Velaris is pursuing multiple potentially best-in-class therapies with pipeline-in-a-product potential Confidential Multiple ligand trap approaches yield distinct opportunities with potential to improve on Winrevair and command PH market share VLR199 Designed to replicate Winrevair’s clinically proven ActRIIA MoA, with broad ligand activity Potential for dose optimization to improve benefit-risk profile SC autoinjector at launch VLR247 & VLR258 Designed to spare ligands BMP-9, BMP-10, lower risk of hematologic AEs ActRIIA and ActRIIB backbone options to optimize activity Half-life extended for less frequent SC dosing VLR360 Designed to replicate imatinib’s PAH efficacy without off-target kinase side effects Designed to extend half-life for less frequent SC dosing MoA: mechanism of action
VLR199 is designed to replicate Winrevair’s proven pharmacology Confidential ActRIIA extracellular domain, with broad ligand trapping activity Fc domain of human IgG1 BMP-10 BMP-9 Activin A Activin B GDF-8 GDF-11 Anti-proliferative Pro-proliferative VLR199 Inhibitory profile matches Winrevair Winrevair Exemplary VLR199 lead VLR199 designed to preserve the balance of Winrevair across several ligand targets No clinical head-to-head studies have been conducted between VLR199 and Winrevair. As a result, cross-study comparisons cannot be made.
Velaris pipeline is designed to improve on areas where Winrevair may not be fully optimized Confidential Potential Ability to Differentiate Area for optimization Potential Velaris initiatives VLR199 VLR247 VLR258 Dosing Winrevair titrated from 0.3 to 0.7 mg/kg Q3W Comprehensive dose-ranging for optimal benefit-risk tradeoff; ability to improve on AE and tolerability profile Auto-injector development from the outset of clinical studies; improving on vial and syringe profile Dosing frequency improvements from uncommon q3wk schedule Safety Winrevair USPI warning for elevated risk of bleeding (De)tuned BMP9/10 potency to potentially expand the therapeutic window; reduce hematologic AEs, dose limits, and monitoring requirements Activin signaling inhibition leaves multiple avenues for meaningful improvement
ActRIIA extracellular domain (similar to Winrevair) Fc domain of human IgG1 VLR247 Inhibitory profiles for lead spares BMP-9/10 Winrevair HS235 VLR258 exemplary lead VLR258 Both designed to be BMP-9/10-sparing ActRIIB extracellular domain (similar to HS235*) Confidential Velaris is pursuing multiple approaches to optimize activity beyond VLR199 VLR247 & VLR258 inhibit key activin-signaling ligands while sparing BMP-9/10, targets linked to hematological AEs Relative IC50 BMP-9 BMP-10 More ligand sparing 17x 1x 1x 3.5x 13x 19x * HS235 is BMP-9/10-sparing ActRIIB-Fc ligand trap acquired by GSK; now known as GSK6792070. No clinical head-to-head studies have been conducted among Winrevair, HS235, and VLR258. As a result, cross-study comparisons cannot be made.
VLR360 targets PDGF-B, an emerging target with potential as a monotherapy… Confidential VLR360 Anti-PDGF-B activity Potential for greater potency than REGN13335 Fc-modified for half-life extension Potential for less frequent dosing than REGN13335 Highly selective for PDGF-B Potential to avoid off-target effects observed with imatinib VLR360 is a potentially best-in-class mAb targeting PDGF-B* PDGF-B signaling leads to vascular remodeling and progression of PH Imatinib demonstrated promising clinical efficacy, likely due to PDGFR inhibition, but it was limited in PAH by off-target toxicity REGN’s anti-PDGF-B antibody was well tolerated in a recent Phase 1 HV study VLR360 could be developed as a potential monotherapy or in combination with ActRII-Fc ligand traps PDGF: Platelet Derived Growth Factor, Imatinib: an oral tyrosine kinase inhibitor, HV: healthy volunteer; *VLR360 is currently under pre-clinical investigation, and it has not been evaluated in human clinical trials. Source: Hoeper et al., 2013. Circulation. Fredenburgh LE et. al. ERS 2026
…and has been engineered with combination potential in mind Confidential Combinations are foundational to the pulmonary treatment paradigms VLR199 Designed to replicate Winrevair’s proven pharmacology Designed to optimize ActRII-Fc tolerability VLR360 Designed to replicate imatinib’s effects without side effects VLR869 and VLR6109 Undisclosed Additional antibodies, Fc-conjugates VLR199, VLR247, VLR258 optimized as monotherapies; designed to be foundation for high-impact combos
PAH Provides a Path to Rapid PoC and Clinical Development
PAH offers Velaris a potentially efficient development path, including a small initial study that could demonstrate PoC Confidential n ≈ 20 - 30 Healthy Volunteers Activin signaling inhibition offers specific PD biomarkers (e.g., FSH) and on-target heme changes Extensive Winrevair precedent enables Velaris to target proven activity levels early in development Design to be informed by Phase 1 data and Winrevair precedent PAH Patients Established hemodynamic endpoints (PVR) allow early signal detection; low placebo PVR responses enable small Phase 2 studies The validated regulatory pathway and Winrevair precedents provide an anticipated clear path for trial design and endpoints Recent examples (e.g. Roivant, Inhibikase, Aerovate) demonstrate the ability to quickly accelerate from Phase 2 into Phase 3 registrational studies Phase 1: PoC Anticipated Efficient Path to Registrational Phase 2/3 Studies VLR199, VLR247, VLR258 will pursue a derisking strategy ahead of registrational studies PVR: pulmonary vascular resistance
Multiple PD markers anticipated to provide early confidence in clinical similarity to Winrevair FSH decrease (in postmenopausal women) Hgb changes BSAP increase Early HV PK/PD data expected to enable dose matching to Winrevair, potentially supporting Winrevair-like activity in Phase 2/3 Activin signaling inhibition reveals biomarker changes in early healthy volunteer studies Confidential Winrevair dose-dependently lowers serum FSH Pbo 0.1 0.3 1.0 3.0 (mpk) Winrevair Source: Ruckle et al., 2009 JBMR (day 8 data); FSH: follicle-stimulating hormone, Hgb: Hemoglobin, BSAP: bone-specific alkaline phosphatase. HV: healthy volunteer
Heart Failure with preserved Ejection Fraction (HFpEF), Group 2 PH, is a blockbuster expansion indication
Activin signaling inhibition is the only PAH MoA to show early signs of efficacy in the larger PH-HFpEF population Confidential PH-HFpEF (Group 2 PH): Results after left-sided heart failure causes progressive, pulmonary vasculature changes comparable to PAH Market size markedly larger than PAH No approved therapies; vasodilator agents cause harm, unable to address both the lung and heart Winrevair is only agent to demonstrate early signs of success: Improved 6MWD Lowered time to clinical worsening Improved key biomarkers in both lung and heart (i.e. PVR, wedge pressure) PH HFpEF: heart failure with preserved ejection fraction
Winrevair is only PAH agent to demonstrate efficacy signal in PH-HFpEF Winrevair advancing to Phase 3 with lower (0.3 mg/kg) dose Velaris has potential to efficiently advance into late-stage studies HFpEF: Winrevair has shown early signs of efficacy in heart failure, a potentially ~10x larger population than PAH Confidential 2024: Approved in PAH Probability of event-free survival Placebo Winrevair Time to death or clinical worsening Phase 3 STELLAR (0.7 mpk) Time (weeks) Placebo Winrevair Time (weeks) % without events 2026: Completed Ph 2 trial in PH-HFpEF Time to clinical worsening Phase 2 CADENCE (0.3 mpk arm) 95% patients on double or triple background therapy HR: 0.16 HR: 0.18 Hoeper et al., 2023 NEJM. Gomberg-Maitland et al., Circulation 2026. 0.3 mg/kg arm. HFpEF: heart failure with preserved ejection fraction
Potential expansion into Group 3 PH and adjacent indications
PAH drugs have demonstrated utility in the large markets of PH-ILD and pulmonary fibrosis Confidential PH-ILD (Group 3) and pulmonary fibrosis share in common underlying lung parenchyma disorder Some PAH drugs have demonstrated efficacy, showing the path, but leaving remaining unmet need Activin signaling inhibition has potential to deliver additional efficacy in these populations Considered one of the most effective in PAH Clear mechanistic rationale Surrogate endpoints offer potential for efficient paths to signal generation and clinical PoC PH PAH: Pulmonary Arterial Hypertension, PH-ILD: Pulmonary Hypertension associated with Interstitial Lung Disease, IPF: Idiopathic pulmonary fibrosis, PPF: Progressive Pulmonary Fibrosis, PH-COPD: Pulmonary Hypertension associated with Chronic Obstructive Pulmonary Disease
PAH drugs have an established path into PH-ILD and pulmonary fibrosis Confidential Prostacyclin sGC PAH Tyvaso Mosliciguat PH-ILD Pulmonary Fibrosis Est. Addressable US Pts 30-50K 60-70K 300K FDA Approval 2009 FDA Approval 2021 Two Positive IPF Ph3s 2025 & 2026 + PPF Ph3 Est. 2027 Potential Indication Expansion Ph1b PVR Data 2024 Deliberately rapid clinical development IPF: idiopathic pulmonary fibrosis, PPF: Progressive pulmonary fibrosis, PVR: pulmonary vascular resistance, 6MWD: 6-minute walk distance
Given Winrevair’s superior efficacy in PAH, evaluating the activin MoA in lung disease is a compelling opportunity Confidential Improvement in exercise capacity TRIUMPH (Tyvaso), STELLAR (Winrevair) For illustrative purposes only; no H2H study was conducted Tyvaso Winrevair Pbo-adj D 6MWD (m) 12 wk 24 wk ISTs and KOLs indicate successful use of Winrevair beyond PAH Clinical interviews, retrospective analyses and case reports for Winrevair in patients with PH or other lung diseases today resemble the early signs that preceded Tyvaso’s expansion Endpoints in these expansion opportunities – similar to PAH – are amenable to early signal detection and efficient derisking (FVC) H2H: head-to-head, IST: investigator-sponsored trial, FVC: forced vital capacity, MoA: mechanism of action. Source: Tyvaso TRIUMPH data (FDA), Winrevair Hoeper et al., 2023 NEJM
Velaris programs expected to enter clinic in 2027 with key clinical PoC data expected in 2028 Confidential 2027 2028 VLR199 (ActIIRA-Fc) IND/CTA (2H) PoC data VLR247 (ActIIRA-Fc BMP9/10 sparing) IND/CTA (1H)* VLR258 (ActIIRB-Fc BMP9/10 sparing) VLR360 (anti-PDGF-B) IND/CTA (2H) PoC data External catalysts Merck Winrevair (ActIIRA-Fc) Phase 3 ongoing (PH-HFpEF) GSK HS235 (ActIIRB-Fc BMP9/10 sparing) Phase 1b/2 data (PAH) Phase 1b/2 data (PH-HFpEF) Phase 3 initiation (PAH) Regeneron REGN13335 (anti-PDGF-B) Phase 2 data (PAH) $350M financing anticipated to provide runway through key inflection points *$250M financing supports either VLR247 or VLR258 moving into the clinic. Based on positive preclinical data, external catalysts, and additional capital we may advance both into the clinic.
Company led by an experienced leadership team Confidential Robert Postma Board member Watermill Asset Management Corporation Holger Weis Chairman Michael Jerman Board member Hollywell Partners Jaime Vieser Board member Brushwood, Castle Hill Asset Management Peter Harwin Incoming Board member Fairmount Board of Directors Management Team Holger Weis, BBA, CPA Chief Executive Officer, Alaunos Michael Henderson, MD President,Velaris CEO Paragon Labs
Alaunos Therapeutics Announces Acquisition of Velaris Therapeutics
Acquisition of Velaris and concurrent oversubscribed $350 million private placement positions the Company to deliver multiple proof-of-concept datasets in pulmonary arterial hypertension
Velaris Therapeutics, the ninth company launched based on Paragon-discovered assets, is advancing a pipeline built to address growth signaling imbalances that drive pulmonary vascular remodeling in PAH and secondary pulmonary hypertension (PH), including PH due to heart failure with preserved ejection fraction
Velaris is developing a broad pipeline of ActRII-Fcs and an anti-PDGF-B antibody, designed to be developed as monotherapies or in combination, across cardiopulmonary indications
The Company is expected to have financial runway into 2029 to support multiple data milestones, including clinical proof-of-concept data for VLR199 in 2028
FORT LAUDERDALE, Fla., October 13, 2026 – Alaunos Therapeutics, Inc. (NASDAQ: TCRT) ("Alaunos" or the “Company”) announced today the completion of the acquisition of Velaris Therapeutics, Inc. (“Velaris”), a privately-held biotechnology company advancing a pipeline of potentially transformative therapies for pulmonary arterial hypertension (“PAH”) and related cardiopulmonary diseases. The acquisition gives the Company a portfolio of ActRII-Fc ligand traps and complementary biologics designed to address the underlying signaling imbalances that drive remodeling of the pulmonary vasculature in multiple cardiopulmonary conditions.
A concurrent private placement of Series C non-voting convertible preferred stock (the “Private Placement”) was led by Fairmount with participation from Venrock Healthcare Capital Partners, certain accounts advised by T. Rowe Price Investment Management, Inc., Wellington Management, Janus Henderson Investors, Access Biotechnology, BB Biotech, Perceptive Advisors, Sirenia Capital Management LP, ADAR1 Capital Management and other leading investment management firms. The private placement resulted in gross proceeds to Alaunos of approximately $350 million and is expected to fund operations into 2029, enabling the generation of key proof-of-concept data sets for VLR199 and VLR360, as well as through initial regulatory filings for VLR247 and VLR258.
Velaris is the ninth company launched based on assets discovered by Paragon. The lead program, VLR199, is an ActRIIA-Fc ligand trap designed to replicate the clinically validated pharmacology of the only approved activin-signaling inhibitor for the treatment of PAH and improve on the existing therapy where it is not fully optimized. Velaris’s pipeline additionally includes VLR247 and VLR258, two ActRII-Fc ligand traps based on ActRIIA and ActRIIB, respectively, engineered to spare ligands BMP-9 and BMP-10, which have been associated with hematologic adverse events. Together, this suite of product candidates is designed to provide significant optionality for Velaris to maximize the potential of activin-signaling inhibition. Velaris is also developing VLR360, an anti-PDGF-B monoclonal antibody targeting a complementary
signaling pathway implicated in PAH. VLR360 and the ActRII-Fcs are designed to be developed as monotherapies or in combination, providing Velaris with the opportunity to address multiple underlying signaling imbalances that drive pulmonary vascular remodeling in PAH and related cardiopulmonary conditions.
“We aim to transform the treatment of pulmonary hypertension, starting with PAH”, said Michael Henderson, MD, President of Velaris. “PAH and secondary pulmonary hypertension, including PH due to heart failure with preserved ejection fraction (PH-HFpEF) and interstitial lung disease (PH-ILD), significantly affect the lives of hundreds of thousands living with these conditions in the United States and even more globally. With these indications sharing the imbalanced growth signaling that drives PAH and mounting evidence demonstrating that effective PAH therapies also have utility in secondary PH, we believe the time is right for Velaris. We’ve built a capital-efficient plan to rapidly achieve proof-of-concept in PAH and demonstrate value. With a pipeline built to provide optionality around ligand traps, to address complementary signaling pathways, and to offer compelling follow-on opportunities beyond PAH, we are excited for this next chapter."
“Since our founding, Alaunos has been committed to advancing innovative therapies designed to improve outcomes for patients,” said Holger Weis, CEO and Chairman of the Board of Directors of Alaunos. “We are pleased to announce the acquisition of Velaris. We believe this transaction and the concurrent private placement provide a strong financial foundation for us to advance an exciting pipeline and offer our stockholders a compelling opportunity to realize value, with proof-of-concept data for VLR199 expected in 2028.”
Management & Organization:
In conjunction with the transaction, Peter Harwin, Founding Partner of Fairmount, will join the Board of Directors for Alaunos.
Alaunos intends to hold a meeting of its stockholders to approve, among other things, the conversion of the non-voting convertible preferred stock issued in the transactions into common stock. Effective upon receipt of that approval, three of Alaunos’ current directors will resign from the Board of Directors and three directors designated by Fairmount will be appointed to fill the resulting vacancies, such that Peter Harwin and the Fairmount designees will constitute four of the five members of the Board of Directors. In addition, following receipt of that approval, the holders of Alaunos’ Series B non-voting convertible preferred stock, voting as a separate class, will be entitled to elect two of Alaunos’ five directors (initially, Peter Harwin and one of the Fairmount designees) for so long as at least 30% of the originally issued Series B non-voting convertible preferred stock remains outstanding.
About the Acquisition and Financing Transaction
The acquisition was approved by the Board of Directors of Alaunos and the Board of Directors and stockholders of Velaris. The closings of the transactions are not subject to the approval of Alaunos’ stockholders. On an as-converted basis and after accounting for these transactions (and without giving effect to any beneficial ownership limitations or reverse stock split), the total number of shares of Alaunos common stock will be approximately 358.59 million.
Cantor is serving as financial advisor to Alaunos. Sichenzia Ross Ference Carmel LLP is serving as legal counsel to Alaunos. Wedbush Securities Inc. is serving as strategic financial advisor to Velaris. Jefferies, TD Cowen, Stifel, UBS Investment Bank, and Wedbush & Co., LLC are serving as the placement agents to Velaris, and Gibson, Dunn & Crutcher LLP is serving as legal counsel to Velaris.
About Alaunos Therapeutics
Alaunos Therapeutics is a biotechnology company focused on developing novel therapeutics. The Company’s obesity and metabolic disorders program is advancing ALN1003, an oral small-molecule candidate being evaluated as a potential differentiated, non-hormonal, non-incretin approach for obesity- and metabolic-disease-relevant biology.
About Velaris Therapeutics
Velaris Therapeutics is a biotechnology company advancing a pipeline of potentially transformative therapies for pulmonary hypertension and related cardiopulmonary diseases. Velaris is developing ActRII-Fc ligand traps and complementary biologics designed to maximize the potential of these classes of therapies. VLR199, with broad ligand activity, is designed to replicate clinically validated pharmacology but improving where it is not fully optimized. VLR247 and VLR258, featuring distinct ActRII extracellular domains, are designed to spare BMP-9 and BMP-10 and lower risk for hematologic adverse events. The pipeline also features VLR360, an anti-PDGF-B monoclonal antibody, which offers a complementary approach that alone or in combination with the ActRII-Fcs is designed to address the signaling imbalances that drive remodeling of the pulmonary vasculature. Velaris’ assets were discovered by Paragon Labs. Velaris is based in Waltham, MA. For more information, visit velaristx.com.
About Paragon Labs
Paragon Laboratories, Inc. (“Paragon Labs” and together with its predecessor, “Paragon”) is a biotechnology company applying cutting-edge science and technology to shape the next generation of novel, best-in-class biologics for major medical needs. Paragon is fueling a pipeline of transformative therapies that are positioned to be rapidly advanced into clinical development. To date, nine companies have been launched based on assets discovered by Paragon. Founded by Fairmount, Paragon is based in Waltham, MA. For more information, please visit www.paragonlabs.com. Follow us on LinkedIn.
Forward-Looking Statements
Certain statements in this press release, other than purely historical information, may constitute “forward-looking statements” within the meaning of the federal securities laws, including for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, express or implied statements relating to the Company’s expectations, hopes, beliefs, intentions or strategies regarding the future of the acquired assets, pipeline and business including, without limitation, the anticipated meeting of Alaunos’ stockholders and the expected changes to the composition of the Board of Directors following receipt of stockholder approval, the Company’s ability to achieve the expected benefits or opportunities with respect to its product candidates, including whether the product candidates will achieve clinical proof of concept. In addition, any statements that refer to
projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting the Company will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the risk that Alaunos’ stockholders do not approve the conversion of the preferred stock and the related matters to be voted on at the stockholder meeting, and those uncertainties and factors described under the heading “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s most recent filings with the SEC. Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth therein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this press release, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. The Company does not undertake or accept any duty to make any updates or revisions to any forward-looking statements.
Additional Information and Where to Find It
This press release does not constitute a solicitation of any vote or approval. Alaunos intends to file with the U.S. Securities and Exchange Commission (the “SEC”) a proxy statement and other relevant materials in connection with the meeting of its stockholders described above. ALAUNOS’ STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ALAUNOS, THE MATTERS TO BE VOTED ON AT THE MEETING AND RELATED MATTERS. Stockholders may obtain free copies of the proxy statement and other documents filed by Alaunos with the SEC, when available, through the SEC’s website at www.sec.gov or Alaunos’ website at www.alaunos.com.
Participants in the Solicitation
Alaunos and its directors and executive officers, and Fairmount and its designees to the Board of Directors, may be deemed to be participants in the solicitation of proxies from Alaunos’ stockholders in connection with the matters to be voted on at the meeting. Information regarding Alaunos’ directors and executive officers is included in Alaunos’ Annual Report on Form 10-K for the year ended December 31, 2025, as amended, filed with the SEC. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.
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