Exhibit 10.1
 
 
 
Agreement and Plan of Merger
 
by and among
 
Zoom Telephonics, Inc.,
 
Elm Acquisition Sub, Inc.,
 
Minim Inc.
 
and
 
the Representative (as defined herein)
 
November 12, 2020
 
 
 
 
 
 
 
 
 

TABLE OF CONTENTS
 
Page
 
 
Article 1 CERTAIN DEFINITIONS
2
Article 2 THE MERGER
2
2.1
The Closing
2
2.2
Effects of the Merger
2
2.3
Cancellation and Conversion of Capital Stock
3
2.4
Treatment of Stock Options, Other Stock-Based Compensation and Convertible Notes
4
2.5
Exchange Procedures
5

2.6
Consideration; Closing Deliveries
6
2.7
Dissenting Shares
7
2.8
Withholding Rights
7

2.9
Lost Certificates
8
2.10
Closing Statements
8
2.11
Further Assurances
8
2.12
Tax Treatment
8
Article 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
9
3.1
Organization and Good Standing
9
3.2
Subsidiaries
9
3.3
Power, Authorization and Validity
9
3.4
Capitalization of the Company; Indebtedness
10
3.5
No Conflict; Consents
12
3.6
Litigation
12
3.7
Taxes
12
3.8
Related Party Transactions
14
3.9
Company Financial Statements; Undisclosed Liabilities
14
3.10
Title to Properties
14
3.11
Absence of Certain Changes
14
3.12
Contracts, Agreements, Arrangements, Commitments and Undertakings
17
3.13
No Default
19
3.14
Intellectual Property
19
3.15
Privacy and Data Protection
22
3.16
Compliance with Laws
23
3.17
Employees and Employee Benefits
24
3.18
Books and Records
27
3.19
Insurance
28
3.20
Environmental Matters
28
3.21
Customers and Suppliers
28
3.22
Accounts Receivable
29
3.23
Anti-Corruption and Anti-Bribery Laws
29
3.24
Trade Compliance
29
3.25
Company PPP Loan
30
3.26
No Brokers
30
3.27
Disclaimer
30
Article 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
30
4.1
Organization and Good Standing
30
4.2
Subsidiaries
31
4.3
Power, Authorization and Validity
31
4.4
No Conflict; Consents
32

 
 
i

 
 

4.5
Capitalization
33
4.6
Parent Common Stock
33
4.7
Indebtedness
33
4.8
Parent SEC Reports
33
4.9
Litigation
34
4.10
Absence of Changes
34
4.11
Related Party Transactions
34
4.12
Takeover Protections
34
4.13
Real Property Holding Corporation
34
4.14
Investment Company
34
4.15
Parent PPP Loan
34
4.16
No Brokers
35
4.17
Tax Treatment
35
4.18
Inspection; No Other Representations
35
4.19
Disclaimer
35
Article 5 COVENANTS
36
5.1
Advise of Changes
36
5.2
Conduct of Business
36
5.3
Approval of Company Stockholders
37
5.4
No Other Negotiations
37
5.5
Access to Information; Confidentiality
38
5.6
Satisfaction of Conditions Precedent
38
5.7
Certain Employee Benefits Matters
39
5.8
Preparation of Certain Financial Statements
39
5.9
Director and Officer Indemnification
40
Article 6 AGREEMENTS RELATING TO PARENT COMMON STOCK
42
6.1
Private Placement
42
6.2
Restrictions on Transfer
42

6.3
Legends
42
6.4
Registration Rights
43
Article 7 CONDITIONS TO CLOSING OF THE MERGER
46
7.1
Conditions to Each Party’s Obligation to Effect the Merger
46
7.2
Additional Conditions to Obligations of Parent and Merger Sub
47
7.3
Additional Conditions to Obligations of the Company
49
Article 8 TERMINATION OF AGREEMENT
50
8.1
Termination by Mutual Consent
50
8.2
Unilateral Termination
50
8.3
Effect of Termination
51
Article 9 NO SURVIVAL/REPRESENTATION AND WARRANTY INSURANCE
51
9.1
No Survival
51
9.2
R&W Insurance
51
Article 10 TAX MATTERS
51
10.1
Tax Returns
51
10.2
Cooperation
52
10.3
Tax Audits
52

 
ii

 
 

Article 11 MISCELLANEOUS
52
11.1
Appointment of Representative
52
11.2
Governing Law; Jurisdiction; Venue
54
11.3
Assignment; Binding Upon Successors and Assigns
54
11.4
Severability
54
11.5
Counterparts
54
11.6
Other Remedies
55
11.7
Amendments and Waivers
55
11.8
Expenses
55
11.9
Notices
55
11.10
WAIVER OF JURY TRIAL
55
11.11
Third-Party Beneficiary Rights
55
11.12
Public Announcement
56
11.13
Confidentiality
56
11.14
Interpretation
56
11.15
Conflicts Waiver; Privilege
56
11.16
Entire Agreement
57

 
LIST OF EXHIBITS AND SCHEDULES
 
EXHIBITS
 
Exhibit A            

Defined Terms
Exhibit B                

Form of Written Consent
Exhibit C          

Form of Support Agreement
Exhibit D                

Form of Certificate of Merger
Exhibit E                 

Form of Amended and Restated Certificate of Incorporation of the Company
Exhibit F                 

Form of Letter of Transmittal
Exhibit G                   

Form of Investor Questionnaire
Exhibit H             

Form of Director and Officer Resignation and Release
Exhibit I                    

Form of FIRPTA Certificate
Exhibit J    

R&W Policy
 
 
SCHEDULES
 
Disclosure Schedules
 
Schedule 1.1(a)             

Major Stockholders
Schedule 1.1(b)               

Key Employees
Schedule 1.1(c)                

Investors
Schedule 2.2(c)  

Merger Sub Directors and Officers
Schedule 2.4(c)     

Convertible Notes
Schedule 3.1(a)            

Jurisdictions
Schedule 3.1(b)        

Company Directors and Officers
 
 
iii

 
 
Schedule 3.4(a)            

Capitalization; Merger Consideration Pro Rata Share
Schedule 3.4(c)           

Company Stock Options and Restricted Stock
Schedule 3.4(f)(i)                          

Indebtedness
Schedule 3.4(f)(ii)                     

Estimated Company Transaction Expenses
Schedule 3.6                  

Litigation
Schedule 3.8                 

Related Party Transactions
Schedule 3.9             

Company Financial Statements
Schedule 3.12               

Material Contracts
Schedule 3.14         

Intellectual Property
Schedule 3.15               

Privacy and Data Protection
Schedule 3.17              

Employees and ERISA
Schedule 3.18              

Books and Records
Schedule 3.19            

Insurance
Schedule 3.20         

Environmental Matters
Schedule 3.21             

Customers and Suppliers
Schedule 3.22         

Accounts Receivable
Schedule 7.2(l)               

Required Consents
Schedule 7.2(j)            

Terminated Agreements
Schedule 11.9                            

Notice Addresses
 
 
 
 
 
 
 
 
 
iv

 

 
AGREEMENT AND PLAN OF MERGER
 
This Agreement and Plan of Merger (this “Agreement”) is made and entered into as
of November 12, 2020 (the “Agreement Date”) by and among Zoom Telephonics, Inc.,
a Delaware corporation (“Parent”), Elm Acquisition Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), Minim Inc.,
a Delaware corporation (the “ Company”), and prior to the Effective Time, Graham
Chynoweth, and after the Effective Time, David Aronoff, solely in each such
Person’s capacity as representative of the stockholders of the Company for
certain purposes described in this Agreement (the “Representative”).
 
Recitals
 
A.           The parties intend that Merger Sub shall merge with and into the
Company (the “Merger”), with the Company being the surviving entity of the
Merger (the “Surviving Entity”), on the terms and subject to the conditions set
forth in this Agreement and pursuant to the Delaware General Corporation Law (as
the same may be amended from time to time, the “DGCL”).
 
B.           The board of directors of the Company has (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
fair to and in the best interests of the Company and the Company Stockholders,
and (ii) approved and declared advisable this Agreement and the transaction
contemplated hereby, including the Merger, on the terms and subject to the
conditions set forth in this Agreement, pursuant to the applicable provisions of
the DGCL.
 
C.           The board of directors of Parent has duly established the Strategy
Committee consisting only of independent and disinterested directors of Parent
to, among other things, review, evaluate and negotiate this Agreement and the
transactions contemplated hereby.
 
D.           The Strategy Committee of the board of directors of Parent (the
“Strategy Committee”) has unanimously (i) determined that it is fair to and in
the best interests of Parent and its stockholders for Parent to enter into this
Agreement and declared this Agreement and the transactions contemplated hereby,
including the Merger, advisable, (ii) recommended that the board of directors of
Parent (A) declare this Agreement and the consummation of the transactions
contemplated hereby, including the Merger, advisable and (B) approve this
Agreement and the transactions contemplated hereby, including the Merger.
 
E.           The board of directors of Parent, acting following the
recommendation of the Strategy Committee, has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are fair to and in the best interests of Parent and its stockholders, and (ii)
approved and declared advisable this Agreement and the transaction contemplated
hereby, including the Merger, on the terms and subject to the conditions set
forth in this Agreement, pursuant to the applicable provisions of the DGCL.
 
F.           The board of directors of Merger Sub has unanimously (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, are fair to and in the best interests of Merger Sub and Parent (as the
sole stockholder of Merger Sub), (ii) approved and declared advisable this
Agreement and the transactions contemplated hereby, including the Merger, on the
terms and subject to the conditions set forth in this Agreement pursuant to the
applicable provisions of the DGCL and (iii) submitted this Agreement to Parent
(as the sole stockholder of Merger Sub) and recommended that Parent (as sole
stockholder of Merger Sub) approve and adopt this Agreement and the transaction
contemplated hereby, including the Merger.
 
G.           Parent, as the sole stockholder of Merger Sub, will, promptly
following the execution and delivery of this Agreement, approve and adopt this
Agreement and the transactions contemplated hereby, including the Merger.
 
 
 

 
 
H.           Immediately prior to the execution and delivery of this Agreement,
and as a condition and inducement to Parent’s willingness to enter into this
Agreement, certain of the Company Stockholders have executed and delivered to
the Company, and the Company has delivered to Parent, a true, correct and
complete copy of a stockholder written consent in the form attached hereto as
Exhibit B which, upon receipt of consents of the Requisite Stockholders, shall
evidence the Stockholder Approval (the “Written Consent”).
 
I.           Concurrently with the execution and delivery of this Agreement, and
as a condition and inducement to Parent’s willingness to enter into this
Agreement, the Persons identified on Schedule 1.1(a) (the “Major Stockholders”)
shall execute and deliver to Parent support agreements in substantially the form
attached hereto as Exhibit C (each a “Support Agreement”).
 
L.           Each of Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger, and to prescribe various conditions to the Merger, as set forth in this
Agreement.
 
M.           For U.S. federal income tax purposes, it is intended that the
Merger qualify as a “reorganization” within the meaning of Section 368 of the
Code and this Agreement constitutes a “plan of reorganization” for purposes of
Sections 354 and 361 of the Code.
 
Agreement
 
Now, Therefore, in consideration of the foregoing and the mutual promises,
covenants and conditions contained herein, the parties hereby agree as follows:
 
ARTICLE 1
 
CERTAIN DEFINITIONS
 
As used in this Agreement, capitalized terms shall have the meanings given to
such terms on Exhibit A hereto.
 
ARTICLE 2
 
THE MERGER
 
2.1           The Closing. Subject to the earlier termination of this Agreement
pursuant to Article 8, the closing of the Merger (the “Closing”) shall take
place by teleconference or through electronic exchange of transaction documents
at 10:00 a.m. Eastern time on the third Business Day after the satisfaction or
waiver (to the extent permitted by Law) of the conditions set forth in Article 7
(other than those conditions that, by their terms, are to be satisfied by action
to be taken at Closing, but subject to the satisfaction or waiver of those
conditions), or at such other place, time or date as Parent and the Company
agree in writing. The date on which the Closing occurs is referred to herein as
the “Closing Date.” On the Closing Date, the Company and Merger Sub shall cause
the Merger to be consummated by filing a certificate of merger, in substantially
the form attached hereto as Exhibit D (the “Certificate of Merger”), with the
Secretary of State of the State of Delaware in accordance with the DGCL. The
Merger shall become effective at the time of such filing and acceptance by the
Secretary of State of the State of Delaware or at such later time as is set
forth in the Certificate of Merger, and such time shall be referred to herein as
the “Effective Time.”
 
2.2           Effects of the Merger.
 
(a)           At the Effective Time, Merger Sub shall be merged with and into
the Company, the separate existence of Merger Sub shall cease and the Company
shall be the surviving entity of the Merger pursuant to the terms of this
Agreement and the Certificate of Merger. The effect of the Merger shall be as
provided in this Agreement and the applicable provisions of the DGCL. Without
limiting the foregoing, from and after the Effective Time, all of the property,
rights, powers, privileges and franchises of the Company and Merger Sub shall be
vested in the Surviving Entity and all of the debts, obligations, liabilities,
restrictions and duties of the Company and Merger Sub shall become the debts,
obligations, liabilities, restrictions and duties of the Surviving Entity, all
as provided under the DGCL.
 
 
 
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(b)           As of the Effective Time, by virtue of the Merger, (i) the
certificate of incorporation of the Company as in effect immediately prior to
the Effective Time shall be amended and restated in its entirety to read as set
forth on Exhibit E attached hereto, and as so amended and restated, shall be the
certificate of incorporation of the Surviving Entity until thereafter amended in
accordance with the terms thereof or as provided by applicable Law, and (ii) the
Company bylaws shall be amended in their entirety to read as the bylaws of
Merger Sub as in effect immediately prior to the Effective Time, and as so
amended, shall be the bylaws of the Surviving Entity until thereafter amended in
accordance with the terms thereof, the certificate of incorporation of the
Surviving Entity or as provided by applicable Law.
 
(c)           As of the Effective Time, by virtue of the Merger, the directors
and officers of Merger Sub, identified on Schedule 2.2(c), as in effect
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Entity, each to hold office until their respective
successors are duly elected or appointed or until their earlier death,
resignation or removal, in each case in accordance with the certificate of
incorporation and bylaws of the Surviving Entity.
 
2.3           Cancellation and Conversion of Capital Stock. At the Effective
Time, as a result of the Merger and without any action on the part of Parent,
Merger Sub, or the Company or the holder of any capital stock of Parent, Merger
Sub, or the Company:
 
(a)           Cancellation of Certain Company Common Stock. Each share of the
Company Common Stock that is owned by the Company (as treasury stock or
otherwise) as of immediately prior to the Effective Time (the “Canceled Shares”)
shall automatically be canceled and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
 
(b)           Conversion of the Company Common Stock and Company Preferred
Stock. Each share of Company Common Stock and each share of Company Preferred
Stock issued and outstanding immediately prior to the Effective Time (excluding
the Canceled Shares and the Dissenting Shares) shall be converted into the right
to receive from Parent, without interest: (i) validly issued, fully paid and
nonassessable shares of Parent Common Stock in an amount equal to the Exchange
Ratio, and (ii) any cash in lieu of fractional shares of Parent Common Stock
payable pursuant to Section 2.3(e).
 
(c)           Cancellation of Shares. At the Effective Time, all shares of
Company Common Stock and Company Preferred Stock shall no longer be outstanding
and all shares of Company Common Stock and Company Preferred Stock shall be
canceled and shall cease to exist, and each holder of: (i) a certificate
formerly representing any shares of Company Common Stock or Company Preferred
Stock (each, a “Certificate”); or (ii) any book-entry shares which immediately
prior to the Effective Time represented shares of Company Common Stock or
Company Preferred Stock (each, a “Book-Entry Share”) shall cease to have any
rights with respect thereto, except the right to receive, without interest and
subject to the terms of this Agreement including Section 2.6(b), (A) the Merger
Consideration in accordance with Section 2.6(a), and (B) any cash in lieu of
fractional shares of Parent Common Stock payable pursuant to Section 2.3(e).
 
(d)           Conversion of Merger Sub Common Stock. Each share of common stock,
par value $0.01 per share, of Merger Sub (“Merger Sub Common Stock”) issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one newly issued, fully paid, and non-assessable share of common stock,
par value $0.01 per share, of the Surviving Entity with the same rights, powers,
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Entity. From and after the
Effective Time, all certificates representing shares of Merger Sub Common Stock
shall be deemed for all purposes to represent the number of shares of common
stock of the Surviving Entity into which they were converted in accordance with
the immediately preceding sentence.
 
 
 
-3-

 
 
(e)           Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the conversion of
Company Common Stock or Company Preferred Stock pursuant to Section 2.3(b) and
such fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a holder of shares of Parent Common Stock.
Notwithstanding any other provision of this Agreement, each holder of shares of
Company Common Stock or Company Preferred Stock converted pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock shall in lieu thereof, upon surrender of such holder’s
Certificates and Book-Entry Shares, receive in cash (rounded to the nearest
whole cent), without interest, an amount without interest equal to such
fractional amount multiplied by the Closing Reference Price.
 
2.4           Treatment of Stock Options, Other Stock-Based Compensation and
Convertible Notes.
 
(a)           Company Stock Options. As of the Effective Time, each option to
acquire shares of Company Common Stock (each, a “Company Stock Option”) that is
outstanding under any Company Stock Plan immediately prior to the Effective
Time, whether or not then vested or exercisable, shall be, by virtue of the
Merger and without any action on the part of the holder thereof, or any other
Person, be assumed by Parent and shall be converted into a Parent Stock Option
in accordance with this Section 2.4. Each such Parent Stock Option as so assumed
and converted shall continue to have, and shall be subject to, the same terms
and conditions as applied to the Company Stock Option immediately prior to the
Effective Time. As of the Effective Time, each such Parent Stock Option as so
assumed and converted shall be an option to acquire that number of whole shares
of Parent Common Stock (rounded down to the nearest whole share) equal to the
product of: (i) the number of shares of Company Common Stock subject to such
Company Stock Option; and (ii) the Exchange Ratio, at an exercise price per
share of Parent Common Stock (rounded up to the nearest whole cent) equal to the
quotient obtained by dividing (A) the exercise price per share of Company Common
Stock of such Company Stock Option by (B) the Exchange Ratio; provided, that the
exercise price and the number of shares of Parent Common Stock subject to the
Parent Stock Option shall be determined in a manner consistent with the
requirements of Section 409A of the Code, and, in the case of Company Stock
Options that are intended to qualify as incentive stock options within the
meaning of Section 422 of the Code, consistent with the requirements of Section
424(a) of the Code.
 
(b)           Company Restricted Stock. The Company shall take all requisite
action so that, at the Effective Time, each share of Company Common Stock
subject to vesting, repurchase, or other lapse of restrictions (“Company
Restricted Stock”) that is outstanding under any Company Stock Plan as of
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be assumed by Parent and
shall be converted into a share of Parent Restricted Stock in accordance with
this Section 2.4(b). Each share of Parent Restricted Stock shall continue to
have and be subject to substantially the same terms and conditions as were
applicable to such Company Restricted Stock immediately before the Effective
Time (including vesting, repurchase, or other lapse restrictions), along with
such transfer restrictions as may be required by applicable federal or state
securities Laws. As of the Effective Time, each such holder of Company
Restricted Stock so assumed and converted shall receive that number of whole
shares of Parent Restricted Stock equal to the product (rounded down to the
nearest whole number) of: (i) the number of shares of Company Restricted Stock
held by that holder as of immediately prior to the Effective Time; and (ii) the
Exchange Ratio.
 
(c)           Company Convertible Notes. Prior to the Effective Time, the
Company shall enter into arrangements with the holders of the convertible notes
of the Company set forth on Schedule 2.4(c) to be exchanged for an aggregate of
148,006 shares of Company Common Stock to be allocated pro rata among holders of
such convertible notes for each $1.00 outstanding principal amount of, and
interest accrued and unpaid on, such convertible notes at the time of such
exchange.
 
 
 
-4-

 
 
(d)           Resolutions and Other Company Actions. At or prior to the
Effective Time, the Company board of directors shall adopt any resolutions and
take any actions (including obtaining any employee consents) that may be
necessary to effectuate the provisions of this Section 2.4.
 
(e)           Parent Actions. At or prior to the Effective Time, Parent shall
reserve for future issuance a number of shares of Parent Common Stock at least
equal to the number of shares of Parent Common Stock that shall be subject to
Parent Equity Awards as a result of the actions contemplated by this Section
2.4. As soon as practicable after the Effective Time, if and to the extent
necessary to cause a sufficient number of shares of Parent Common Stock to be
registered and issuable with respect to the Parent Equity Awards, Parent shall
prepare and file with the SEC a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of Parent Common
Stock subject to the Parent Equity Awards.
 
2.5           Exchange Procedures.
 
(a)           Exchange Agent; Exchange Fund. Prior to the Effective Time, Parent
shall appoint Computershare Inc., or another entity that is reasonably
acceptable to Parent and the Company (the “Exchange Agent”) to act as the agent
for the purpose of distributing the Merger Consideration for the Certificates
and the Book-Entry Shares. At or promptly following the Effective Time, Parent
shall deposit, or cause the Surviving Entity to deposit, with the Exchange Agent
in accordance with the terms of an exchange agent agreement in a form reasonably
satisfactory to Parent and the Company (the “Exchange Agent Agreement”) to be
executed at or prior to the Closing by Parent and the Exchange Agent: (i)
certificates representing the shares of Parent Common Stock to be issued as a
portion of the Merger Consideration pursuant to Section 2.6(a) (or make
appropriate alternative arrangements if uncertificated shares of Parent Common
Stock represented by book-entry shares shall be issued); and (ii) cash
sufficient to make payments in lieu of fractional shares pursuant to Section
2.3(e). Such shares of Parent Common Stock and cash solely for fractional shares
deposited with the Exchange Agent pursuant to this Section 2.5(a), are referred
to collectively in this Agreement as the “Exchange Fund.”
 
(b)           Procedures for Surrender; No Interest. Promptly after the
Effective Time, Parent shall send, or shall cause the Exchange Agent to send, to
each record holder of shares of Company Capital Stock at the Effective Time,
whose Company Capital Stock was converted pursuant to Section 2.3(b) into the
right to receive the Closing Payment in accordance with Section 2.6, a letter of
transmittal in substantially the form attached hereto Exhibit F (a “Letter of
Transmittal”) and instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates or transfer of the Book-Entry Shares to the Exchange Agent, and
which Letter of Transmittal shall be in customary form and have such other
provisions as Parent and the Surviving Entity may reasonably specify) for use in
such exchange. Each holder of shares of Company Capital Stock that have been
converted into the right to receive the Closing Payment in accordance with
Section 2.6 shall be entitled to receive the Closing Payment into which such
shares of Company Capital Stock have been converted pursuant to Section 2.3(b)
in respect of the Company Capital Stock represented by a Certificate or
Book-Entry Share, any cash in lieu of fractional shares which the holder has the
right to receive pursuant to Section 2.3(e), upon: (i) surrender to the Exchange
Agent of a Certificate; or (ii) receipt of an “agent’s message” by the Exchange
Agent (or such other evidence, if any, of transfer as the Exchange Agent may
reasonably request) in the case of Book-Entry Shares; in each case, together
with a duly completed and validly executed letter of transmittal and such other
documents as may reasonably be requested by the Exchange Agent. No interest
shall be paid or accrued upon the surrender or transfer of any Certificate or
Book-Entry Share. Upon payment of the Merger Consideration pursuant to the
provisions of this Article II, each Certificate or Certificates or Book-Entry
Share or Book-Entry Shares so surrendered or transferred, as the case may be,
shall immediately be canceled.
 
 
 
-5-

 
 
(c)           Investment of Exchange Fund. Until disbursed in accordance with
the terms and conditions of this Agreement, the cash in the Exchange Fund shall
be invested by the Exchange Agent, as directed by Parent or the Surviving
Entity. No losses with respect to any investments of the Exchange Fund shall
affect the amounts payable to the holders of Certificates or Book-Entry Shares.
Any income from investment of the Exchange Fund shall be payable to Parent or
the Surviving Entity, as Parent directs.
 
(d)           Payments to Non-Registered Holders. If any portion of the Merger
Consideration is to be paid to a Person other than the Person in whose name the
surrendered Certificate or the transferred Book-Entry Share, as applicable, is
registered, it shall be a condition to such payment that: (i) such Certificate
shall be properly endorsed or shall otherwise be in proper form for transfer or
such Book-Entry Share shall be properly transferred; and (ii) the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
Tax required as a result of such payment to a Person other than the registered
holder of such Certificate or Book-Entry Share, as applicable, or establish to
the reasonable satisfaction of the Exchange Agent that such Tax has been paid or
is not payable.
 
(e)           Full Satisfaction. All Merger Consideration paid upon the
surrender of Certificates or transfer of Book-Entry Shares in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Capital Stock formerly represented by
such Certificate or Book-Entry Shares, and from and after the Effective Time,
there shall be no further registration of transfers of shares of Company Capital
Stock on the stock transfer books of the Surviving Entity. If, after the
Effective Time, Certificates or Book-Entry Shares are presented to the Surviving
Entity, they shall be canceled and exchanged as provided in this Article II.
 
(f)           Termination of Exchange Fund. Any portion of the Exchange Fund
that remains unclaimed by the holders of shares of Company Capital Stock one (1)
year after the Effective Time shall be returned to Parent, upon demand, and any
such holder who has not exchanged shares of Company Capital Stock for the Merger
Consideration in accordance with this Section 2.5 prior to that time shall
thereafter look only to Parent (subject to abandoned property, escheat, or other
similar Laws), as general creditors thereof, for payment of the Merger
Consideration without any interest. Notwithstanding the foregoing, Parent shall
not be liable to any holder of shares of Company Capital Stock for any amounts
paid to a public official pursuant to applicable abandoned property, escheat, or
similar Laws.
 
(g)           Distributions with Respect to Unsurrendered Shares of Company
Capital Stock. Whenever a dividend or other distribution is declared by Parent
in respect of the Parent Common Stock, the record date for which is after the
Effective Time, that declaration shall include dividends or other distributions
in respect of all shares issuable pursuant to this Agreement. Notwithstanding
any provision of this Agreement to the contrary, no dividends or other
distributions in respect of the Parent Common Stock shall be paid to any holder
of any unsurrendered Company Capital Stock until the Certificate (or affidavit
of loss in lieu of the Certificate as provided in Section 2.9) or Book-Entry
Share is surrendered for exchange in accordance with this Section 2.5. Subject
to the effect of applicable Laws, following such surrender, there shall be
issued or paid to the holder of record of the whole shares of Parent Common
Stock issued in exchange for Company Capital Stock in accordance with this
Section 2.5, without interest: (i) at the time of such surrender, the dividends
or other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid;
and (ii) at the appropriate payment date, the dividends or other distributions
payable with respect to such whole shares of Parent Common Stock with a record
date after the Effective Time but with a payment date subsequent to surrender.
 
2.6           Consideration; Closing Deliveries.
 
 
(a)           Merger Consideration. For all purposes of this Agreement, the term
“Merger Consideration” shall mean the aggregate number of shares of Parent
Common Stock issuable upon the conversion of Company Common Stock and Company
Preferred Stock pursuant to the Merger in accordance with Section 2.3(b)
(assuming for such purpose that there are no Dissenting Shares).
 
 
 
-6-

 
 
(b)           Closing Deliveries. At the Closing, subject to the terms and
conditions set forth in this Agreement, Parent shall deliver or cause to be
delivered the following “Closing Payments” as follows:
 
(i)           the amount(s) payable to each Person designated by the invoices
delivered pursuant to Section 7.2(m) in respect of the Company Transaction
Expenses to the bank accounts designated in such invoices; and
 
(ii)           the Merger Consideration as represented by (x) the shares of
Parent Common Stock and (y) cash solely for fractional shares to the Exchange
Agent for deposit in the Exchange Fund payable to the Company Stockholders
pursuant to Section 2.3(e), with such aggregate consideration being further
distributable by the Exchange Agent to the Company Stockholders in accordance
with each Company Stockholder’s Merger Consideration Pro Rata Share as set forth
on Schedule 3.4(a).
 
Payments of the Closing Payment made pursuant to Sections 2.6(b)(i) and Section
2.6(b)(ii)(y) above shall be made in the form of cash by wire transfer of
immediately available U.S. funds. Delivery of the Closing Payment made pursuant
to Section 2.6(b)(ii)(x) above shall be comprised of shares of Parent Common
Stock (value based on the Closing Reference Price). No fraction of a share of
Parent Common Stock shall be issued in connection with the payment of the
Closing Payment, but shall be paid in cash without interest as provided in
Section 2.3(e).
 
2.7           Dissenting Shares.
 
(a)           Notwithstanding anything to the contrary contained in this
Agreement, any Company Stockholder who is entitled to demand and properly
demands appraisal of the Company Capital Stock in accordance with Section 262 of
the DGCL (any such shares being referred to as “Dissenting Shares” until such
time as such holder effectively withdraws or fails to perfect or otherwise loses
such holder’s appraisal rights under Section 262 of the DGCL with respect to
such shares) shall not be converted into or represent the right to receive the
Merger Consideration, but shall be entitled only to such rights as are granted
by the DGCL to a holder of Dissenting Shares. At the Effective Time, the
Dissenting Shares shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of Dissenting Shares shall
cease to have any rights with respect thereto, except the right to receive the
fair value of such Dissenting Shares in accordance with the provisions of
Section 262 of the DGCL.
 
(b)           If any Dissenting Shares shall lose their status as such (through
failure to perfect or otherwise), then, as of the later of the Effective Time or
the date of loss of such status, such Dissenting Shares shall be treated as if
they had been converted as of the Effective Time and shall automatically be
converted into and shall represent only the right to receive the Merger
Consideration, without interest thereon, and shall not thereafter be deemed to
be Dissenting Shares.
 
(c)           The Company shall give Parent prompt written notice of (i) any
demand for appraisal received by the Company prior to the Effective Time
pursuant to the DGCL; (ii) any withdrawal or attempted withdrawal of any such
demand; and (iii) any other demand, notice or instrument relating to any demand
for appraisal delivered to the Company prior to the Effective Time pursuant to
the DGCL. Parent shall have the opportunity and right to direct all negotiations
and proceedings with respect to such demands. Except with the prior written
consent of Parent, the Company shall not make any payment with respect to, or
settle or offer to settle, any such demands.
 
2.8           Withholding Rights. Each of the Exchange Agent, Parent, Merger
Sub, and the Surviving Entity shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person pursuant to this Article II such
amounts as are required to be deducted and withheld with respect to the making
of such payment under any Tax Laws. To the extent that amounts are so deducted
and withheld by the Exchange Agent, Parent, Merger Sub, or the Surviving Entity,
as the case may be, and are paid to the applicable Taxing authority, such
amounts shall be treated for all purposes of this Agreement as having been paid
to the Person in respect of which the Exchange Agent, Parent, Merger Sub, or the
Surviving Entity, as the case may be, made such deduction and withholding.
Parent shall notify the Company promptly upon becoming aware that any such
deduction or withholding may be required.
 
 
 
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2.9           Lost Certificates. If any Certificate shall have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen, or destroyed and, if required by
Parent or the Exchange Agent, the posting by such Person of a bond, in such
reasonable amount as Parent or the Exchange Agent may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent shall issue, in exchange for such lost, stolen, or destroyed
Certificate, the Merger Consideration to be delivered in respect of the shares
of Company Capital Stock formerly represented by such Certificate as
contemplated under this Article II.
 
2.10           Closing Statements. At least three (3) Business Days prior to the
Closing Date, the Company shall deliver to Parent a statement (the “Company
Closing Statement”) which sets forth the Company’s good faith estimate of all
accrued and unpaid Company Transaction Expenses as of the Effective Time
(including an itemized list thereof and wire transfer instructions with respect
to each payee of unpaid Company Transaction Expenses) (collectively, the
“Estimated Company Transaction Expenses”). The Company Closing Statement shall
be prepared by the Company in good faith and certified by the Company’s Chief
Executive Officer. The Company shall provide Parent and its accounting and
financial staff, auditors and advisors reasonable access to the Books and
Records of the Company and its accounting and financial staff in connection with
Parent’s review thereof. The Company shall consider in good faith changes
reasonably requested by Parent to the Company Closing Statement. At least three
(3) Business Days prior to the Closing Date, Parent shall deliver to the Company
a statement (the “Parent Closing Statement”) which sets forth Parent’s good
faith estimate of all accrued and unpaid Parent Transaction Expenses as of the
Effective Time (including an itemized list thereof and wire transfer
instructions with respect to each payee of unpaid Parent Transaction Expenses)
(collectively, the “Estimated Parent Transaction Expenses”). The Parent Closing
Statement shall be prepared by Parent in good faith and certified by the
Parent’s Chief Financial Officer. Parent shall provide the Company and its
accounting and financial staff, auditors and advisors reasonable access to the
Books and Records of Parent and its accounting and financial staff in connection
with the Company’s review thereof. Parent shall consider in good faith changes
reasonably requested by the Company to the Parent Closing Statement.
 
2.11           Further Assurances. If, at any time before or after the Effective
Time, any of the parties hereto reasonably believes or is advised that any
further instruments, deeds, assignments or assurances are reasonably necessary
to consummate the Merger or to carry out the purposes and intent of this
Agreement at or after the Effective Time, then the Company, Parent, the
Surviving Entity and their respective officers, directors and managers shall
execute and deliver all such proper deeds, assignments, instruments and
assurances and do all other things reasonably necessary to consummate the Merger
and to carry out the purposes and intent of this Agreement.
 
2.12           Tax Treatment. For U.S. federal income Tax purposes, it is
intended that the Merger qualify as a “reorganization” within the meaning of
Section 368(a)(2)(E) of the Code, and the regulations promulgated thereunder and
that this Agreement shall constitute a “plan of reorganization” for purposes of
Sections 354 and 361 of the Code. Each party hereto shall, and shall cause its
respective Affiliates to, use reasonable best efforts to cause the Merger to
qualify as a “reorganization” within the meaning of Section 368(a)(2)(E) of the
Code and shall file all Tax Returns consistent with, and take no position
inconsistent with (whether in audits, Tax Returns or otherwise), such treatment
unless required to do so pursuant to a “determination” that is final within the
meaning of Section 1313(a) of the Code.
 
 
 
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ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby represents and warrants to Parent and Merger Sub that the
statements contained in this Article 3 are correct and complete as of the
Agreement Date except as otherwise set forth in the schedules prepared by the
Company and attached to this Agreement (the “Disclosure Schedules”), which
Disclosure Schedules are incorporated by reference herein. The Disclosure
Schedules shall be arranged in Sections corresponding to the numbered and
lettered Sections of this Article 3, and the disclosures in any Section of the
Disclosure Schedules shall provide information regarding, and qualify only, the
corresponding numbered and lettered Section of this Article 3, unless and to the
extent that (a) cross references to other Sections are set forth in the
Disclosure Schedules or (b) it is reasonably apparent due to the nature of the
disclosure that such disclosure qualifies one or more of the numbered or
lettered Sections of this Article 3. For purposes of this Agreement, a document
shall be deemed to have been “made available” by the Company to Parent only if
it has been posted in the electronic data site maintained on the “Box” cloud
platform on behalf of the Company in connection with the Merger (the “Virtual
Data Room”) no later than one (1) Business Day prior to the Agreement Date (and
has not been subsequently removed or modified prior to the Agreement Date).
 
3.1           Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Company has all requisite corporate power and authority to own,
operate and lease its assets and properties and to carry on the Business. The
Company is duly qualified or licensed to do business, and is in good standing,
in each jurisdiction where the character of the properties owned, leased or
operated by it or nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified, licensed or in good
standing would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. Schedule 3.1(a) sets forth each
jurisdiction in which the Company is qualified or licensed to do business. The
Company has made available to Parent true and complete copies of its
organizational documents, including its certificate of incorporation, bylaws and
any preferred financing documents currently in effect, including all amendments
thereto (collectively, the “Charter Documents”). The Company is not in violation
of any of the provisions of its Charter Documents. Schedule 3.1(b) sets forth a
list as of the Agreement Date of all of the current directors and officers of
the Company.
 
3.2           Subsidiaries. The Company does not currently have, and has never
had, any Subsidiaries. The Company does not own, directly or indirectly, any
capital stock of, or other equity or voting interests in, any corporation,
limited liability company, partnership or other entity.
 
3.3           Power, Authorization and Validity.
 
(a)           Power and Authority. The Company has all requisite corporate power
and authority to enter into, execute, deliver and perform its obligations under
this Agreement and each of the Company Ancillary Agreements and to consummate
the transactions contemplated hereby and thereby, subject only to receipt of the
Stockholder Approval. The execution, delivery and performance by the Company of
this Agreement and each of the Company Ancillary Agreements and the consummation
of the transactions contemplated hereby or thereby, have been duly and validly
approved and authorized by all requisite corporate action, subject only to
receipt of the Stockholder Approval.
 
(b)           Enforceability. This Agreement has been duly executed and
delivered by the Company. This Agreement and each of the Company Ancillary
Agreements are, or when executed and delivered by the Company shall be, assuming
the due authorization, execution and delivery by Parent, Merger Sub and the
other Persons party hereto or thereto, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, subject to limitations on enforcement and other remedies imposed by or
arising under or in connection with (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to or affecting rights of creditors generally, and (ii) rules of law
and general principles of equity, including those governing specific
performance, injunctive relief and other equitable remedies (the “General
Enforceability Exceptions”).
 
 
 
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(c)           Board Approval. The board of directors of the Company has, at a
meeting duly called and held, by a vote of the board of directors, or by a
unanimous written consent in lieu thereof: (i) approved and declared advisable
this Agreement, (ii) determined that the Merger and other transactions
contemplated by this Agreement are advisable, fair to, and in the best interests
of the Company and the Company Stockholders and approved the same, (iii)
approved the Company Ancillary Agreements and the transactions contemplated
thereby, (iv) resolved to recommend to the Company Stockholders the adoption of
this Agreement, and (v) directed that this Agreement be submitted to the Company
Stockholders for adoption (such board approval in clauses (i) through (v), the
“Board Approval”).
 
(d)           Required Vote of Company Stockholders. The affirmative vote or
consent of the Requisite Stockholders are the only votes or consents of the
holders of any class or series of the capital stock of the Company necessary to
adopt or approve this Agreement, the Merger, and the other matters set forth in
the Written Consent, and, to the extent such approval is required, the Company
Ancillary Agreements and the other transactions contemplated hereby and thereby
(such vote or consent, the “Stockholder Approval”). As of the Effective Time,
the Company shall have obtained the Stockholder Approval which is in full force
and effect. No further vote or consent of any of the Company Stockholders is
necessary to adopt this Agreement and approve the Merger, the Company Ancillary
Agreements, the transactions contemplated hereby and thereby and the other
matters set forth in the Written Consent.
 
(e)           Anti-Takeover Statutes. No “fair price,” “moratorium,” “control
share acquisition,” “supermajority,” “affiliate transactions,” “business
combination,” or other similar anti-takeover statute or regulation enacted under
any federal, state, local, or foreign laws applicable to the Company is
applicable to this Agreement, the Merger, or any of the other transactions
contemplated by this Agreement. Since the Company’s date of inception, the
Company has never been a party to any stockholder rights agreement, rights plan,
“poison pill” or other similar agreement or plan.
 
3.4           Capitalization of the Company; Indebtedness.
 
(a)           Authorized and Outstanding Capital Stock of the Company.
 
(i)           As of the Agreement Date, the authorized capital stock of the
Company consists solely of: (x) 16,300,000 shares of Company Common Stock (of
which there are currently 5,345,590 shares of Company Common Stock issued and
outstanding); and (y) 8,046,756 shares of Company Preferred Stock (of which
there are currently 7,986,675 shares of Company Preferred Stock issued and
outstanding). As of the Effective Time, after giving effect to the completion of
the exchange contemplated by Section 2.4(c), the authorized capital stock of the
Company consists solely of: (x) 16,300,000 shares of Company Common Stock (of
which there will be 5,493,596 shares of Company Common Stock issued and
outstanding); and (y) 8,046,756 shares of Company Preferred Stock (of which
there will be 7,986,675 shares of Company Preferred Stock issued and
outstanding). The Company Preferred Stock is comprised of: (A) 2,430,990 shares
of Company Preferred Stock that is designated as Founder Preferred Stock (of
which as of the Agreement Date there are 2,430,990 shares of Founder Preferred
Stock issued and outstanding); (B) 2,173,912 shares of Company Preferred Stock
that is designated as Series Seed Preferred Stock (of which as of the Agreement
Date there are 2,173,912 shares of Series Seed Preferred Stock issued and
outstanding); and (C) 3,441,854 shares of Company Preferred Stock that is
designated as Series Seed Plus Preferred Stock (of which as of the Agreement
Date there are 3,381,773 shares of Series Seed Plus Preferred Stock issued and
outstanding). The number and class and series of issued and outstanding equity
securities held by each Company Stockholder as of the Agreement Date is set
forth on Schedule 3.4(a), no equity securities are issued or outstanding as of
the Agreement Date that are not set forth on Schedule 3.4(a), and no equity
securities shall be issued or outstanding as of the Agreement Date. Schedule
3.4(a) accurately reflects all of the Persons who are entitled to receive any
portion of the Merger Consideration, including for such purpose the holders of
the convertible notes of the Company described in Section 2.4(c) assuming that
the exchange contemplated by Section 2.4(c) has been completed in accordance
with its terms, pursuant to the terms of this Agreement and an accurate
calculation of their respective Merger Consideration Pro Rata Shares.
 
 
 
-10-

 
 
(ii)           The Company does not hold any treasury stock and does not
otherwise own any Company Common Stock. All issued and outstanding Company
Common Stock (other than the Company Restricted Stock) and Company Preferred
Stock (x) have been duly authorized and validly issued, are fully paid and
nonassessable, (y) were offered, issued, sold and delivered by the Company in
compliance with applicable Law, the Company’s Charter Documents, and all
requirements set forth in applicable Contracts, and (z) are not subject to
vesting, forfeiture, any right of rescission, right of first refusal or
preemptive right under applicable Law, the Company’s Charter Documents or any
Contract to which the Company is a party. The shares of Company Common Stock to
be issued pursuant to Section 2.4(c), when so issued, (A) shall have been duly
authorized and validly issued, and shall be fully paid and nonassessable, (B)
shall have been offered, issued, sold and delivered by the Company in compliance
with applicable Law, the Company’s Charter Documents, and all requirements set
forth in applicable Contracts, and (C) shall not be subject to vesting,
forfeiture, any right of rescission, right of first refusal or preemptive right
under applicable Law, the Company’s Charter Documents or any Contract to which
the Company is a party. There is no Liability for dividends or other
distributions accrued and unpaid by the Company.
 
(b)           Since the Company’s date of inception, the Company has never had
more than two thousand (2,000) Company Stockholders of record. To the Knowledge
of the Company, no more than ten (10) Company Stockholders are not “accredited
investors” within the meaning of Rule 501 promulgated under the Securities Act.
To the Knowledge of the Company, each of such Company Stockholders has such
knowledge and experience in financial and business matters that make such
Company Stockholder capable of evaluating the merits and risks of an investment
in the Company and is able to bear all economic risk of investment in the
Company, including a complete loss of such Company Stockholder’s investment
therein.
 
(c)           Stock Options and Restricted Stock. Other than the Company Common
Stock issuable upon exercise of the Company Stock Options and the Company
Restricted Stock in each such case listed on Schedule 3.4(c) and the exchange
contemplated by Section 2.4(c), there are no shares of capital stock of the
Company or other equity securities of the Company authorized, issued, reserved
for issuance or outstanding and no outstanding or authorized options, warrants,
convertible or exchangeable securities, subscriptions, rights (including any
preemptive rights), profits interests, equity appreciation rights, profit or
revenue participation rights, calls or commitments of any character whatsoever
to which the Company is a party or is bound or requiring the issuance or sale of
any security or other interest in the Company. The Company does not have any
authorized or outstanding bonds, debentures, notes or other debt with respect to
which the holders thereof have the right to vote or consent (or convertible
into, exchangeable for, or evidencing the right to subscribe for or acquire
securities having the right to vote or consent) with the Company Stockholders on
any matter or directly or indirectly exercisable or exchangeable for or
convertible into capital stock of the Company.
 
(d)           No Other Rights. There is no outstanding (i) equity appreciation
right, option, restricted equity, “phantom” equity or any similar security or
right that is derivative or provides any economic benefit based, directly or
indirectly, on the value or price of any security of the Company or (ii)
warrant, call, right, commitment, conversion privilege or preemptive or other
right or Contract to purchase or otherwise acquire any equity security, any
equity security or debt convertible into or exchangeable for equity securities
or obligating the Company to grant, extend or enter into any such equity
appreciation right, option, restricted equity, “phantom” equity, warrant, call,
right, commitment, conversion privilege or preemptive or other right or
Contract. Except under the agreements to be terminated in accordance with
Section 7.2(j), there is no voting agreement, registration right, rights of
first refusal, preemptive right, co-sale right or other similar right or
restriction applicable to any outstanding security of the Company.
 
 
 
-11-

 
 
(e)           Ungranted Stock Options and Restricted Stock. No employee of the
Company or any other Person has an offer letter or other Contract that
contemplates or commits to making a grant of any Company Stock Options, Company
Restricted Stock or any other security of the Company, or has otherwise been
promised any option to purchase any Company Common Stock or any other security
of the Company, which option has not been granted, or security has not been
issued, as of the Agreement Date.
 
(f)           Indebtedness.
 
(i)           Schedule 3.4(f)(i) sets forth a true, correct and complete list of
all Indebtedness of the Company as of the Agreement Date, including, for each
item of Indebtedness, the Contract(s) governing such item of Indebtedness. All
Indebtedness may be prepaid at the Closing without penalty under the terms of
the Contract(s) governing such Indebtedness.
 
(ii)           Schedule 3.4(f)(ii) sets forth a true, correct and complete
estimate of all Estimated Company Transaction Expenses as of the Closing Date.
The Company Closing Statement, when delivered, will set forth a true, correct
and complete list of all of the Company Transaction Expenses as of the Effective
Time.
 
3.5           No Conflict; Consents.
 
(a)           Neither the execution and delivery of this Agreement or any of the
Company Ancillary Agreements by the Company, nor the performance of the
Company’s obligations hereunder or thereunder or the consummation of the
transaction contemplated hereby or thereby, shall conflict with, result in a
termination, breach, impairment, violation of (with or without notice or lapse
of time, or both), acceleration of an obligation or loss of a material benefit,
or constitute a default, or require the consent, release, waiver or approval of,
or notice to, any third party, under: (i) any provision of any Charter Documents
as currently in effect, (ii) any Law applicable to the Company or any of its
assets or properties, (iii) any Contract to which the Company is a party or to
which the Company or any of its assets or properties, are bound, (iv) any
Governmental Permit, or (v) any judgment, decree or order to which the Company
is subject.
 
(b)           Except for the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, the Company is not required to give
any notice to, make any declaration, filing or registration with, or obtain any
consent, approval, release or authorization from, any Person or Governmental
Authority in connection with the Merger, this Agreement, the Company Ancillary
Agreements or the performance of the Company’s obligations hereunder and
thereunder.
 
3.6           Litigation
 
. There is no, and since the Company’s date of inception there has not been any,
Action pending or, to the Knowledge of the Company, threatened, against the
Company, or, to the Knowledge of the Company, against any present officer or
director of the Company in his or her capacity as such. There is no judgment,
decree, injunction, rule or order of any Governmental Authority, arbitrator or
mediator binding on the Company or any of its assets or properties. The Company
does not have any Action pending against any Governmental Authority or any other
Person.
 
3.7           Taxes.
 
(a)           Tax Returns, Taxes and Audits.
 
(i)           The Company (A) has properly completed and timely filed all income
and other material Tax Returns required to be filed by them (taking into account
any applicable extensions), and all such Tax Returns are true, correct and
complete in all material respects, (B) has timely paid all material Taxes
required to be paid by them for which payment was due (whether or not shown on
any Tax Return), (C) has made (or shall make on a timely basis) all estimated
Tax payments required to be made sufficient to avoid any underpayment, penalties
or interest, and (D) since the Balance Sheet Date, has not incurred any
Liability for Taxes outside the Ordinary Course of Business or otherwise
inconsistent with past custom and practice other than as a result of the
transactions contemplated by this Agreement. The Company has made available to
Parent correct and complete copies of all federal and state income Tax Returns
filed for all taxable years remaining open under the applicable statute of
limitations.
 
 
 
-12-

 
 
(ii)           No Tax Claim is currently pending or, to the Knowledge of the
Company, threatened. No written claim has ever been made by a Governmental
Authority in a jurisdiction where the Company does not file Tax Returns that any
of them is or may be required to file any Tax Return in that jurisdiction.
 
(iii)           There are no requests for rulings or determinations in respect
of any Tax pending between the Company and any Governmental Authority.
 
(iv)           No Tax liens are currently in effect against any of the assets of
the Company, other than liens for Taxes not yet delinquent. There is not in
effect any waiver by the Company of any statute of limitations with respect to
any Taxes nor has the Company agreed to any extension of time for filing any Tax
Return that has not been filed. The Company has not consented to extend the
period in which any Tax may be assessed or collected by any Tax agency or
authority which extension is still in effect.
 
(v)           During the two (2)-year period ending on the Agreement Date, the
Company was not a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Code.
 
(vi)           The Company (i) has not been a member of an affiliated,
consolidated, combined or unitary group other than one of which the Company was
the common parent, (ii) is party to any Tax Sharing Agreement, or (iii) has any
Liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or non-U.S. law) or any Tax Sharing
Agreement or as a transferee or successor.
 
(vii)           The Company (A) does not have, and has never had, a permanent
establishment in any country other than the country in which it is organized and
resident, or (B) is not, and has never been, subject to net income Tax in a
jurisdiction outside the country in which it is organized or resident.
 
(viii)           The Company shall 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: (A) change in
method of accounting made prior to the Closing Date for a taxable period ending
on or prior to the Closing Date; (B) “closing agreement” as described in Section
7121 of the Code or other agreement with a Governmental Authority (or any
similar provision of any applicable Law) executed before Closing; (C)
intercompany transaction or excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any similar provision of any
applicable Law); (D) installment sale or open transaction disposition made
before Closing; (E) prepaid amount received before Closing outside of the
Ordinary Course of Business; or (F) election under Section 108(i) of the Code.
 
(ix)           The Company has not taken or agreed to take any action or has
knowledge of any fact or circumstance that could reasonably be expected to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a)(2)(E) of the Code.
 
(b)           Withholding. All Taxes that the Company is or was required to
withhold or collect in connection with any amount paid or owing to any employee,
independent contractor, stockholder, nonresident, creditor or other third party
have been duly withheld or collected and have been paid, to the extent required,
to the proper Governmental Authority or other Person.
 
(c)           No Tax Shelters. The Company has (i) no, and has never had any,
disclosure obligation under Section 6662 of the Code or comparable provisions of
state, local or foreign Law or (ii) not participated in any listed transaction
within the meaning of Treasury Regulations Section 1.6011-4(b)(2) or any
transaction that is substantially similar to any of those transactions.
 
 
 
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3.8           Related Party Transactions. Except for Company Benefit
Arrangements disclosed on Schedule 3.17(h) and the Company’s obligations
thereunder, the Company is not a party to any Contract with, or indebted, either
directly or indirectly, to any of the current or former officers, directors,
employees or other Company Stockholders (the “Related Parties”) or, to the
Knowledge of the Company, any of their respective Affiliates or immediate family
members. The Company has never extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of any
personal loan or any other type of loan to any of the Related Parties or, to the
Knowledge of the Company, any of their respective Affiliates or immediate family
members. To the Knowledge of the Company, except as set forth on Schedule 3.8,
none of the Related Parties, and no record or beneficial owner of more than five
percent (5%) of any class or series of Company Common Stock and/or Company
Preferred Stock, nor any immediate family member of a Related Party, has a
direct ownership interest of more than five percent (5%) of the equity ownership
of any firm or corporation that does business with, has any contractual
arrangement with, or is a competitor of the Company. All Contracts to which the
Company is a party are on arms’ length terms.
 
3.9           Company Financial Statements; Undisclosed Liabilities.
 
(a)           Schedule 3.9 sets forth the Company Financial Statements. The
Company Financial Statements: (i) are derived from the Books and Records of the
Company, (ii) fairly present in all material respects, and in accordance with
the Accounting Principles, the financial condition of the Company at the dates
and for the periods therein indicated, and (ii) have been prepared in accordance
with the Accounting Principles applied on a basis consistent with prior periods
(except that the unaudited Company Financial Statements do not have notes and
are subject to normal recurring year-end adjustments, the effect of which are
not, individually or in the aggregate, material).
 
(b)           The Company has no Liabilities that would be required by GAAP to
be reflected or reserved against on a balance sheet of the Company or disclosed
in the notes thereto, except for (i) those shown on the Company Balance Sheet,
(ii) those that were incurred after the Balance Sheet Date in the Ordinary
Course of Business and do not relate to breach of Contract, breach of warranty,
tort, infringement, violation of Law, or any environmental Liability and (iii)
Company Transaction Expenses. All reserves established by the Company that are
set forth in or reflected in the Company Balance Sheet have been established in
accordance with the Accounting Principles and are adequate. The Company has no
“off-balance sheet arrangement” within the meaning of Item 303 of Regulation S-K
promulgated under the Securities Act.
 
3.10           Title to Properties. The Company has good and marketable title
to, or in the case of leased assets and properties, valid leasehold interests
in, all of the material tangible assets and properties (including those shown on
the Company Balance Sheet) used or held for use in, or necessary for, the
operation of the Business, free and clear of all Encumbrances, other than
Permitted Encumbrances. All machinery, vehicles, equipment and other material
tangible personal property owned or leased by the Company, or otherwise used in
the Business, have been regularly maintained, are in good operating condition
and satisfactory repair (normal wear and tear excepted) and are sufficient for
the continued operation of the Business (in the manner conducted prior to the
Agreement Date) following the Closing. All leases of real or personal property
to which the Company is a party are in full force and effect and afford the
Company a valid leasehold interest in, or license to use, the real or personal
property that is the subject of such lease or license. All rents, required
deposits and additional rents which are due under the terms of such leases have
been paid in full. The Company has never owned any real property.
 
3.11           Absence of Certain Changes. Since December 31, 2019, the Business
has been operated in the Ordinary Course of Business and there has not been any
Material Adverse Effect with respect to the Company or the Business. Except as
disclosed on Schedule 3.11 or as contemplated by this Agreement, since the
Balance Sheet Date, there has not been with respect to the Company any:
 
 
 
-14-

 
 
(a)           amendment or change in any of the Charter Documents;
 
(b)           incurrence, creation or assumption of (i) any Encumbrance on any
of its assets or properties (other than Permitted Encumbrances) or (ii) any
Indebtedness;
 
(c)           assumption, guarantee, endorsement or otherwise of any liability
or responsibility for any indebtedness of another Person;
 
(d)           cancelation of any material third party Indebtedness owed to it;
 
(e)           acceleration or release of any vesting condition with respect to
(i) any equity security or (ii) the right to exercise any right to purchase or
otherwise acquire any equity securities, or any acceleration or release of any
right to repurchase equity securities upon a securityholder’s termination of
employment or services with it or pursuant to any right of first refusal;
 
(f)           payment or discharge of any of their Liabilities except for
(i) Liabilities shown on the Company Balance Sheet or incurred in the Ordinary
Course of Business after the Balance Sheet Date or (ii) Company Transaction
Expenses;
 
(g)           purchase, license, sale, grant, assignment or other disposition or
transfer, or any Contract for the purchase, license, sale, grant, assignment or
other disposition or transfer, of any of its assets (including Company
Intellectual Property Rights and other intangible assets), properties or
goodwill, other than the non-exclusive license of its products or services to
its customers in the Ordinary Course of Business;
 
(h)           damage, destruction or loss of any material property or material
asset, whether or not covered by insurance, except ordinary wear and tear;
 
(i)           declaration, setting aside or payment of any dividend on, or the
making of any other distribution in respect of, its equity securities, or any
split, combination, subdivision, reclassification, recapitalization or similar
transaction of its equity securities or any direct or indirect redemption,
purchase or other acquisition of any equity securities or any change in any
right, preference, privilege or restriction of any of its outstanding
securities;
 
(j)           issuance, sale, disposal of, transfer or grant of any equity
securities, capital stock, ownership interests, or other equity interests of any
class, or any securities or rights convertible, exercisable or exchangeable for,
or evidencing the right to subscribe for any of its shares of equity,
securities, capital stock, ownership interests, or other equity interests;
 
(k)           creation or acquisition of any Subsidiary or the acquisition of
any shares or other securities of, or any direct or indirect equity interest in,
any Person;
 
(l)           hiring, termination or resignation of any officer, employee,
independent contractor or other service provider;
 
(m)           change or increase in (or promise to change or increase) the
compensation or benefits payable or to become payable to any current or former
officers, directors, employees, independent contractors, agents, or other
service providers, or change or increase in (or promise to change or increase)
any bonus, pension, severance, change-of-control, retention, insurance or other
benefit payment or arrangement (including any equity awards) made to or with any
of such officers, directors, employees, independent contractors, agents or other
service providers, except as required by applicable Law or a written Contract in
effect as of the Agreement Date and previously made available to Parent and
disclosed in the Disclosure Schedules;
 
 
 
-15-

 
 
(n)           Liability incurred by or to any Related Party, except for normal
and customary compensation and expense allowances payable to officers and
employees in the Ordinary Course of Business;
 
(o)           loan, advance or capital contribution to, or any investment in,
any Person (other than the advancement of travel expenses to employees in the
Ordinary Course of Business);
 
(p)           (i)  entering into, amendment of, relinquishment, termination or
nonrenewal of any Company Material Contract or Company Benefit Arrangement
except as required by such Company Material Contract or Company Benefit
Arrangement, or Law, (ii) any default under such Company Material Contract or
Company Benefit Arrangement, or (iii) any written or, to the Knowledge of the
Company, oral indication or assertion by the other party thereto of any material
problems with its services or performance under any such Company Material
Contract or such other party’s desire to so amend, relinquish, terminate or not
renew any such Company Material Contract or Company Benefit Arrangement;
 
(q)           entering into of any Contract that by its terms requires or
contemplates a current and/or future financial commitment, expense (inclusive of
overhead expense) or obligation on its part that involves in excess of $50,000
for any single Contract (or $200,000 in the aggregate among all Contracts that
are below $50,000) (other than such Contracts entered into in the Ordinary
Course of Business);
 
(r)           making or entering into any Contract with respect to any
acquisition, sale or transfer of any material asset of the Business (other than
with Parent and other than with respect to Contracts entered with customers,
suppliers or vendors of the Company in the Ordinary Course of Business);
 
(s)           adoption of a plan or agreement of complete or partial
liquidation, dissolution, restructuring, merger, consolidation or other
reorganization;
 
(t)           change in accounting or Tax reporting methods or practices
(including any change in depreciation or amortization policies or rates or
revenue recognition policies) or any revaluation of any of its assets;
 
(u)           settlement or compromise of any claim, notice, audit report or
assessment in respect of Taxes; amendment to or filing (inconsistent with past
practice) of any Tax Return; making of (inconsistent with past practice), change
in, or revocation of any election in respect of Taxes; adoption, change in, or
revocation of any accounting method in respect of Taxes; surrender any right to
claim a refund of Taxes; entering into of any Tax allocation, sharing or
indemnity agreement or closing agreement relating to Taxes; or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
 
(v)           deferral of the payment of any accounts payable other than in the
Ordinary Course of Business, or any discount, accommodation, customer credit or
other concession made in order to accelerate or induce the collection of any
receivable;
 
(w)           Action threatened or initiated by or against, or Action or
threatened Action settled or otherwise resolved by, the Company;
 
(x)           capital expenditure made by the Company in excess of $50,000;
 
(y)           entering into any new line of business; or
 
(z)           any entry or commitment to enter into, any Contract to do any of
the things described in the preceding clauses (a) through (w) (other than
negotiations and agreements with Parent and its representatives regarding the
transactions contemplated by this Agreement).
 
 
 
-16-

 
 
3.12           Contracts, Agreements, Arrangements, Commitments and
Undertakings. Schedule 3.12 sets forth a list of each Contract of the following
types to which the Company is a party or by which the Company or any of its
assets or properties is bound, including the applicable subsection(s) to which
such Contract is responsive:
 
(a)           any Contract providing for payments (whether fixed, contingent or
otherwise) by or to the Company in an aggregate annual amount of $50,000 or
more;
 
(b)           any Contract with the users, customers or clients of the Business
that involves an amount in excess of $25,000 other than the Standard EULAs;
 
(c)           any lead generation, dealer, distributor, reseller, OEM (original
equipment manufacturer), VAR (value added reseller), sales representative or
similar Contract under which any third party is authorized to sell, license,
sublicense, lease, distribute, market or take orders for any Company Offering or
provide marketing services (including referral partners) for the foregoing;
 
(d)           any Contract that (i) provides for the authorship, invention,
creation, conception or other development of any Intellectual Property Rights
(A) by the Company for any other Person or (B) for the Company by any other
Person, including, in the case of each of clauses (A) and (B), any joint
development, (ii) provides for the assignment or other transfer of any ownership
interest in Intellectual Property Rights (1) to the Company from any other
Person or (2) by the Company to any other Person, (iii) includes any grant of a
license to access or use any Intellectual Property Right to any other Person by
the Company (other than, with respect to this subsection (iii) only,
non-exclusive licenses granted to the end users or customers of the Business in
the Ordinary Course of Business pursuant to Contracts substantially in the form
of the standard end user agreement(s) of the Company, copies of which have been
made available to Parent) (“Standard EULAs”), or (iv) includes any grant of a
license to access or use any Intellectual Property Right to the Company by any
other Person (other than, with respect to this subsection (iv) only, licenses
for (x) Open Source Software and (y) Commercially Available Software);
 
(e)           any Contract that relates to a partnership, joint venture, joint
marketing, joint development or similar arrangement with any other Person;
 
(f)           any current Company Employee Agreement or other Contract for or
relating to the employment by the Company of any director, officer, or employee,
but excluding (i) termination agreements pursuant to which there are no
continuing payment or indemnification obligations of the Company and (ii)
Contracts which do not involve, in each case, an annual payment by the Company
in excess of $50,000;
 
(g)           any current Contract involving any bonus, commission, pension,
profit sharing, retirement or any other form of deferred compensation or
incentive plan or any equity purchase, option, hospitalization, insurance or
similar employee benefit plan or practice, whether formal or informal;
 
(h)           any Contract involving any severance, change-of-control, retention
or similar payments or benefits;
 
(i)           any Contract with any current or former (since the Company’s date
of inception to the Agreement Date) advisor, independent contractor, or leased
employee;
 
 
 
-17-

 
 
(j)           any Contract relating to or evidencing any Indebtedness or
otherwise placing an Encumbrance (other than a Permitted Encumbrance) on any
asset of the Company, including any Contract that contains an earn-out or other
similar contingent payment or obligation;
 
(k)           any Contract that expressly and materially restricts the Company
from (i) engaging in any aspect of their respective businesses, (ii)
participating or competing in any line of business, market or geographic area,
(iii) freely setting prices for its products, services or technologies
(including most favored customer pricing provisions), or (iv) soliciting
potential employees, independent contractors or other suppliers or customers;
 
(l)           any Contract relating to the sale, issuance, grant, exercise,
award, purchase, repurchase or redemption of any equity or equity-linked
securities or any options, warrants or other rights to purchase or otherwise
acquire any such equity or equity-linked securities, other securities or
options, warrants or other rights for the foregoing;
 
(m)           any current Contract with any labor union or any collective
bargaining agreement or similar Contract with the Company’s employees;
 
(n)           any Contract relating to the settlement or other resolution of any
Action or threatened Action (including any agreement under which any
employment-related claim is settled);
 
(o)           (i) any Contract that includes an obligation by the Company to
indemnify any other Person against any claim of infringement or violation of any
Intellectual Property Rights, and (ii) any other Contract of guarantee,
indemnification or any similar commitment by the Company with respect to the
Liabilities or indebtedness of any other Person, other than, in the case of each
of clauses (i) and (ii), Standard EULAs;
 
(p)           any Contract pursuant to which the Company has acquired a business
or entity, any securities of any entity, or any significant assets of a business
or entity or any Contract that contains an earn-out or other similar contingent
payment or obligation;
 
(q)           any Contract that involves the sharing of profits with other
Persons or the payment of royalties or referral fees to any other Person;
 
(r)           any material non-disclosure Contract or other material Contract
concerning the use or disclosure of Proprietary Information by, to, or from the
Company that is not on the standard form of non-disclosure Contract that has
been made available to Parent;
 
(s)           any (i) lease or license with respect to material tangible
personal property and (ii) real property lease or license;
 
(t)           any Contract with any Governmental Authority, university, college
or research center;
 
(u)           all Contracts to provide or deliver any Company Offering, or to
support or maintain any Company Offering, on, in conjunction with, or
interoperating with any third party’s products or services, and each commitment
to develop, improve or customize any Company Offering;
 
 
 
-18-

 
 
(v)           all Contracts to provide or deliver any products of the Business,
or to support or maintain any product of the Business, on, in conjunction with,
or interoperating with any Third-Party Platform, which Third-Party Platform is
not currently fully interoperable with such product or service or with respect
to which the Company must undertake any efforts to create such interoperability,
and each commitment to develop, improve or customize any product or services of
the Business;
 
(w)           all Contracts with any customer or other Person to develop or
customize any product or services of the Business, or to provide support for,
customize or develop any third-party product, service or platform; or
 
(x)           any Contract not otherwise listed above that is material to the
Company, its business, operations, financial condition, properties or assets.
 
True, correct and complete copies of each Company Material Contract (including
schedules, exhibits and amendments thereto), or summaries of any oral Company
Material Contract, have been made available to Parent.
 
3.13           No Default. Each of the Company Material Contracts is (i) in full
force and effect, (ii) a valid and binding obligation of the Company and, to the
Knowledge of the Company, the other parties thereto, and (iii) enforceable in
accordance with its terms, subject to the General Enforceability Exceptions.
There exists no breach or default or event of default under any Company Material
Contract on the part of the Company or, to the Knowledge of the Company, with
respect to any other contracting party, and there has not occurred any event,
occurrence, condition or act, with respect to the Company or, to the Knowledge
of the Company, with respect to any other contracting party, which, with the
giving of notice, the lapse of time or the happening of any other event or
condition, would or would reasonably be expected to (1) become a default, event
of default or breach under any Company Material Contract, or (2) give any third
party (A) the right to declare a default or exercise any remedy under any
Company Material Contract, (B) the right to accelerate the maturity or
performance of any obligation of the Company under any Company Material
Contract, or (C) the right to cancel, terminate or modify any Company Material
Contract. The Company has not received any written, or, to the Knowledge of the
Company, oral notice or other communication regarding any actual or possible
violation or breach of or default under, or intention to cancel or modify, any
Company Material Contract.
 
3.14           Intellectual Property.
 
(a)           Schedule 3.14(a) sets forth a true, correct and complete list of
all (i) Registered Company Intellectual Property Rights, and (ii) material
unregistered Marks and Copyrights owned or purported to be owned by, or
exclusively licensed to, the Company. For each item of Registered Company
Intellectual Property Rights, Schedule 3.14(a) lists (A) the record owner of
such item, and, if different, the legal owner and beneficial owner of such item,
(B) the jurisdiction in which such item is issued, registered or pending, (C)
the issuance, registration or application date and number of such item, and (D)
for each Domain Name registration, the applicable Domain Name registrar, the
name of the registrant and the expiration date for the registration.
 
(b)           All necessary fees and filings with respect to any Registered
Company Intellectual Property Rights have been timely submitted to the relevant
Governmental Authorities and Domain Name registrars to maintain such Registered
Company Intellectual Property Rights in full force and effect. There are no
renewals, annuities, payments, fees, responses to office actions or other
filings required to be made and having a due date with respect to any Registered
Company Intellectual Property Rights within 60 days after the Agreement Date. No
issuance or registration obtained and no application filed by the Company for
any Intellectual Property Rights has been canceled, abandoned, allowed to lapse
or not renewed, except where the Company has, in its reasonable business
judgment, decided to cancel, abandon, allow to lapse or not renew such issuance,
registration or application. None of the Registered Company Intellectual
Property Rights have been or are subject to any interference, derivation,
reexamination (including ex parte reexamination, inter partes reexamination,
inter partes review, post grant review or covered business method (CBM) review),
cancellation, or opposition proceeding. All Owned Company IP is fully and freely
transferable and assignable.
 
 
 
-19-

 
 
(c)           The Company is the sole and exclusive owner of all right, title
and interest in and to (i) all Registered Company Intellectual Property Rights
and (ii) all other Company Intellectual Property Rights owned or purported to be
owned by the Company (clauses (i) and (ii) collectively, the “Owned Company
IP”), free and clear of all Encumbrances. The Company has the sole and exclusive
right to bring a claim or suit against a third party for infringement or
misappropriation of Owned Company IP. The Company has not granted any exclusive
license with respect to any Owned Company IP. No Owned Company IP is subject to
any claim, proceeding or outstanding decree, order, judgment, stipulation or
Contract restricting in any material manner, the use, transfer, or (except for
non-exclusive licenses listed in Schedule 3.12(d)(iii) and Standard EULAs in
each case that would restrict the ability of the Company to grant exclusive
licenses) licensing thereof by the Company, or which may affect the validity,
use or enforceability of such Company Intellectual Property Rights or Company
Offering. All Company Intellectual Property Rights that are not Owned Company IP
(“Licensed IP”) are validly licensed to the Company pursuant to (A) licenses
contained in the Contracts listed on Schedule 3.12(d), (B) Open Source Software
licenses set forth in Schedule 3.14(k), or (C) licenses for Commercially
Available Software. The Company has (and shall continue to have immediately
following the Effective Time) valid and continuing rights (under such Contracts)
to use, sell, license and otherwise exploit, as the case may be, all Licensed IP
as the same are currently used, sold, licensed and otherwise exploited by the
Business.
 
(d)           The Owned Company IP and the Licensed IP constitute all of the
Intellectual Property Rights that are used in or, to the Knowledge of the
Company, are necessary to enable the Company to conduct the Business as it
currently is conducted including the design, development, manufacture, use,
marketing, import for resale, distribution, licensing out and sale of any
Company Offering.
 
(e)           Neither the conduct of the Business as it is currently conducted,
nor any Company Offering, to the Knowledge of the Company, has been or is
infringing, misappropriating or otherwise violating any Intellectual Property
Rights of any third Person.
 
(f)           The Company has not received any written notice from any Person
(i) alleging any infringement, misappropriation, misuse, violation, or
unauthorized use or disclosure of any Intellectual Property Rights or unfair
competition or (ii) challenging the ownership, use, validity or enforceability
of any Company Intellectual Property Rights. To the Knowledge of the Company,
there is no reasonable basis for any Person to make any such allegation or
challenge and the Company has no reason to believe that any such claim is or may
be forthcoming. The Company is not in violation of the terms of any license
agreement to access or use any Intellectual Property Rights.
 
(g)           To the Knowledge of the Company, no Person is infringing,
misappropriating, misusing or violating any Company Intellectual Property Rights
or Company Offering. The Company has not made any claim against any Person
alleging any of the foregoing.
 
(h)           Neither this Agreement nor the transactions contemplated by this
Agreement shall result in: (i) Parent, the Company or any of their respective
Affiliates granting to any third Person any right to or with respect to any
Intellectual Property Rights owned by, or licensed to any of them (other than
rights granted by the Company on or prior to the Closing Date under Intellectual
Property Rights held by the Company as of the Closing Date) or being required to
provide any source code for any Company Offering to any third Person or (ii)
Parent, the Company or any of their respective Affiliates being obligated to pay
any royalties or other license fees with respect to Intellectual Property Rights
of any third Person in excess of those payable by the Company in the absence of
this Agreement or the transactions contemplated hereby.
 
(i)           The Company has taken commercially reasonable measures to protect
all Proprietary Information of the Business and all Proprietary Information of
any third Person in the possession or control of the Business with respect to
which the Company has a confidentiality obligation. No such Proprietary
Information has been authorized to be disclosed or has been actually disclosed
by or on behalf of the Company to any Person other than pursuant to a written
Contract restricting the disclosure and use of such Proprietary Information.
Each current and former employee, director, consultant, and independent
contractor of the Business that has been involved in the authorship, invention
or other development of any Company Intellectual Property Rights has entered
into an enforceable Contract with the Company that effectively and validly
assigns to the Company all Intellectual Property Rights developed by such
employee, consultant, independent contractor, or director in the scope of his,
her or its employment or engagement with the Business (an “Invention Assignment
Agreement”) in a form made available to Parent prior to the Agreement Date.
Without limiting the foregoing, all rights in, to and under all Intellectual
Property Rights created by the founders of the Company for or on behalf of or in
contemplation of the Business prior to their commencement of employment with the
Company have been duly and validly assigned to the Company.
 
 
 
-20-

 
 
(j)           Schedule 3.14(j) sets forth a true and correct list of all third
party Software that is (i) incorporated or embedded in or linked or bundled with
any Company Software or (ii) except for Commercially Available Software,
otherwise used by the Business (and, for each item required to be listed in
subschedules (i) or (ii), the name of the licensor or owner of the Software and
the Contract under which Software is licensed). None of the source code for any
Company Software has been licensed or provided to, or used or accessed by, any
Person other than employees and independent contractors of the Business who have
entered into written confidentiality obligations with the Company with respect
to such source code. The Company is not a party to any source code escrow
Contract or any other Contract (or a party to any Contract obligating the
Company to enter into a source code escrow Contract or other Contract) requiring
the deposit of any source code for any Company Software, or that shall otherwise
result in, or entitle any Person to demand, the disclosure, delivery or license
of any source code for any Company Offering to any Person.
 
(k)           Schedule 3.14(k) sets forth a list of all Open Source Software
that is or has been included, incorporated or embedded in, linked to, combined
or distributed or made available with, or used in the delivery or provision of
any Company Software or any Company Offering, and accurately describes (i)
Company Software or Company Offerings (if any) to which each such item of Open
Source Software relates or if such item is used internally by or on behalf of
the Business, and (ii) the manner in which such Open Source Software is or was
incorporated, linked or otherwise used. Schedule 3.14(k) also lists (or provides
a link to) the applicable license for each such item of Open Source Software.
The Company fully complies with all license terms applicable to any item of Open
Source Software that is or has been included, incorporated or embedded in,
linked to, combined or distributed or made available with any Company Software
or any Company Offering. No Open Source Software is or has been included,
incorporated or embedded in, linked to, combined or distributed or made
available with or used in the delivery or provision of any of the Software of
the Company or any Company Offering, in each case, in a manner that (i) violates
any license term applicable to such Open Source Software, (ii)  requires or
purports to require the licensing of any Company Intellectual Property Rights,
or any portion of any Company Offering other than such unmodified Open Source
Software, for the purpose of making derivative works, (iii) requires or purports
to require the disclosure or distribution in source code form of any portion of
a Company Offering other than such unmodified Open Source Software, (iv) permits
the redistribution or reverse engineering of any Company Offering, or (v)
imposes any restriction on the consideration to be charged for the distribution
of any Company Offering.
 
(l)           The Company Software and Company Offerings are free from any
material defect or bug, or material programming, design or documentation error.
The Company uses industry standard methods to detect and prevent any malicious
or surreptitious code or device, such as a virus, worm, time or logic bomb,
disabling device, Trojan horse or other malicious or surreptitious code designed
to (i) disrupt or damage any use of the Company Software or Company Offerings or
related computer systems; (ii) erase, destroy or corrupt any files or data; or
(iii) bypass any technical security measure, or masquerade as compliant, so as
to obtain access to any of licensee’s hardware or software in contravention of
such technical security measures.
 
(m)           No government funding and no facilities of any university,
college, other educational institution or research center were used in the
development of any Owned Company IP or otherwise made available to the Company
for any other purpose. No Governmental Authority or any university, college or
research center owns, purports to own, has any other rights in or to, or has any
option to obtain any rights in or to, any Owned Company IP.
 
(n)           All of the Contracts pursuant to which the Company is obligated to
provide maintenance, support or other, similar services with respect to a
Company Offering licensed to a licensee (collectively, the “Services
Agreements”) after the Effective Time are set forth on Schedule 3.14(n). No
Services Agreement obligates Parent, the Company or the Surviving Entity, after
the Effective Time, to provide any improvement, enhancement, change in
functionality, additional functionality or other alteration or addition to the
performance of any Company Offering other than error corrections and upgrades if
and when made available to customers of the Business generally. The Company has
not granted any other Person the right to furnish support or maintenance
services with respect to any Company Offering to any other Person. The Company
has not undertaken any joint development activities with any other Person.
 
 
 
-21-

 
 
3.15           Privacy and Data Protection.
 
(a)           The Company has provided accurate and complete disclosures with
respect to its privacy policies and privacy and data practices including
providing all types of notice and obtaining all types of consent and/or
authorization required by applicable Privacy Laws and/or by mandated by any
contractual obligations to which the Company is subject. Such disclosures have
not contained any material omissions related to the privacy policies and privacy
and data practices of the Company.
 
(b)           The Company and, to the Knowledge of the Company, each of its
subcontractors and agents who collect, store, maintain, transmit or have routine
access to Personal Information and User Data, have at all times complied (i) in
all respects with all applicable Privacy Laws; (ii) in all respects with all of
the policies and practices of the Company regarding privacy and data security;
and (iii) with all contractual obligations relating to the receipt, collection,
compilation, use, storage, processing, sharing, safeguarding, security,
disposal, destruction, disclosure, or transfer (including the transfer by or on
behalf of the Business of Personal Information or User Data). The Company has
not received any claim or complaint regarding its or its agents’ collection, use
or disclosure of any data (including Personal Information and User Data).
Neither the Company nor, to the Knowledge of the Company, any of its vendors,
consultants, agents or suppliers collects, stores, uses, accesses, discloses or
transfers Personal Information or User Data outside of the United States of
America.
 
(c)           Schedule 3.15(c) identifies all categories of Personal Information
and User Data collected by or maintained by or on behalf of the Business (and
the process by which such information is collected) and sets forth all places,
whether physical or electronic, where Personal Information and User Data is
stored, which of the Company or its subcontractors or agents maintain such
storage, and the security policies that have been, or should have been pursuant
to contractual arrangements of the Company, adopted and maintained with respect
to such places.
 
(d)           To the Knowledge of the Company, there have not been any actual or
alleged incidents of, or claims or Actions related to, data security breaches,
unauthorized access or use of any of the IT Systems, or unauthorized
acquisition, destruction, damage, disclosure, loss, corruption, alteration, or
use of any Personal Information or User Data or data owned by the Company or
provided by the customers of the Business, whether held by the Company or any of
its subcontractors, and there are no facts or circumstances which would
reasonably serve as the basis for any such allegations or claims. The Company
has not notified, or been required to notify, any Person of any information
security breach or incident involving Personal Information or User Data. The
Company has not received any correspondence relating to, or notice of any
Actions, claims, investigations or alleged violations of, Laws with respect to
Personal Information or User Data from any Person, there is no such ongoing
Action, claim, investigation or allegation, and there are no facts or
circumstances which could reasonably be expected to form the basis for any such
Action, claim, investigation or allegation.
 
(e)           No investigation, inspection, audit or other proceeding of any
nature involving allegations of any violation of Privacy Laws is threatened,
pending, or, to the Knowledge of the Company, contemplated by any Governmental
Authority or other third party against the Company or any of its subcontractors
who store, maintain, transmit or have routine access to Personal Information or
User Data.
 
(f)           The Company has implemented commercially reasonable, though in no
event less than industry-standard organizational, physical, administrative and
technical measures required by (i) applicable Privacy Laws; (ii) all existing
contractual commitments; and (iii) all written policies adopted by the Company,
to protect the integrity, security and operations of the IT Systems,
transactions executed thereby, and Company Data, including protecting against
loss and against damage, accidental loss or destruction, unauthorized or
unlawful access, use, modification, disclosure or other misuse. The IT Systems
are adequate and sufficient (including with respect to working condition and
capacity) for the operations of the Business, including reasonable and
appropriate back-up and disaster recovery procedures, the Company owns or has
valid and enforceable rights to use all IT Systems and in the past twenty-four
(24) months, there have been no material failures, crashes, security breaches,
or other adverse events affecting the IT Systems. The Company has taken
commercially reasonable actions to protect the integrity of and to otherwise
safeguard the IT Systems and the information stored therein, processed thereon
or transmitted therefrom from misuse or unauthorized use, access, disclosure or
modification by third parties and there has been no such misuse or unauthorized
use, access, disclosure or modification.
 
 
 
-22-

 
 
(g)           The transfer of Personal Information and User Data in connection
with the transactions contemplated by this Agreement shall not violate any of
the Contracts of the Company, applicable Privacy Laws, including the privacy
policies of the Company as they currently exist or as they existed at any time
during which any of the Personal Information or User Data was collected or
obtained.
 
(h)           In connection with each third-party servicing, outsourcing,
processing, or otherwise using Personal Information or User Data collected,
held, or controlled by or on behalf of the Company, the Company has
contractually obligated any such third party to (i) comply with applicable
Privacy Laws with respect to Personal Information and User Data, (ii) act only
in accordance with the instructions of the Company, (iii) take appropriate steps
to protect and secure Personal Information and User Data from unauthorized
disclosure, (iv) restrict use of Personal Information and User Data to those
authorized or required under the servicing, outsourcing, processing, or similar
arrangement, and (v) certify or guarantee the return or adequate disposal or
destruction of Personal Information and User Data.
 
(i)           Except for disclosures of information required by Law, authorized
by the provider of Personal Information or User Data, or provided for in the
Contracts listed in Schedule 3.15(i), the Company has not shared, sold, rented
or otherwise made available, communicated orally, in writing or by electronic or
other means to third parties any Personal Information or User Data.
 
(j)           The Company does not collect or otherwise process any payment
and/or credit card data and is not otherwise subject to the Payment Card
Industry – Data Security Standards.
 
(k)           Neither the Company nor any third party acting on their behalf has
transferred any Personal Information or User Data from one country to another.
 
(l)           To the Knowledge of the Company, the Company has taken all steps
necessary to satisfy its notice and transparency obligations under the CCPA and
GDPR.
 
(m)           The Company has never used web scraping, bots, spiders, indexing
or similar methods or technology to collect data from the websites, online
services or applications of any other Person. The Company has not directly or
indirectly used credentials of any other Person to use or access any Third-Party
Platform. The Company is not, nor has the Company received any notice that it
is, in violation, breach or default of any Contract (including, without
limitation, any website’s terms of use or privacy policy) concerning the
collection of data or any of the websites from which the Company scrapes or
otherwise obtains data, and there has not occurred any event that with the lapse
of time or the giving of notice or both would constitute such a violation,
breach or default.
 
(n)           The Company does not obtain any data from any other Person except
for User Data. The Company uses User Data solely for the benefit of such
customer that provided the data and does not disclose User Data (whether
aggregated, de-identified or otherwise modified) to any Person except for such
customer’s employees, subcontractors and agents, as requested by customer, or as
otherwise explicitly set forth in the underlying Contract with such customer.
 
3.16           Compliance with Laws.
 
(a)           The Company is, and has at all times been, in compliance in all
material respects with all Laws applicable to or binding on them, their
respective assets or properties or the Business. To the Knowledge of the
Company, the Company has not received any written notice asserting any actual,
alleged, possible or potential non-compliance with any Laws relating to the
Company or the operation of the Business.
 
(b)           The Company holds all permits, licenses and approvals from, and
has made all filings with, Governmental Authorities that are required to be held
to conduct the Business in compliance with applicable Law (“Governmental
Permits”), and all such Governmental Permits are valid and in full force and
effect. The Company has not received any written notice or other written
communication, or to the Knowledge of the Company, any oral notice or other oral
communication, from any Governmental Authority regarding (i) any actual or
possible violation of applicable Law or any Governmental Permit or any failure
to comply with any term or requirement of any Governmental Permit or (ii) any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Permit.
 
 
 
-23-

 
 
(c)           The Company has not received at any time any written
communication, notice, citation, suspension, revocation, limitation or warning
from any Governmental Authority regarding any actual, alleged or potential
obligation on the part of the Company to undertake any remedial, corrective or
response action of any nature. There is no civil, criminal, administrative or
other proceeding or audit pending or threatened in writing against the Company.
The Company is not now and has never been named as a defendant in any Action
under the Civil or Criminal False Claims Act.
 
3.17           Employees and Employee Benefits.
 
 
(a)           Schedule 3.17(a)-1 accurately lists all current employees of the
Company as of the Agreement Date, and for each such employee, his or her: (i)
name, (ii) job position or title, (iii) current annual base salary or hourly
wage (as applicable), (iv) annual commission opportunity or bonus potential, (v)
classification as full-time, part-time, temporary or seasonal, (vi)
classification by the Company as exempt or non-exempt under applicable state,
federal or foreign wage and hour regulations, (vii) accrued but unused vacation
balance and maximum annual accrual amount, (viii) visa type or work
authorization (if any), (ix) date of hire, (x) work location, (xi) severance
entitlements, if any, (xii) leave status (including anticipated return to work
date), and (xiii) the total amount of bonus, severance, retention, change in
control and/or other amounts to be paid to such employee at the Closing or
otherwise in connection with the transactions contemplated hereby. All employees
of the Company are employed at will. Schedule 3.17(a)-2 accurately lists all
current independent contractors, consultants, and leased workers of the Company
as of the Agreement Date, and for each such individual, his or her: (A) fee or
compensation arrangements, (B) commencement date, (C) service location; (D)
description of services provided; (E) average hours worked per week; (F) notice
required to terminate the relationship, and (G) indicating whether a written
independent contractor agreement exists.
 
(b)           During the past three years (and to the extent of applicable state
wage and hour statutes of limitations, if longer), the Company has correctly
classified and paid employees as exempt employees and nonexempt employees under
the Fair Labor Standards Act and other applicable Laws. All employees of the
Company are, and have been since their respective start of employment, legally
permitted to be employed by the Company in the jurisdiction in which such
employee is employed in their current job capacities for the maximum period
permitted by applicable Law. All independent contractors providing services to
the Company have been properly classified and paid as independent contractors
for purposes of applicable federal and state Tax Laws, employee benefits Laws,
and wage hour Laws. The Company has no employment or consulting Contracts
currently in effect that are not terminable at will (other than agreements with
the sole purpose of providing for the confidentiality of Proprietary Information
or assignment of inventions). The Company has paid in full or accrued in its
Company Financial Statements all wages, salaries, commissions, incentives,
bonuses, and other compensation due to any current or former employee,
independent contractor, or other worker who is currently providing or previously
provided services to the Company. The Company has complied with all Laws
relating to employment practices, terms and conditions of employment, leaves of
absence, equal employment opportunity, non-harassment, non-discrimination,
immigration (including immigration related hiring practices and benefits),
wages, hours, benefits, collective bargaining, the payment of social security
and similar taxes and occupational health and safety.
 
(c)           Neither the Company nor any of its ERISA Affiliates: is liable for
any (i) arrears of wages or any Taxes or any penalty for failure to comply with
any Law; or (ii) payment to any trust or other fund governed by or maintained by
or on behalf of any Governmental Authority with respect to unemployment
compensation benefits, social security or any other applicable social insurance,
or other benefits or obligations for employees of the Company (other than
routine payments to be made in the Ordinary Course of Business). There is no
pending or, to the Knowledge of the Company, threatened Action against the
Company under any worker’s compensation policy or long-term disability policy.
 
 
 
-24-

 
 
(d)           The Company is not a party to or currently negotiating any
collective bargaining or similar agreement with any labor union or organization,
nor are any organized groups of its employees represented by any labor union.
There is no, and since the Company’s date of inception, there has been no
pending, or to the Knowledge of the Company, threatened, labor dispute, work
slowdown, work stoppage, strike or investigation by a Governmental Authority,
involving the Business. There is not currently, nor has there ever been, any
Unfair Labor Practice (as defined in the National Labor Relations Act) charge or
complaint or any other action pending before the National Labor Relations Board
or any other Governmental Authority having jurisdiction thereof and, to the
Knowledge of the Company, no such complaint is or has been threatened. To the
Knowledge of the Company, no employee of the Company currently intends to
terminate his or her employment, and no employee of the Company has received an
offer to join a business that may be competitive with the Business. To the
Knowledge of the Company, no officer, director, employee, agent or contractor of
the Company is subject to any Contracts of any order, writ or judgment that
prohibits, limits or purports to limit such individual from (i) engaging in or
continuing any conduct, activity, duty or practice relating to the Company, or
(ii) assigning to the Company any rights to any invention, improvement,
discovery or other similar proprietary rights. No former or current employee is
a party to, or is otherwise bound by, any Contract that in any way adversely
affected, affects or shall affect the ability of the Company to conduct its
business in the manner previously, currently or contemplated to be conducted.
The Company has not, since the Company’s date of inception, been a party to any
Action, or received written notice of any threatened Action, in which the
Company was, or is, alleged to have violated any applicable Contract or Law
relating to employment, including equal opportunity, discrimination,
retaliation, harassment, immigration, wages, hours, unpaid compensation,
classification of employees as exempt from overtime or minimum wage Laws,
classification or workers as independent contractors, benefits, collective
bargaining, the payment of social security and similar Taxes, occupational
safety and health, and/or privacy rights of employees. There is no pending,
threatened, and since the Company’s date of inception, the Company has not
received written notice of any investigation or audit by a Governmental
Authority responsible for the enforcement of labor, immigration or employment
regulations. The Company is not a party to or otherwise bound by any consent
decree or order with, or citation by, any Governmental Authority relating to any
employee or employment practices, wages, hours or terms or conditions of
employment.
 
(e)           Since the Company’s date of inception, there has been no “mass
layoff,” “employment loss,” or “plant closing” as defined by the WARN Act or any
other applicable Law in respect of the Business and the Company has not been
affected by any transaction or engaged in any lay-offs or employment
terminations sufficient in number to trigger application of any such Law. The
consummation of the transaction shall not implicate the WARN Act or any similar
Law. The Company does not intend to take any action that could implicate the
WARN Act or any similar Law.
 
(f)           To the Knowledge of the Company, no employee or independent
contractor of the Company is in violation of (i) any material term of any
employment or independent contractor Contract or (ii) any term of any other
Contract or any restrictive covenant relating to the right of any such employee
or independent contractor to be employed by or to render services to the
Business or to use Proprietary Information of others. The employment of any
employee or engagement of any independent contractor by the Company does not
subject them to Liability to any third party.
 
(g)           Since the Company’s date of inception, the Company has not been a
party to a settlement agreement with a current or former employee or independent
contractor that relates primarily to allegations of sexual harassment or sexual
misconduct. Since the Company’s date of inception, no allegations of sexual
harassment or sexual misconduct have been made against any officer, director or
employee of the Company in his or her capacity as an officer, director or
employee.
 
 
 
-25-

 
 
(h)           Schedule 3.17(h) sets forth a true, complete and correct list of
every Company Employee Plan and each material Company Employee Agreement (each,
whether or not material, a “Company Benefit Arrangement” and collectively, the
“Company Benefit Arrangements”). True, complete and correct copies of the
following documents, with respect to each Company Benefit Arrangement, where
applicable, have previously been made available to Parent: (i) all documents
embodying or other governing such Company Benefit Arrangement (or for unwritten
Company Benefit Arrangement a written description of the material terms of such
arrangement); (ii) the most recent IRS determination or opinion letter; (iii)
the most recently filed IRS Form 5500; (iv) the most recent summary plan
description (or other descriptions provided to employees) and all modifications
thereto; (v) all applicable non-discrimination test results; and (vi) all
non-routine correspondence, since the Company’s date of inception, to and from
any state or federal agency related to such Company Benefit Arrangement. No
Company Benefit Arrangement is subject to the laws of any jurisdiction outside
the United States.
 
(i)           Each Company Employee Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination or opinion
letter from the IRS with respect to such qualification, and no event or omission
has occurred that would could reasonably be expected to cause any Company
Employee Plan to lose such qualification or require material corrective action
under the IRS Employee Plans Compliance Resolution System in order to maintain
such qualification.
 
(j)           Each Company Benefit Arrangement is and has been operated and
administered in all material respects in accordance with its terms and all
applicable Laws and regulations including ERISA, the Code, and the Affordable
Care Act. No litigation or governmental administrative proceeding, audit or
other proceeding or Action (other than those relating to routine claims for
benefits) is pending or, to the Knowledge of the Company, threatened with
respect to any Company Benefit Arrangement or any fiduciary and, to the
Knowledge of the Company, there is no reasonable basis for any such litigation
or proceeding. All payments and/or contributions required to have been timely
made with respect to all Company Benefit Arrangements have been timely made in
accordance with the terms of the applicable Company Benefit Arrangement and
applicable Law, and all such contributions not yet required to be made have been
properly accrued on the Company Financial Statement to the extent required by
and in accordance with GAAP.
 
(k)           Neither the Company nor any of its ERISA Affiliates has ever
maintained, contributed to, or been required to contribute, or has or had any
Liability with respect to, including on account of any ERISA Affiliate (whether
contingent or otherwise), to (i) any employee benefit plan that is or was
subject to Title IV of ERISA, Section 412 of the Code, Section 302 of ERISA,
(ii) a Multiemployer Plan, (iii) any funded welfare benefit plan within the
meaning of Section 419 of the Code, (iv) any “multiple employer plan” (within
the meaning of Section 210 of ERISA or Section 413(c) of the Code), or (v) any
“multiple employer welfare arrangement” (as such term is defined in Section
3(40) of ERISA).
 
(l)           None of the Company Benefit Arrangements: (i) provide health care
or any other non-pension benefits to any employees after their employment is
terminated (other than as required by Part 6 of Subtitle B of Title I of ERISA
or similar state Law); or (ii) provide health (other than through a flexible
spending account cafeteria plan), life insurance or long-term disability
benefits that are not fully insured through an insurance contract.
 
(m)           Neither the Company nor any ERISA Affiliate has any obligation to
gross-up, indemnify or otherwise reimburse any current or former employee,
director, consultant or other service provider for any tax incurred by such
service provider, including under Section 409A or 4999 of the Code.
 
 
 
-26-

 
 
(n)           No Company Benefit Arrangement is a “nonqualified deferred
compensation plan” subject to Section 409A of the Code. Each Company Stock
Option has been issued only with regard to common stock and with an exercise
price no less than the fair market value (determined consistently with the
provisions of Section 409A of the Code) of the underlying stock at the time of
grant.
 
(o)           The Company has the right under the terms of each Company Employee
Plan to terminate such Company Employee Plan without the consent of any other
party, and no additional contributions would be required to effect properly such
termination. Each asset held under each Company Employee Plan may be liquidated
or terminated without the imposition of any redemption fee, surrender charge or
comparable Liability other than ordinary administration expenses. Neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement shall (i) result in any payment
(including severance, unemployment compensation, golden parachute or otherwise)
becoming due to any person under any Company Benefit Arrangement, (ii) increase
any benefits otherwise payable under any Company Benefit Arrangement, (iii)
result in any acceleration of the time of payment or vesting of any such
benefits (other than with respect to any Terminated Benefit Plan terminated
pursuant to Section 5.7(b)), or (iv) result in the loss of a tax deduction under
Section 280G of the Code or the imposition on any person of an excise tax under
Section 4999(a) of the Code.
 
(p)           Except as set forth on Schedule 3.17(p), there are no written
personnel policies, written rules, written procedures or written employment
agreements applicable to any employee.
 
(q)           Set forth on Schedule 3.17(q) is a list of the employees whose
employment with the Company has ended in the last three (3) calendar years,
together with a complete and accurate list of the following information in
respect of each former employee: (i) the date of such termination; (ii) the
reason therefor; (iii) the employee’s base salary or hourly rate, as well as any
bonus or commission eligibility; (iv) whether the employee executed a general
release of claims or other separation agreement; and (v) the employee’s work
location. To the extent that any of the employees listed on Schedule 3.17(q)
have executed a general release of claims or other separation agreement, the
Company has provided a true, correct and complete copy of such document to
Parent.
 
(r)           Set forth on Schedule 3.17(r) is a complete list of all current
and former Company workers other than employees (e.g., consultants, independent
contractors, etc.), together with a complete and accurate list of the following
information with respect to each such individual: (i) name; (ii) dates of
engagement; (iii) nature of work performed; (iv) compensation paid; and (v) work
location.
 
(s)           The Company has properly completed an I-9 form for every employee,
as required by the Immigration Reform and Control Act of 1986. The Company has
not received any notices or other correspondence from any Governmental Authority
including U.S. Citizenship and Immigration Services, U.S. Department of Homeland
Security, Homeland Security Investigations and Immigration and Customs
Enforcement relating to the employment authorization of employees or employer’s
compliance with the requirements of the Immigration Reform and Control Act of
1986 including Notices of Inspection, Notices of Suspect Documents, Notices of
Intent to Fine, Social Security “no match” letters and any internal memoranda or
other documentation evidencing employer’s response to such correspondence and
the outcome of any investigation or audit.
 
3.18           Books and Records.
 
(a)           The Company has made and kept business records, financial books
and records, personnel records, ledgers, sales accounting records, Tax records
and related work papers and other books and records of the Company
(collectively, the “Books and Records”) that are true, correct and complete in
all material respects and accurately and fairly reflect, in all material
respects, the business activities of the Company since formation. At the
Closing, the minute books and other Books and Records shall be in the possession
of the Company.
 
 
 
-27-

 
 
(b)           Since January 1, 2019, the Company has established and maintained,
and continues and maintains, a system of internal controls over financial
reporting (as defined in Rule 13a-15 under the Securities Exchange Act)
(“Internal Controls”). Such Internal Controls are sufficient to provide
reasonable assurance regarding the reliability of the Company’s financial
reporting and the preparation of the Company Financial Statements in accordance
with the Accounting Principles. The Company has disclosed, based on its most
recent evaluation of such Internal Controls prior to the Agreement Date, to the
Company’s accountants and the board of directors of the Company or a committee
thereof (x) all significant deficiencies and material weaknesses in the design
or operation of Internal Controls which are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
information and (y) any fraud, whether or not material, that involves management
or other employees who have a significant role in Internal Controls.
 
(c)           Schedule 3.18(c) lists (i) the name of each bank, safe deposit
company or other financial institution in which the Company has an account, lock
box or safe deposit box or joint accounts, lock boxes or safe deposit boxes
(together with the name of the joint holder thereof), (ii) the account numbers
or other identifying descriptions of such accounts, lock boxes and safe deposit
boxes of the Company, (iii) the names of all Persons authorized to draw thereon
or have access thereto and the names of all Persons, if any, holding powers of
attorney or proxies from the Company, and (iv) all instruments or agreements to
which the Company is party as an endorser, surety or guarantor, other than
checks endorsed for collection or deposit in the Ordinary Course of Business.
 
3.19           Insurance. The Company maintains the policies of insurance and
bonds set forth on Schedule 3.19, which include all legally required workers’
compensation and other coverage in such amounts that cover such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of the Business, correct and complete copies of which have been
made available to Parent (“Insurance Policies”). Schedule 3.19 sets forth the
name of the insurer under each such Insurance Policy, the type of Insurance
Policy, policy number and the term and amount of coverage thereunder. There is
no material claim pending under any of such Insurance Policies as to which
coverage has been questioned, denied or disputed by the underwriters of such
policy or bond or for which its total value (inclusive of defense expenses)
would reasonably be expected to exceed the applicable policy limits. All
premiums due and payable under all such Insurance Policies have been timely
paid.
 
3.20           Environmental Matters. The Company has at all times been in
compliance with all Environmental Laws, which compliance includes the possession
of all Governmental Permits and other governmental authorizations required under
Environmental Laws and material compliance with the terms and conditions
thereof. The Company has not received any written notice or other written
communication, whether from a Governmental Authority, citizens’ groups, employee
or otherwise, that alleges that the Company is not or has not been in compliance
with any Environmental Law. To the Knowledge of the Company, no current or prior
owner of any real property leased or possessed by the Company has received any
written notice or other written communication, whether from a Governmental
Authority, citizens group, employee or otherwise, that alleges that such current
or prior owner or the Company is not or has not been in compliance with any
Environmental Law. All Governmental Permits held by the Company pursuant to
Environmental Law (if any) are identified on Schedule 3.20.
 
3.21           Customers and Suppliers.
 
(a)           As of the Agreement Date, none of the current customers of the
Company or the Business (each a “Company Customer”) has terminated or canceled
its relationship with the Company or the Business. The Company has not issued
any material credits or made any material payments to a Company Customer
pursuant to service level agreements or similar obligations in a Contract with
respect to uptime, latency, support or maintenance. All Company Customers are
current in their payment of invoices and the Company does not have, and since
January 1, 2019 has not had, any material disputes with any Company Customer
that remain unresolved. Schedule 3.21(a) sets forth the top ten (10) customers
of the Business based on revenue during the nine (9)-month period ended on the
Balance Sheet Date (each a “Significant Customer”). Since January 1, 2019, the
Company has not received any written or, to the Knowledge of the Company, oral
notice from any Significant Customer that such customer (i) is materially
dissatisfied with the Business, (ii) shall not continue as a customer of the
Business or (iii) intends to terminate, breach or request a material
modification to existing Contracts with the Company. There are no warranty
claims made, requests for service credits or refunds requested by any
Significant Customer with respect to any Company Offerings except for normal
warranty claims and refunds consistent with past history or in the Ordinary
Course of Business.
 
 
 
-28-

 
 
(b)           Schedule 3.21(b) sets forth the top ten (10) vendors and suppliers
of products and services to the Business based on amounts paid or payable by the
Company to such vendors and suppliers during the nine (9)-month period ended on
the Balance Sheet Date (each a “Significant Supplier”). The Company is current
in its payments consistent with the payment schedule for such Significant
Supplier established and agreed in the Ordinary Course of Business to all
Significant Suppliers. The Company does not have, and since January 1, 2019 has
not had, any material dispute concerning Contracts with or products and/or
services provided by any Significant Supplier. The Company has not received any
written or, to the Knowledge of the Company, oral notice from any Significant
Supplier that such supplier (i) is materially dissatisfied with the Business,
(ii) shall not continue as a supplier to the Business or (iii) intends to
terminate, breach or not renew existing Contracts with the Company.
 
3.22           Accounts Receivable. Schedule 3.22 sets forth an accurate and
complete aging of the accounts receivable of the Company as of the Agreement
Date, both in the aggregate and by customer. All such accounts receivable derive
from bona fide sales transactions entered into in the Ordinary Course of
Business, are free of Encumbrances (other than Permitted Encumbrances) and are
payable on the terms and conditions set forth in the applicable Contract. As of
the Agreement Date, no such accounts receivable is subject to asserted claims
by, or any other disputes with, customers.
 
3.23           Anti-Corruption and Anti-Bribery Laws.
 
(a)           Neither the Company nor any of its directors, officers, agents,
employees, independent contractors or other representatives, or any other Person
or acting for or on behalf of the Business, has, directly or indirectly, in
connection with the conduct of any activity of the Business: (i) made, offered
or promised to make or offer any payment, loan or transfer of anything of value,
including any reward, advantage or benefit of any kind, to or for the benefit of
any foreign government official, candidate for public office, political party or
political campaign (or any official of such party or campaign) (each a “Foreign
Person”), for the purpose of (A) influencing any Foreign Person, (B) inducing
such Foreign Person to do or omit to do any act in violation of a lawful duty,
(C) obtaining or retaining business for or with any Foreign Person, (D)
expediting or securing the performance of official acts of a routine nature, or
(E) otherwise securing any improper advantage, in each of cases (A)-(D) in
violation of any applicable anti-corruption or anti-bribery Law; (ii) paid,
offered or agreed or promised to make or offer any bribe, payoff, influence
payment, kickback, unlawful rebate or other similar unlawful payment of any
nature; (iii) made, offered or agreed or promised to make or offer any unlawful
contributions, gifts, entertainment or other unlawful expenditures; (iv)
established or maintained any unlawful fund of corporate monies or other
properties; (v) created or caused the creation of any false or inaccurate Books
and Records related to any of the foregoing; or (vi) otherwise violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C.
Sec.Sec.78dd-1, et seq. (the “FCPA”), the United Kingdom Bribery Act of 2010
(the “Bribery Act”) or any other applicable anti-corruption or anti-bribery Law.
 
(b)           The Company has established and maintains policies, procedures and
internal controls reasonably designed to promote compliance with the FCPA, the
Bribery Act and all other applicable anti-corruption and/or anti-bribery Laws.
 
3.24           Trade Compliance. The Company is in compliance in all material
respects with all applicable U.S. export control and economic sanctions laws,
regulations, statutes, and orders, including the U.S. Export Administration
Regulations and economic sanctions administered and enforced by the U.S.
Department of the Treasury, Office of Foreign Assets Control (collectively,
“Trade Control Laws”). The Company has not received written notice from any
Governmental Authority of violation of any Trade Control Laws.
 
 
 
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3.25           Company PPP Loan. The Company received a loan from Primary Bank
in the principal amount of Five Hundred Forty-Four Thousand Five Hundred Dollars
($544,500.00) (the “Company PPP Loan”) under the Paycheck Protection Program
established pursuant to the Coronavirus Aid, Relief and Economic Security Act
(the “CARES Act”), which is the only loan received by the Company in connection
with the CARES Act. As of the date of the Company’s submission of the
application for the Company PPP Loan (the “Company Application”), the Company
satisfied all eligibility requirements for the Company PPP Loan. All information
included in the Company Application was complete and accurate as of the date of
its submission, and all certifications made pursuant to the Company Application
were true and made in good faith. The proceeds from the Company PPP Loan have
been used in compliance with the requirements of the CARES Act. The Company has
not used the Company PPP Loan proceeds in any manner, or taken any other action,
that would cause the Company PPP Loan or any portion thereof to not be
forgivable or that would otherwise violate the terms of the CARES Act or any
other applicable Law. The Company has submitted an application to seek
forgiveness of all of the Company PPP Loan in accordance with the then
applicable requirements of the Paycheck Protection Program under the CARES Act.
 
3.26           No Brokers. No agent, broker, investment banker, financial
advisor or other Person is or shall be entitled to any brokers’ or finder’s fee
or any other commission or similar fee from the Company in connection with the
Merger, this Agreement or any of the transactions contemplated hereby.
 
3.27           Disclaimer
 
. Except as expressly set forth in this Article 3 and in any Company Ancillary
Agreement or certificate delivered pursuant to this Agreement, each of the
Company and each Company Stockholder makes no representation or warranty,
express or implied, at law or in equity and any such other representations or
warranties are hereby expressly disclaimed including any implied representation
or warranty as to condition, merchantability, suitability or fitness for a
particular purpose. Notwithstanding anything to the contrary, (i) the Company
shall not be deemed to make to Parent or Merger Sub any representation or
warranty other than as expressly made by such Person in this Agreement and in
any Company Ancillary Agreement or certificate delivered pursuant to this
Agreement and (ii) the Company makes no representation or warranty to Parent or
Merger Sub with respect to (A) any projections, estimates or budgets heretofore
delivered to or made available to Parent, Merger Sub or their respective
counsel, accountants or advisors of future revenues, expenses or expenditures or
future results of operations of the Company, or (B) except as expressly set
forth in this Agreement (including Article 3) or in any Company Ancillary
Agreement or certificate delivered pursuant to this Agreement, any other
information or documents (financial or otherwise) made available to Parent,
Merger Sub or their respective counsel, accountants or advisors with respect to
the Company.
 
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
 
Parent and each Merger Sub represent and warrant to the Company as follows:
 
4.1           Organization and Good Standing. Parent is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has the corporate power and authority to own, operate and lease its
assets and properties and to carry on its business as now conducted. Merger Sub
is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Each of Parent and Merger Sub is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Parent’s or Merger Sub’s ability to consummate the Merger or to perform their
respective obligations under this Agreement, the Parent Ancillary Agreements and
the Merger Sub Ancillary Agreements.
 
 
 
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4.2           Subsidiaries. Except for Merger Sub and MTRLC LLC (“MTRLC”),
Parent does not have any subsidiaries. Parent owns all of the outstanding equity
interests in Merger Sub and MTRLC. Except for the equity interests in Merger Sub
and MTRLC, Parent does not own, directly or indirectly, any capital stock of, or
other equity or voting interests in, any corporation, limited liability company,
partnership or other entity.
 
4.3           Power, Authorization and Validity.
 
(a)           Power and Authority. Parent has all requisite corporate power and
authority to enter into, execute, deliver and perform its obligations under this
Agreement and each of the Parent Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Parent of this Agreement and each of the Parent Ancillary
Agreements and the consummation of the transactions contemplated hereby or
thereby have been duly and validly approved and authorized by all necessary
corporate action on the part of Parent. Merger Sub has all requisite corporate
power and authority to enter into, execute, deliver and perform its obligations
under this Agreement and each of the Merger Sub Ancillary Agreements to which it
is to be party and to consummate the transactions contemplated hereby and
thereby, subject to approval of Merger Sub’s sole stockholder. The execution,
delivery and performance by Merger Sub of this Agreement and each of the Merger
Sub Ancillary Agreements to which it is to be party and the consummation of the
transactions contemplated hereby or thereby have been duly and validly approved
and authorized by all necessary corporate action on the part of Merger Sub,
subject to approval of Merger Sub’s sole stockholder. Parent is the sole
stockholder of Merger Sub. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
by this Agreement.
 
(b)           Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is necessary or required to be made or obtained by Parent or Merger
Sub to enable Parent and Merger Sub to lawfully execute and deliver, enter into,
and perform their respective obligations under this Agreement, each of the
Parent Ancillary Agreements (as to Parent) and the Merger Sub Ancillary
Agreements to be entered into by Merger Sub (as to Merger Sub) or to consummate
the transactions contemplated hereby or thereby, except for (i) such consents,
approvals, orders, authorizations, registrations, declarations and filings, if
any, that if not made or obtained by Parent or Merger Sub would not reasonably
be expected to result in a Material Adverse Effect on Parent’s or Merger Sub’s
ability to consummate the Merger or to perform their respective obligations
under this Agreement, the Parent Ancillary Agreements (as to Parent) and Merger
Sub Ancillary Agreements (as to Merger Sub), (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware, and (iii) any
filings required under applicable securities Laws.
 
(c)           Enforceability. This Agreement has been duly executed and
delivered by Parent and Merger Sub. This Agreement and each of the Parent
Ancillary Agreements are, or when executed and delivered by Parent shall be,
assuming the due authorization, execution and delivery by the Company and the
other Persons party hereto or thereto, valid and binding obligations of Parent,
enforceable against Parent in accordance with their respective terms, subject to
the General Enforceability Exceptions. This Agreement and each of the Merger Sub
Ancillary Agreements to be entered into by Merger Sub are, or when executed by
Merger Sub shall be, assuming the due authorization, execution and delivery by
the Company or the other Persons hereto or thereto, valid and binding
obligations of Merger Sub, enforceable against Merger Sub in accordance with
their respective terms, subject to the General Enforceability Exceptions.
 
(d)           Strategy Committee and Board Approval.
 
 
 
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(i)           The Strategy Committee has, at a meeting duly called and held, by
a unanimous vote of the Strategy Committee, or by a unanimous written consent in
lieu thereof, (A) determined that it is fair to and in the best interests of
Parent and its stockholders for Parent to enter into this Agreement and declared
this Agreement and the transactions contemplated hereby, including the Merger,
advisable, (B) recommended that the board of directors of Parent (x) declare
this Agreement and the consummation of the transactions contemplated hereby,
including the Merger, advisable and (y) approved this Agreement and the
transactions contemplated hereby, including the Merger.
 
(ii)           The board of directors of Parent has, acting following the
recommendation of the Strategy Committee, at a meeting duly called and held, by
a unanimous vote of the entire board of directors, or by a unanimous written
consent in lieu thereof: (A) approved and declared advisable this Agreement, (B)
determined that this Agreement, the Merger and other transactions contemplated
by this Agreement are advisable, fair to, and in the best interests of Parent
and its stockholders and approved the same, (C) approved the Parent Ancillary
Agreements and the transactions contemplated thereby, and (D) approved the
adoption of this Agreement.
 
(iii)           The board of directors of Merger Sub has, at a meeting duly
called and held, by a unanimous vote of the entire board of directors, or by a
unanimous written consent in lieu thereof, (A) determined that this Agreement
and the transactions contemplated hereby, including the Merger, upon the terms
and subject to the conditions set forth herein, are fair to, and in the best
interests of, Merger Sub and Parent, as the sole stockholder of Merger Sub, (B)
approved and declared advisable this Agreement, including the execution,
delivery, and performance thereof, and the consummation of the transactions
contemplated by this Agreement, including the Merger, upon the terms and subject
to the conditions set forth herein, and (C) resolved to recommend that Parent,
as the sole stockholder of Merger Sub, approve the adoption of this Agreement in
accordance with the DGCL.
 
4.4           No Conflict; Consents.
 
(a)           Neither the execution and delivery of this Agreement, any of the
Parent Ancillary Agreements (in the case of Parent) or any of the Merger Sub
Ancillary Agreements to be entered into by Merger Sub (as to Merger Sub) by
Parent or Merger Sub, nor the performance of the Parent or Merger Sub’s
obligations hereunder or thereunder or the consummation of the Merger or any
other transaction contemplated hereby or thereby, shall conflict with, or (with
or without notice or lapse of time, or both) result in a breach, impairment,
violation of or an acceleration of an obligation or loss of material benefit, or
constitute a default under (i) any provision of the certificate of incorporation
or bylaws of Parent or the certificate of incorporation or bylaws of Merger Sub,
each as currently in effect, (ii) any Law applicable to Parent, Merger Sub or
any of their respective assets or properties, (iii) any Contract to which Parent
or Merger Sub is a party or to which Parent or Merger Sub or any of their
respective assets or properties are bound, (iv) any Governmental Permit, or (v)
any judgment, decree or order to which Parent or Merger Sub is subject.
 
(b)           Except for the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, neither Parent nor Merger Sub are
required to give any notice to, make any declaration, filing or registration
with, or obtain any consent, approval, release or authorization from, any Person
or Governmental Authority in connection with the Merger, this Agreement, the
Parent Ancillary Agreements, the Merger Sub Ancillary Agreements or the
performance of Parent’s and Merger Sub’s obligations hereunder and thereunder.
 
 
 
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4.5           Capitalization. As of the Agreement Date, the authorized capital
stock of Parent consists solely of: (x) 40,000,000 shares of Parent Common
Stock, of which 24,058,642 shares are issued and outstanding, and 1,738,000
shares are reserved for issuance pursuant to securities exercisable or
exchangeable for, or convertible into, Parent Common Stock, and (y) 2,000,000
shares of preferred stock, $0.001 par value per share, of which no shares are
issued and outstanding. Parent does not hold any treasury stock and does not
otherwise own any Parent Common Stock. All of such issued and outstanding shares
have been duly authorized and validly issued, and are fully paid and
non-assessable. Except for compensatory equity grants made to Parent’s officers,
directors and consultants consistent with past practice or as disclosed in the
Parent SEC Reports: (i) none of Parent or any of its subsidiary’s capital stock
is subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by Parent or any of its subsidiaries; (ii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of
Parent or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which Parent or any of its subsidiaries is or may become bound
to issue additional capital stock of Parent or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any capital stock of Parent or any of its
subsidiaries; (iii) there are no agreements or arrangements under which Parent
or any of its subsidiaries is obligated to register the sale of any of their
securities under the Securities Act; (iv) there are no outstanding securities or
instruments of Parent or any of its subsidiaries which contain any redemption or
similar provisions, and there are no contracts, commitments, understandings or
arrangements by which Parent or any of its subsidiaries is or may become bound
to redeem a security of Parent or any of its subsidiaries; and (v) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the shares of Parent Common Stock
hereunder.
 
4.6           Parent Common Stock. All shares of Parent Common Stock which may
be issued pursuant to this Agreement shall be, when issued in accordance with
the terms of this Agreement for the consideration expressed herein, duly
authorized and validly issued, fully paid and nonassessable, and shall be free
of restrictions on transfer other than restrictions set forth under this
Agreement or under the Securities Act and any other applicable Law.
 
4.7           Indebtedness. Except as disclosed in the Parent SEC Reports,
including Parent’s existing revolving line of credit with Rosenthal & Rosenthal,
Inc., the balance on which may vary on a daily basis, and the Parent PPP Loan,
neither Parent nor any of its subsidiaries has any outstanding indebtedness. The
Parent Closing Statement, when delivered, will set forth a true, correct and
complete list of all of the Parent Transaction Expenses as of the Effective
Time.
 
4.8           Parent SEC Reports. A true and complete copy of each annual,
quarterly and other report, registration statement, and definitive proxy
statement filed by Parent with the SEC from April 29, 2020 through the Agreement
Date (the “Parent SEC Reports”) is available on the Web site maintained by the
SEC at http://www.sec.gov and Parent has made available to the Company a draft
of the Quarterly Report on Form 10-Q that Parent expects to file with the SEC on
or about November 13, 2020. As of their respective filing dates, Parent SEC
Reports complied as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Reports, and none of Parent SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent corrected by a subsequently
filed Parent SEC Report.
 
 
 
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4.9           Litigation. There is no Action pending or, to Parent’s knowledge,
threatened against Parent or Merger Sub that would prevent, enjoin, alter, delay
or otherwise adversely affect Parent’s or Merger Sub’s performance under this
Agreement or the consummation of the transactions contemplated hereby. Neither
Parent nor Merger Sub is subject to any outstanding judgment, decree,
injunction, rule or order of any Governmental Authority, arbitrator or mediator
that would prevent, enjoin, alter or delay the Merger, or that would interfere
with the ability of Parent or Merger Sub to consummate the Merger.
 
4.10           Absence of Changes. Except as disclosed in the Parent SEC Reports
and the transactions contemplated by this Agreement, the business of Parent and
its subsidiaries has been conducted in the ordinary course of business
consistent with past practice, and there has not been or occurred any event,
fact, condition, or change that is, or would reasonably be expected to result in
a Material Adverse Effect on Parent’s or Merger Sub’s ability to consummate the
Merger or to perform their respective obligations under this Agreement, the
Parent Ancillary Agreements and the Merger Sub Ancillary Agreements.
 
4.11           Related Party Transactions. Except as disclosed in the Parent SEC
Reports and the transactions contemplated by this Agreement, there have been no
contracts, transactions, arrangements, or understandings between Parent or any
of its subsidiaries, on the one hand, and any Affiliate thereof or any holder of
5% or more of the shares of Parent Common Stock, but not including any
wholly-owned subsidiary of Parent, on the other hand, that would be required to
be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC in
the Parent SEC Reports.
 
4.12           Takeover Protections. Parent and its board of directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under
Parent’s certificate of incorporation (or similar charter documents) or the laws
of its state of incorporation that is or could become applicable to a Company
Stockholder as a result of such Company Stockholder and Parent fulfilling their
obligations or exercising their rights under this Agreement, including as a
result of Parent’s issuance of the Parent Common Stock and such Company
Stockholder’s ownership of the Parent Common Stock as a result of the Merger.
 
4.13           Real Property Holding Corporation. Parent is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Code.
 
4.14           Investment Company. Parent is not, and is not an Affiliate of,
and will not be, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
 
4.15           Parent PPP Loan. Parent received a loan from Primary Bank in the
principal amount of Five Hundred Eighty-Three Thousand Three Hundred Dollars
($583,300) (the “Parent PPP Loan”) under the Paycheck Protection Program
established pursuant to the CARES Act, which is the only loan received by Parent
in connection with the CARES Act. As of the date of Parent’s submission of the
application for the Parent PPP Loan (the “Parent Application”), Parent satisfied
all eligibility requirements for the Parent PPP Loan. All information included
in the Parent Application was complete and accurate as of the date of its
submission, and all certifications made pursuant to the Parent Application were
true and made in good faith. The proceeds from the Parent PPP Loan have been
used in compliance with the requirements of the CARES Act. Parent has not used
the Parent PPP Loan proceeds in any manner, or taken any other action, that
would cause the Parent PPP Loan or any portion thereof to not be forgivable or
that would otherwise violate the terms of the CARES Act or any other applicable
Law.
 
 
 
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4.16           No Brokers. Except for Houlihan Lokey Financial Advisors, Inc.
and B. Riley Securities, Inc. (whose fees and expenses shall be paid by Parent
in accordance with Parent’s respective agreements with such financial advisors),
no agent, broker, investment banker, financial advisor or other Person is or
shall be entitled to any brokers’ or finder’s fee or any other commission or
similar fee from Parent in connection with the Merger, this Agreement or any of
the transactions contemplated hereby.
 
4.17           Tax Treatment. Parent has not taken or agreed to take any action
or has knowledge of any fact or circumstance that could reasonably be expected
to occur before or after the Closing that could reasonably be expected to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a)(2)(E) of the Code.
 
4.18           Inspection; No Other Representations.
 
(a) Each of Parent and Merger Sub is an informed and sophisticated Person, and
has engaged expert advisors experienced in the evaluation and acquisition of
companies such as the Company as contemplated hereunder. Each of Parent and
Merger Sub has undertaken such investigation and has been provided with and has
evaluated such documents and information as it has deemed necessary to enable it
to make an informed and intelligent decision with respect to the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby; provided, however, that no investigation or due diligence review by
Parent or Merger Sub or any of their respective Affiliates shall alter, diminish
or impair the right or ability of such Persons to rely upon the R&W Policy.
Parent and Merger Sub acknowledge and agree that they are relying exclusively on
the representations and warranties set forth in Article 3 and in any Company
Ancillary Agreement or certificate delivered pursuant to this Agreement and
their own examination and investigation of the Company and that they are not
relying on any other statements by or documents from the Company, any Company
Stockholder or any of their respective Affiliates.
 
(a)             Without limiting the generality of the foregoing, Parent and
Merger Sub each acknowledges (i) none of the Company, any Company Stockholder or
any of their respective Affiliates makes any representation or warranty with
respect to (A) any projections, estimates or budgets delivered to or made
available to Parent of future revenues, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Surviving Entity or the future business and operations
of the Surviving Entity, (B) any other information or documents made available
to Parent or its counsel, accountants or advisors with respect to the Company or
its business, assets, liabilities or operations, except as expressly set forth
in this Agreement (including Article 3) or in any Company Ancillary Agreement or
certificate delivered pursuant to this Agreement, or (C) any other matter
whatsoever including, without limitation, the accuracy of completeness of the
information in either of subclauses (A) or (B) of clause (i) above, except as
expressly set forth in this Agreement (including Article 3) or in any Company
Ancillary Agreement or certificate delivered pursuant to this Agreement, and
(ii) neither Parent and Merger Sub has relied or will rely upon (and each
expressly disclaims reliance upon) any of the information described in any of
subclauses (A), (B) and (C) of clause (i) above in executing, delivering and
performing this Agreement and the transactions contemplated hereby or any other
information, representation or warranty except for those representations and
warranties set forth in Article 3 hereof or in any Company Ancillary Agreement
or certificate delivered pursuant to this Agreement in negotiating, discussing,
executing, delivering and performing this Agreement and the transactions
contemplated hereby.
 
4.19           Disclaimer. Except as expressly set forth in this Article 4 and
in any Parent Ancillary Agreement or certificate delivered pursuant to this
Agreement, each of Parent and Merger Sub makes no representation or warranty,
express or implied, at law or in equity and any such other representations or
warranties are hereby expressly disclaimed including any implied representation
or warranty as to condition, merchantability, suitability or fitness for a
particular purpose. Notwithstanding anything to the contrary, (i) Parent and
Merger Sub shall not be deemed to make to the Company or any Company Stockholder
any representation or warranty other than as expressly made by such Person in
this Agreement and in any Parent Ancillary Agreement or certificate delivered
pursuant to this Agreement and (ii) Parent and Merger Sub makes no
representation or warranty to the Company or any Company Stockholder with
respect to (A) any projections, estimates or budgets heretofore delivered to or
made available to the Company or its respective counsel, accountants or advisors
of future revenues, expenses or expenditures or future results of operations of
Parent (including the Surviving Entity), or (B) except as expressly set forth in
this Agreement (including Article 4) or in any Parent Ancillary Agreement or
certificate delivered pursuant to this Agreement, any other information or
documents (financial or otherwise) made available to the Company or its
respective counsel, accountants or advisors with respect to Parent (including
the Surviving Entity).
 
 
 
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ARTICLE 5
 
COVENANTS
 
5.1           Advise of Changes.
 
(a)             During the time period from the Agreement Date until the earlier
to occur of (x) the Effective Time or (y) the termination of this Agreement in
accordance with the provisions of Article 8 (the “Executory Period”), the
Company shall promptly advise Parent in writing of: (a) any breach of any
covenant or obligation of the Company pursuant to this Agreement or any Company
Ancillary Agreement; (b) any Material Adverse Effect with respect to the Company
or the Business; or (c) any change, event, circumstance, condition or effect
that would cause, or reasonably be expected to cause, any of the conditions set
forth in Section 7.1 or Section 7.2 not to be satisfied; provided, however, that
the delivery of any notice by the Company pursuant to this Section 5.1(a) shall
not be deemed to amend or supplement the Disclosure Schedules and shall not cure
any breach of, or non-compliance with, any other provision of this Agreement or
limit any right of Parent to claim a failure of a condition to Closing set forth
in Section 7.1 or Section 7.2, as applicable, with respect to any matters
disclosed pursuant to this Section 5.1(a).
 
(b)             During the Executory Period, Parent shall promptly advise the
Company in writing of: (a) any breach of any covenant or obligation of the
Parent or Merger Sub pursuant to this Agreement or any Parent Ancillary
Agreement or Merger Sub Ancillary Agreement; (b) any Material Adverse Effect
with respect to the Parent or Merger Sub; or (c) any change, event,
circumstance, condition or effect that would cause, or reasonably be expected to
cause, any of the conditions set forth in Section 7.1 or Section 7.3 not to be
satisfied; provided, however, that the delivery of any notice by Parent pursuant
to this Section 5.1(b) shall not cure any breach of, or non-compliance with, any
other provision of this Agreement or limit any right of the Company to claim a
failure of a condition to Closing set forth in Section 7.1 or Section 7.3, as
applicable, with respect to any matters disclosed pursuant to this Section
5.1(b).
 
5.2           Conduct of Business . During the Executory Period, the Company
shall continue to conduct the Business in the Ordinary Course of Business and
use its commercially reasonable efforts to preserve substantially intact its
Business organization, maintain its rights and ongoing operations and maintain
and preserve its business relationships with business associates, investors,
partners, customers, distributors, creditors, lessors and suppliers. Except for
the exchange contemplated by Section 2.4(c), the Company shall not, without
Parent’s prior written consent, take any action that, had it been taken after
the Balance Sheet Date but before the execution of this Agreement, would have
been required to be disclosed in the Disclosure Schedules pursuant to Section
3.11; provided that, to the extent any provision of Section 3.11 refers to a
Company Material Contract, Company Employee Agreement or Company Employee Plan,
such provision shall be deemed to apply to any Company Material Contract,
Company Employee Agreement or Company Employee Plan as well as any Contract,
plan, policy or other instrument that would have been a Company Material
Contract, Company Employee Agreement or Company Employee Plan had it been
entered into or adopted by the Company as of the Agreement Date.
 
 
 
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5.3           Approval of Company Stockholders. Prior to November 17, 2020, the
Company shall deliver to Parent, a true, correct and complete copy of evidence
that the Stockholder Approval has been obtained and is in full force and effect.
As soon as practicable following the Agreement Date, the Company shall, with the
reasonable assistance of Parent, prepare an information statement (together with
any amendments thereof or supplements thereto, the “Information Statement”) to
be used in connection with (i) soliciting Support Agreements from certain
Company Stockholders and soliciting approval of the matters set forth in the
Written Consent in order to consummate the Merger and the other transactions
contemplated hereby, (ii) to facilitate Parent’s proposed issuance of the Parent
Common Stock in the Merger in reliance upon an exemption from registration under
Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder and
applicable exemptions under state securities laws and (iii) the notice of
stockholder action taken by written consent and availability of appraisal rights
and related disclosures required by Sections 228 and 262 of the DGCL. The
Information Statement shall include, among other things, a description of the
terms of this Agreement, the Company Ancillary Agreements and the transactions
contemplated hereby and thereby, and the recommendation of the board of
directors of the Company to the Company Stockholders to vote in favor of the
approval and adoption of this Agreement and the Merger, the other transactions
contemplated hereby and the other matters set forth in the Written Consent.
Within five (5) Business Days following the Agreement Date, the Company shall
send the Information Statement to each Company Stockholder. The parties hereto
shall cooperate with each other in connection with the preparation of the
Information Statement, including by providing information reasonably necessary
for the preparation of the Information Statement. Whenever any event occurs
which should be set forth in an amendment or supplement to the Information
Statement so that such document would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading, the Company or Parent, as the case may be, shall promptly inform
the other of such occurrence and cooperate in making any appropriate amendment
or supplement to the Information Statement, and the Company shall thereafter
deliver to the Company Stockholders such amendment or supplement. No amendment
or supplement to the Information Statement shall be made by the Company without
the approval of Parent.
 
5.4           No Other Negotiations.
 
(a)           During the Executory Period, neither the Company nor the Parent
shall, nor shall such party cause its officers, directors, employees,
stockholders, Affiliates, agents, advisors (including any attorneys, financial
advisors, investment bankers or accountants) or other representatives
(collectively, “Party Representatives”) to, directly or indirectly: (i) solicit,
initiate, seek, consider, knowingly encourage, facilitate, support or induce the
making, submission or announcement of any inquiry, expression of interest,
proposal or offer that constitutes, or could reasonably be expected to lead to,
an Acquisition Proposal; (ii) enter into, participate in, maintain or continue
any communications (except solely to provide written notice as to the existence
of these provisions) or negotiations regarding, or deliver or make available to
any Person any non-public information with respect to, or take any other action
regarding, any inquiry, expression of interest, proposal or offer that
constitutes, or could reasonably be expected to lead to, an Acquisition
Proposal; (iii) agree to, accept, approve, endorse or recommend (or publicly
propose or announce any intention or desire to agree to, accept, approve,
endorse or recommend) any Acquisition Proposal; (iv) enter into any letter of
intent, term sheet, indication of interest, or Contract contemplating or
otherwise relating to any Acquisition Proposal; or (v) submit any Acquisition
Proposal to the vote of such party’s stockholders. Each of the Company and
Parent shall, and shall cause its respective Party Representatives to, (A)
immediately cease and cause to be terminated any and all existing activities,
discussions or negotiations with any Persons conducted prior to or on the
Agreement Date with respect to any Acquisition Proposal and (B) immediately
revoke or withdraw access of any Person (other than other parties to this
Agreement and their respective Party Representatives) to any data room (virtual
or actual) containing any non-public information with respect to the Company in
connection with an Acquisition Proposal and request from each Person (other than
other parties to this Agreement and their respective Party Representatives) the
prompt return or destruction of all non-public information with respect to such
party previously provided to such Person in connection with an Acquisition
Proposal. If any Party Representative, whether in his, her or its capacity as
such or in any other capacity, takes any action that the Company or Parent is
obligated pursuant to this Section 5.5(a) to cause such Party Representative not
to take, then the Company or Parent, as the case may be, shall be deemed for all
purposes of this Agreement to have breached its obligations under this Section
5.5(a).
 
 
 
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(b)           During the Executory Period, each of the Company and Parent shall
promptly (but in any event, within two (2) Business Days) notify the other party
in writing after receipt by such party of any (i) Acquisition Proposal, (ii)
inquiry, expression of interest, proposal or offer that could reasonably be
expected to lead to an Acquisition Proposal, (iii) notice that any Person is
considering making an Acquisition Proposal or (iv) request for non-public
information relating to such party or for access to any of the properties, books
or records of such party by any Person or Persons that could reasonably be
expected to be considering making an Acquisition Proposal (other than the other
parties to this Agreement and their respective Party Representatives). Such
notice shall describe the material terms and conditions of such Acquisition
Proposal, inquiry, expression of interest, proposal, offer, notice or request.
 
5.5           Access to Information; Confidentiality.
 
(a)           Unless requested by Parent, no modifications or alternations shall
be made to the contents of the Virtual Data Room following the date that is two
(2) Business Days prior to the Agreement Date. Within two (2) Business Days
following the Agreement Date, the Company shall deliver to Parent a digital copy
of all documents and other information that was included in the Virtual Data
Room on or prior to the Agreement Date. During the Executory Period, the Company
shall provide Parent and its agents and advisors (including the R&W Policy
underwriters and their respective advisors) reasonable access to the files,
books, records, Contracts, personnel and offices of the Company, including any
and all information relating to the Taxes, Contracts, Liabilities, financial
condition and real, personal and intangible property of the Company and the
Business, subject to the terms of the Confidentiality Agreement.
 
(b)           Each of Parent and Merger Sub acknowledges that the information
provided to it in connection with this Agreement and the transactions
contemplated hereby is subject to the terms of the Confidentiality Agreement,
the terms of which are incorporated herein by reference. From and after the
Agreement Date and through the Closing, each of Parent and Merger Sub agrees it
shall be bound by and comply with the obligations of the Confidentiality
Agreement. Effective as of and contingent upon the Closing, the Confidentiality
Agreement shall be deemed to have been terminated by the parties thereto and
shall no longer be binding.
 
(c)           From and after the Closing, the Representative shall, and shall
use its commercially reasonable efforts to cause its Affiliates and
representatives to hold in confidence any and all non-public information,
whether written or oral, concerning the Company and its operations and
businesses, except (a) to the extent that such information is generally
available to and known by the public through no fault of the Representative, or
any of its Affiliates or representatives, or (b) with respect to (i) the
exercise of rights, or the assertion, defense, or resolution of any claims or
disputes under this Agreement by the Representative, or (ii) in connection with
the fulfillment by Representative of its obligations hereunder. If the
Representative or any of its Affiliates or representatives are compelled to
disclose any information by judicial or administrative process or by applicable
Law, such the Representative shall, unless legally prohibited from doing so,
promptly notify Parent in writing and shall disclose only that portion of such
information which the Representative is advised by its counsel is legally
required to be disclosed, provided that the Representative shall use
commercially reasonable efforts to cooperate in efforts taken or reasonably
requested by Parent to seek a protective order or other reasonable assurance
that confidential treatment shall be accorded such information.
 
5.6           Satisfaction of Conditions Precedent.
 
(a)           During the Executory Period, the Company shall use reasonable best
efforts to satisfy or cause to be satisfied all the conditions precedent set
forth in Sections 7.1 and 7.2, and the Company shall use commercially reasonable
efforts to cause the Merger and the other transactions contemplated by this
Agreement to be consummated in accordance with the terms of this Agreement. In
furtherance of, and without limiting, the foregoing, the Company shall use its
reasonable best efforts to obtain as promptly as reasonably practicable after
the Agreement Date and prior to the Closing Date, Written Consents and Support
Agreements and investor questionnaires substantially in the form attached hereto
as Exhibit G (the “Investor Questionnaires”), in each case executed and
completed by each applicable Company Stockholder.
 
 
 
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(b)           During the Executory Period, Parent shall use reasonable best
efforts to satisfy or cause to be satisfied all of the conditions precedent set
forth in Sections 7.1 and 7.3, and Parent shall use reasonable best efforts to
cause the Merger and the other transactions contemplated by this Agreement to be
consummated in accordance with the terms of this Agreement.
 
5.7           Certain Employee Benefits Matters.
 
(a)           For purposes of any benefit plan, program or arrangement
maintained for benefit of employees of the Company at any time after the Closing
Date, each such employee shall receive credit for service with the Company prior
to the Closing Date (except where doing so would cause a duplication of
benefits), to the extent such service is reflected in records of the Company and
recognized under the corresponding Company employee benefit plan, for
eligibility to participate and vesting and, but only with respect to calculation
of the amount of any severance payments, vacation, sick and paid time off, for
benefit accrual purposes. Parent shall also (x) use commercially reasonable
efforts to cause any and all pre-existing conditions (or actively at work or
similar limitations), eligibility waiting periods and evidence of insurability
requirements under any group health plans to be waived with respect to such
employees and their eligible dependents and (y) provide such employees with
credit for any co-payments, deductibles, and offsets (or similar payments) made
during the plan year to the extent reflected in records of the Company for the
purposes of satisfying any applicable deductible, out-of-pocket, or similar
requirements under any employee benefit plans, programs or arrangements in which
they are eligible to participate after the Closing Date.
 
(b)           The Company shall terminate, effective as of no later than the day
immediately preceding the Closing Date, any Company Benefit Arrangements
(including any Code Section 401(k) arrangement, any Company Benefit Arrangement
intended to meet the requirements of Code Section 125 and the Company Stock
Plan) (each a “Terminated Benefit Plan”) (unless Parent provides written notice
to the Company no later than three (3) Business Days prior to the Closing Date
that any such Company Benefit Arrangement shall not be terminated). The Company
shall provide Parent with evidence that such Terminated Benefit Plan(s) have
been terminated in the manner provided in the preceding sentence by appropriate
actions. The manner, form and/or substance of such actions shall be subject to
review and approval of Parent, which approval shall not be unreasonably
withheld, conditioned or delayed, but such review and approval shall not
diminish the Company’s obligation pursuant to the preceding sentences to
terminate such Company Benefit Arrangements effectively. In the event that
termination of any Terminated Benefit Plan triggers any liquidation charges,
surrender charges, or other fees, then such charges or fees shall be deemed to
be Company Transaction Expenses.
 
(c)           The provisions contained in this Section 5.7 are for the sole
benefit of the respective parties hereto and no current or former employee,
director, independent contractor, consultant, service provider or any other
individual associated therewith shall be regarded for any purpose as a
third-party beneficiary of this Agreement. Nothing in this Section 5.7, express
or implied, shall be construed or interpreted to (i) create any right, benefit
or remedy of any nature whatsoever, including any right to continued employment
or service, under or by reason of this Agreement, in any other Person, including
any employees, former employees, any participant or any beneficiary thereof in
any Company Benefit Arrangement or employee benefit plan of Parent, the
Surviving Entity or any of their Affiliates, or (ii) amend any Company Benefit
Arrangement or employee benefit plan of Parent, the Surviving Entity or any of
their respective Affiliates. Nothing in this Section 5.7 shall be construed or
interpreted to limit the ability of Parent, the Surviving Entity or any of their
respective Affiliates to amend or terminate any employee benefit plan pursuant
to its terms.
 
5.8           Preparation of Certain Financial Statements. Following the
Agreement Date, the Company shall use commercially reasonable efforts to, and
shall cause its and their respective attorneys, accountants, financial advisors
and other representatives to, provide all customary cooperation with and
assistance to Parent and its independent public accountants, in the compilation
and preparation of all financial statements and financial statement schedules of
the Company, as may be necessary for Parent to comply with its SEC reporting and
disclosure requirements. If requested by Parent, the Company shall deliver all
certifications, engagement letters, management representation letters and other
necessary documentation, as may be reasonably requested by Parent or such
accountants. In connection with the foregoing, the Company shall use its
reasonable best efforts to cooperate with and assist in the preparation of the
audited and unaudited financial statements contemplated by this Section 5.9,
including such cold comfort letters as may be reasonably requested with any
reports or registration statements filed by Parent with the SEC.
 
 
 
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5.9           Director and Officer Indemnification
 
. Parent agrees (and after the Effective Time shall cause the Surviving Entity
to ensure) that all rights to indemnification and exculpation from Liability for
acts or omissions occurring on or prior to the Closing Date now existing in
favor of the past and present directors and officers of the Company
(collectively, the “D&O Indemnified Parties”), in effect immediately prior to
the Effective Time, shall survive the Effective Time and shall continue in full
force and effect in accordance with their respective terms for a period of not
less than six (6) years after the Closing Date, which provisions shall not be
amended, repealed or otherwise modified during such period in any manner that
would affect adversely the rights thereunder of the D&O Indemnified Parties,
unless such modification shall be required by Law.
 
5.10           R&W Policy. Parent shall obtain a buyer-side Representations and
Warranties Insurance Policy from the R&W Insurer reasonably satisfactory to
Parent having substantially the terms specified in Exhibit J or, if such policy
is for any reason not issued to Parent upon payment of the premium therefor, a
similar policy from another insurance company reasonably satisfactory to Parent
and the Representative having then-prevailing market terms for products of such
type to insure against up to a maximum aggregate amount to be determined between
$3.0 million to $5.0 million (subject to a self-retention of 1.0% of equity
value of the Company which is reduced by 0.5% of equity value one year after the
Closing Date)in Losses incurred by any Parent Indemnified Party as a result of
the failure of any representation or warranty made by the Company in Article 3
hereof to be true and correct. The R&W Policy will expressly exclude any right
of subrogation against the Company or its Affiliates under this Agreement,
whether by the R&W Insurer underwriting the R&W Policy or otherwise. The
Representative and the Company shall cooperate with Parent’s efforts and provide
assistance as reasonably requested by Parent to obtain and bind the R&W Policy.
Notwithstanding the foregoing, Parent and Merger Sub acknowledge and agree that
Parent shall be responsible for all fees, expenses and premiums relating to the
R&W Policy.
 
5.11           Section 280G Stockholder Vote Covenant. Prior to the Effective
Time, the Company shall submit to the Company Stockholders for vote the right of
any “disqualified individual” (as defined in Section 280G(c) of the Code) to
receive any and all payments or benefits that could be deemed “parachute
payments” under Section 280G(b) of the Code, in a manner that satisfies the
stockholder approval requirements for the small business exemption of Section
280G(b)(5)(ii) of the Code. Such vote shall be undertaken in a manner that
establishes the disqualified individual’s right to the payment or other
compensation, including adequate disclosure to all the Company Stockholders
entitled to vote of all material facts concerning all such payments or benefits
and any needed waiver by the disqualified individual(s) of such payments or
benefits. The Company shall upon request of Parent provide advance copies of all
materials needed to effectuate such vote for Parent’s review and approval, or an
analysis demonstrating that no such disqualified individual could receive such
parachute payments, which review and approval shall not be unreasonably withheld
or delayed, but which review and approval shall not diminish the Company’s
obligations under the first two sentences hereof.
 
 
 
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5.12           Release.
 
(a)           Effective as of the Effective Time, each of the Company
Stockholders for himself, herself or itself, as applicable, and for each of his,
her or its Affiliates and each of his, her or its partners, heirs,
beneficiaries, successors and assigns (each, a “Releasing Party”) hereby
releases and absolutely forever discharges the Surviving Entity and the Company
and each of their respective officers, managers, directors, members of any
applicable governing body, securityholders, Affiliates, employees, advisors,
representatives and agents (each, a “Released Party”) from and against all
Released Matters. “Released Matters” means any and all claims, demands, Losses,
Actions or causes of action of any nature whatsoever, whether now known or
unknown, suspected or unsuspected, that such Releasing Party now has, or at any
time previously had, or shall or may have in the future, in any capacity,
arising by virtue of or in any matter related to any actions or inactions in
their capacities as a director, officer, employee or shareholder of the Company
on or before the Effective Time. Notwithstanding the foregoing or anything to
the contrary contained herein, nothing in this Agreement will waive or preclude
each such Company Stockholder from exercising his, her or its rights, if any,
(i) under this Agreement, any Company Ancillary Agreements or each other
agreement entered into by him, her or it in connection therewith, including the
right to receive and be delivered the portion of the Merger Consideration
deliverable under, and subject to the terms and conditions set forth in, this
Agreement in respect of each share of Company Common Stock held by such Company
Stockholder or to be held by such Company Stockholder after giving effect to the
conversion of the Company Preferred Stock in to the Company Common Stock, (ii)
to indemnification under, and subject in all respects to the terms and
conditions and other limitations set forth in this Agreement, (iii) if
applicable, to indemnification, advancement of expenses, exculpation or rights
to benefits pursuant to (A) the Company’s Charter Documents or (iv) (A) rights
to accrued but unpaid wages, salaries or other cash compensation due to him, her
or it for services rendered to the Company that remain unpaid as of the date
hereof, (B) rights as an employee of the Company to reimbursement from the
Company for expenses incurred and documented prior to the date hereof and
consistent with the Company’s reimbursement policies with respect to its
employees, (C) unreimbursed claims under the Company’s employee health and
welfare plans, consistent with terms of coverage related thereto, or (D) the
entitlement of such Company Stockholder as an employee or former employee of the
Company to continuation coverage benefits or any other similar benefits required
to be provided by the Company by applicable Law.
 
(b)           It is the intention of the Company Stockholders in executing this
release, and in giving and receiving the consideration called for herein, that
the release contained in this Section 5.12 shall be effective as a full and
final accord and satisfaction and general release of and from all Released
Matters and the final resolution by the Releasing Parties and the Released
Parties of all Released Matters. Notwithstanding anything herein or otherwise to
the contrary, the release contained in this Section 5.12 will not be effective
so as to benefit a particular Released Party in connection with any matter or
event that would otherwise constitute a Released Matter, but involved Fraud,
willful concealment or the breach of any applicable Law on the part of such
Released Party. Each of the Company Stockholders hereby represents and warrants
to the Representative, the Company, the Surviving Entity and Parent that no
Releasing Party has voluntarily or involuntarily assigned or transferred, or
purported to assign or transfer, to any Person any Released Matters and that no
Person other than Parent, the Surviving Entity or the Company, as applicable,
has any interest in any Released Matter by applicable Law or Contract by virtue
of any action or inaction by any Releasing Party. The invalidity or
unenforceability of any part of this Section 5.12 shall not affect the validity
or enforceability of the remainder of this Section 5.12, which shall remain in
full force and effect.
 
 
 
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ARTICLE 6
 
AGREEMENTS RELATING TO PARENT COMMON STOCK
 
6.1           Private Placement. Parent intends to issue shares of Parent Common
Stock as provided in this Agreement pursuant to a “private placement” exemption
or exemptions from registration under Section 4(a)(2) of the Securities Act or
Regulation D promulgated thereunder and an exemption from qualification under
the laws of the Commonwealth of Massachusetts and the State of New Hampshire and
other applicable state securities laws. The Company agrees to fully cooperate
with Parent in its efforts to ensure that such shares of Parent Common Stock may
be issued pursuant to such exemptions.
 
6.2           Restrictions on Transfer. The shares of Parent Common Stock issued
pursuant to this Agreement shall be subject to the restrictions on Transfer set
forth in this Article 6. Such shares of Parent Common Stock constitute
“restricted securities” under the Securities Act, and may not be transferred
absent registration under the Securities Act or an exemption therefrom and
similar exemptions under applicable state securities laws. Each Company
Stockholder who receives shares of Parent Common Stock and every transferee or
assignee of any such shares from any Company Stockholder shall be bound by and
subject to the terms and conditions of this Article 6, and Parent may require,
as a condition precedent to the issuance or Transfer of any shares of Parent
Common Stock, that any recipient, transferee or assignee agrees in writing to be
bound by, and subject to, all the terms and conditions of this Article 6. To
ensure compliance with the restrictions imposed by this Agreement, Parent may
issue appropriate “stop-transfer” instructions to its transfer agent, if any,
and if Parent acts as its own transfer agent, it may make appropriate notations
to the same effect in its own records. Parent shall not be required (a) to
transfer on its books any shares of Parent Common Stock that have been
Transferred in violation of any of the provisions of this Agreement or (b) to
treat as owner of such shares, or to accord the right to vote or pay dividends,
to any transferee or assignee to whom such shares have been purportedly so
Transferred. Before effecting any Transfer of shares of Parent Common Stock,
Parent may require an opinion of counsel in form and substance satisfactory to
Parent to the effect that any proposed transfer or resale of such shares is in
compliance with the Securities Act and any applicable state securities laws.
 
6.3           Legends. Each certificate or book-entry notation representing any
shares of Parent Common Stock issued hereunder shall bear the following legend
(in addition to any other legends required by law, Parent’s certificate of
incorporation or bylaws or any other agreement to which any such Company
Stockholder is a party):
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
 
Parent agrees to cooperate in a timely manner with the holders of the shares of
Parent Common Stock issued pursuant to this Agreement to remove any restrictive
legends or similar transfer instructions in the event that such shares of Parent
Common Stock are otherwise transferable in conformity with the terms of this
Agreement and the registration requirements of the Securities Act and such other
applicable rules and regulations or pursuant to an exemption therefrom.
 
 
 
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6.4           Registration Rights.
 
(a)           Registration of Registrable Securities. Subject to compliance by
the Company with Section 5.9, prior to the expiration of the Registration
Period, Parent shall prepare and file with the SEC a Registration Statement
covering the resale of the Registrable Securities as would permit the sale and
distribution of all the Registrable Securities from time to time pursuant to
Rule 415 in the manner reasonably requested by the Representative. Any such
Registration Statement prepared and filed pursuant to this Section 6.4 shall be
on Form S-1 or another appropriate form in accordance with the Securities Act
and the rules promulgated thereunder. Parent shall (i) if such Registration
Statement is not automatically effective upon filing, use reasonable best
efforts to cause the Registration Statement filed by it to be declared effective
under the Securities Act as promptly as reasonably practicable after the filing
thereof, and (ii) use reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act until the earlier of
(x) the eighteen (18) month anniversary of the effectiveness of such
Registration Statement and (y) such date as all Registrable Securities covered
by such Registration Statement have ceased to be Registrable Securities.
 
(b)           Lock Up Period. Prior to the six (6) month anniversary of the
later of (i) the Effective Time and (ii) the filing of a Form 8-K by Parent
containing the audited financial statements of the Company as may be necessary
for Parent to comply with its SEC reporting and disclosure requirements (such
period, the “Lock Up Period”), no holder of Registrable Securities shall (1)
offer, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, pledge, hypothecate, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, the Parent Common Stock issued in connection with the Merger; or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of such Parent Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of such Parent Common Stock, in cash or otherwise.
Notwithstanding anything to the contrary contained herein, the lock-up
restrictions contained in this Section 6.4(b) shall not apply in the following
circumstances:
 
(A)            The transfer of the Parent Common Stock issued in connection with
the Merger to any Permitted Transferee; provided, however, that such Permitted
Transferee agrees in writing to be subject to the restrictions of this Section
6.4(b). “Permitted Transferee” means (i) an Affiliate of a holder of Registrable
Securities, (ii) any executor, administrator or testamentary trustee of such
holder’s estate if such holder dies, (iii) any person or entity receiving the
Parent Common Stock issued in connection with the Merger by a holder of
Registrable Securities by will, intestacy laws or the laws of descent or
survivorship, (iv) any trust (including an inter vivos trust), partnership or
limited liability company for the direct or indirect benefit of a holder of
Registrable Securities and/or the immediate family of such holder for estate
planning purposes of which there are no principal beneficiaries other than such
holder or one or more family members of such holder, or (v) any corporation,
partnership, limited liability company or similar entity controlled by such
holder and of which there are no principal beneficiaries or owners other than
such holder or one or more family members of such holder.
 
(B)           Any Private Transaction of at least 100,000 shares of Parent
Common Stock (subject to adjustment for any stock splits, stock dividends,
recapitalizations and similar events) by a holder of Registrable Securities or
of shares of Parent Common Stock for a gross purchase price of at least $100,000
to a single entity or to a broker for at most two entities. “Private
Transaction” means any privately negotiated sale of shares of Parent Common
Stock by a holder of Registrable Securities that is not effected pursuant to a
Registration Statement.
 
(C)           Sales made by a holder of Registrable Securities during any period
when the last reported sale price of the Parent Common Stock on the applicable
trading market is at least $5.50 (subject to adjustment for any stock splits,
stock dividends, recapitalizations and similar events).
 
 
 
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(D)           Sales made by a holder of Registrable Securities in connection
with any third party tender offer, merger or similar transaction effected by
third party that results or is intended to result (in any one or series of
transactions) in a change in control of the Parent, issuer tender offer,
liquidation, or in the event the Parent Common Stock is no longer registered
pursuant to Section 12 of the Securities Exchange Act.
 
(c)           Other Provisions Applicable to Registration. In connection with
any registration of Registrable Securities pursuant to this Section 6.4, Parent
shall:
 
(i)           use commercially reasonable efforts to ensure that (a) any
Registration Statement filed pursuant to this Section 6.4 (x) complies in all
material respects with the Securities Act and the rules and regulations
thereunder, and (y) does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(b) any prospectus forming part of any such Registration Statement and any
supplement to such prospectus does not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading;
 
(ii)           furnish the Representative with a copy of the Registration
Statement and all amendments thereto and supply the Representative with copies
of any prospectus included therein (including a preliminary prospectus and all
amendments and supplements thereto), in each case including all exhibits, and
such other documents as may be reasonably requested, in such quantities as may
be reasonably necessary for the purposes of the proposed sale or distribution
covered by such registration;
 
(iii)           (A) use commercially reasonable efforts to register or qualify
the securities covered by such Registration Statement for sale under the
securities laws of such states, if any, as is reasonably requested to permit the
distribution of such securities and use commercially reasonable efforts to keep
each such registration or qualification effective during the period such
registration statement is required to be kept effective and to do such other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the securities covered by the applicable registration statement
in accordance with applicable “blue sky” securities laws of such jurisdictions;
provided, however, that Parent shall not be required in connection therewith or
as a condition thereof to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or become subject to
taxation in any jurisdiction, and (B) cooperate and assist in any filings
required to be made with the Financial Industry Regulatory Authority, Inc.
(“FINRA”);
 
(iv)           notify the Representative and the holders of Registrable
Securities included in the Registration Statement promptly:
 
(A)           when the prospectus or any prospectus supplement or post-effective
amendment has been filed, and with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;
 
(B)           of any request by the SEC or any other federal or state
Governmental Authority for any amendments or supplements to the Registration
Statement or the prospectus;
 
(C)           of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose;
 
(D)           of the receipt of any notification with respect to the suspension
of the qualification of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose;
 
 
 
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(E)           of the happening of any event which makes any statement made in
the Registration Statement, the prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue or which requires changes
in the Registration Statement, the prospectus, or any document incorporated
therein by reference in order to make the statements therein not misleading; and
 
(F)           of the occurrence or existence of any pending corporate
development Parent believes may be material and that, in the determination of
Parent, makes it not in the best interest of Parent to allow continued
availability of a Registration Statement or prospectus;
 
(v)           use commercially reasonable efforts to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of a prospectus or suspending the qualification
of any of the Registrable Securities included therein for sale in any
jurisdiction (subject to the proviso at the end of Section 6.4(b)(iii)(A)), and,
in the event of the issuance of any stop order suspending the effectiveness of
the Registration Statement, or of any order suspending or preventing the use of
any related prospectus or suspending the qualification of any Registrable
Securities included in such registration statement for sale in any jurisdiction
(subject to the proviso at the end of Section 6.4(b)(iii)(A)), use its
commercially reasonable efforts to promptly obtain the withdrawal of any such
order; and
 
(vi)           as promptly as reasonably practicable, if required, based on the
advice of Parent’s counsel, or upon the occurrence of any event contemplated by
Section 6.4(b)(iv)(E), prepare and file a supplement or post-effective amendment
to the registration statement, the related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the securities, the prospectus
shall not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading.
 
(d)           Obligations of Holders of Registrable Securities. Each of the
holders of Registrable Securities shall agree by acquisition of the Registrable
Securities that upon receipt of any notice from Parent of the happening of any
event of the kind described in Section 6.4(b)(iv)(B)-(F), such holder shall
immediately discontinue his, her or its disposition of Registrable Securities
pursuant to the Registration Statement relating to such Registrable Securities
until such holder’s receipt of copies of the supplemented or amended prospectus,
as applicable. The length of time that any Registration Statement is required to
remain effective shall be extended by any period of time that such Registration
Statement is unavailable for use pursuant to this paragraph, provided in no
event shall any Registration Statement be required to remain effective after the
date on which all Registrable Securities cease to be Registrable Securities.
 
(e)           Indemnification and Contribution.
 
(i)           Indemnification by Parent. Parent shall indemnify and hold
harmless each holder of Registrable Securities included in the Registration
Statement and its officers, directors, successors and assigns, against any
Losses, obligations, claims, damages, Liabilities, contingencies, judgments,
fines, penalties, charges, costs (including court costs, reasonable attorneys’
fees and costs of defense and investigation), amounts paid in settlement or
expenses, joint or several (collectively, “Claims”) reasonably incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto, to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and shall reimburse such holder of Registrable
Securities included in such Registration Statement, and each such officer,
director, successor or assign and each such controlling Person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Claim or action; provided, however, that Parent shall not be
liable in any such case if and to the extent that any such loss, Claim, damage
or Liability arises out of or is based upon (A) a breach of representation or
warranty made by the Representative in or pursuant to this Agreement or (B) an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by the Representative or any such
controlling Person in writing specifically for use in such Registration
Statement or prospectus.
 
 
 
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(ii)           Indemnification by Holders of Registrable Securities. Each holder
of Registrable Securities included in the Registration Statement shall indemnify
and hold harmless, to the fullest extent permitted by law, Parent, its officers,
directors and each Person who controls Parent (within the meaning of the
Securities Act) and their respective successors and assigns against any Claims
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent that such untrue
statement or omission is contained in any information furnished in writing by or
on behalf of such holder to Parent specifically for inclusion in such
Registration Statement or prospectus or amendment or supplement thereto.
 
(iii)           Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder shall (A) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (B) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such Person unless (x) the indemnifying party
has agreed to pay such fees or expenses, or (Y) the indemnifying party shall
have failed to assume the defense of such claim or employ counsel reasonably
satisfactory to such Person or (Z) in the reasonable judgment of any such
Person, based upon written advice of its counsel, a conflict of interest exists
between such Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
shall, except with the consent of the indemnified party, which consent shall not
be unreasonably withheld or delayed, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all Liability in respect of such claim or litigation.
 
(iv)           Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (c)(i) and (ii) is unavailable to an indemnified
party or insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such Claim in such proportion as
is appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations. No
Person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act shall be entitled to contribution from any Person
not guilty of such fraudulent misrepresentation.
 
ARTICLE 7
 
CONDITIONS TO CLOSING OF THE MERGER
 
7.1           Conditions to Each Party’s Obligation to Effect the Merger. The
respective obligations of Parent, Merger Sub and the Company to effect the
Merger shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
 
(a)           Governmental Approvals. All permits, authorizations, consents,
orders or approvals of, or declarations or filings with, any Governmental
Authority as required to consummate the Merger shall have been filed, occurred
or been obtained, other than (i) the filing of the Certificate of Merger in
accordance with the terms of Section 2.1 and (ii) any filings required under
applicable securities Laws.
 
 
 
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(b)           No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order shall have been
issued, or other legal or regulatory action taken, by any Governmental Authority
of competent jurisdiction that restrains, prohibits or prevents the consummation
of the Merger on the terms and conditions set forth herein, nor shall any Law
have been enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger on the terms and conditions set forth
herein illegal.
 
(c)           R&W Policy. The R&W Policy shall have been issued, bound and
effective by the R&W Insurer, and Jeremy Hitchcock shall have executed and
delivered to the applicable insurer a closing no claims declaration in
connection with the R&W Policy.
 
7.2           Additional Conditions to Obligations of Parent and Merger Sub.
 
  The obligations of Parent and Merger Sub to effect the Merger are subject to
the satisfaction of each of the following conditions, any of which may be waived
in writing exclusively by Parent (on its own behalf and on behalf of Merger
Sub), to the extent permitted by Law:
 
(a)           Representations and Warranties. As of the Agreement Date and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent such representations and warranties are made only as of a specific
earlier date, in which case as though made as of such earlier date), (i) each of
the Fundamental Representations of the Company other than those set forth in
Section 3.4 or Section 3.7 shall be true and correct in all respects (subject
only to de minimis exceptions) and (ii) each of the representations and
warranties of the Company, other than such Fundamental Representations, shall be
true and correct in all respects, except, in the case of this clause (ii), where
the failure of such representations and warranties to be so true and correct
would not have a Material Adverse Effect on the Company or the Business; and
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer of the Company to such effect.
 
(b)           Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date; and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer of the Company to such effect.
 
(c)           No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect with respect to the Company or the Business; and Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer of the Company to such effect.
 
(d)           No Actions. There shall be no Action of any nature pending or
threatened in writing by (i) any Governmental Authority of competent
jurisdiction against Parent or the Company, or any order entered by any
Governmental Authority of competent jurisdiction, (A) challenging or seeking to
prohibit this Agreement, the Merger or any of the other transactions
contemplated by this Agreement or (B) limiting or restricting, or seeking to
limit or restrict, (1) Parent’s ownership of the Surviving Entity or its
securities or assets or (2) the conduct or operation of the Business by Parent
or the Surviving Entity after the Effective Time; or (ii) any current, former or
alleged Company Stockholder (including any current, former or alleged holder of
options or other securities or rights to securities) of the Company or any
Person who has any right or claim with respect to ownership of any securities of
the Company (whether against the Company, Parent, any Affiliate of the Company
or Parent, or any officer, manager, director, employee, agent or representative
of any of the foregoing) relating to this Agreement, any other agreement entered
into in connection with this Agreement, the Merger or any of the other
transactions contemplated hereby or thereby (including claims as to the amount,
adequacy or fairness of the Merger Consideration or claims relating to any
actual or alleged breach of fiduciary duties) but excluding claims made in
accordance with the terms of Section 2.7 in respect of the Dissenting Shares.
 
 
 
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(e)           Threshold for Stockholder Action. The Company shall have
delivered, or caused to be delivered to Parent, (i) a true, correct and complete
executed copy of the Written Consent evidencing the Stockholder Approval, and
(ii) fully executed (and, in the case of the Investor Questionnaire, completed)
Written Consents, which are certified by the Company’s Secretary, Support
Agreements and Investor Questionnaires from Company Stockholders holding at
least 95% of the outstanding Company Capital Stock, and such Written Consents,
Support Agreements and Investor Questionnaires shall remain in full force and
effect, without any such documents having been repudiated or purportedly
revoked.
 
(f)           Dissenters’ Rights. The Dissenting Shares shall not constitute, as
of the Effective Time, more than 5% of the outstanding Company Common Stock.
 
(g)           Exchange Agent Agreement. The Exchange Agent shall have executed
and delivered to Parent the Exchange Agent Agreement in a form reasonably
satisfactory to Parent.
 
(h)           Employment Matters. Each of the Key Employees of the Company shall
have executed and delivered all applicable Employment Documents, including
non-competition and non-solicitation agreements, to Parent and such agreements
shall remain in full force and effect, without any such agreement having been
repudiated or purportedly revoked.
 
(i)           Non-Solicitation Agreements. Each Person identified on Schedule
1.1(c) (each an “Investor”) shall have executed and delivered to Parent a
restrictive covenant agreement (each an “Investor Non-Solicitation Agreement”)
which is conditioned upon the occurrence of the Closing, and such Investor
Non-Solicitation Agreements shall remain in full force and effect, without any
such Investor Non-Solicitation Agreement having been repudiated or purportedly
revoked by an Investor.
 
(j)           Termination of Agreements. Each of the agreements identified on
Schedule 7.2(j) (each a “Terminated Agreement”) shall have been terminated (in
each case effective prior to or as of the Effective Time and in such a manner
that neither Parent nor the Surviving Entity shall be subject to or incur any
claim, Liability under any such agreement following the Effective Time), and the
Company shall have delivered evidence of such termination in form and substance
reasonably acceptable to Parent.
 
(k)           Resignations of Directors and Officers; Releases. Each of the
individuals holding the positions of a director or officer of the Company in
office immediately prior to the Effective Time shall have executed and delivered
to Parent a resignation letter and release in the form attached hereto as
Exhibit H.
 
(l)           Required Consents. Parent shall have received duly executed copies
of all third party consents, approvals, assignments, notices, waivers,
authorizations or other certificates set forth on Schedule 7.2(l), each in form
and substance reasonably acceptable to Parent.
 
(m)           Closing Statement. The Company shall have delivered to Parent the
Company Closing Statement in accordance with Section 2.10, and Parent shall have
received final invoices in respect of all Company Transaction Expenses (which
invoices may be in summary form and need not include any time entries or similar
detail).
 
(n)           Good Standing Certificates. Parent shall have received a
certificate of good standing from (i) the office of the Secretary of State of
the State of Delaware and (ii) the office of the Secretary of State of each
state or jurisdiction in which the Company is qualified to do business as a
foreign corporation, in each case certifying, as of a date no more than ten (10)
Business Days prior to the Closing Date, that the Company is in good standing in
such jurisdiction.
 
 
 
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(o)           Secretary’s Certificate. Parent shall have received a certificate
dated as of the Closing Date, signed by the secretary of the Company, certifying
as to (i) an attached copy of the Company’s certificate of incorporation and
stating that such certificate has not been amended, modified, revoked or
rescinded, (ii) an attached copy of the Company’s bylaws and stating that such
bylaws have not been amended, modified, revoked or rescinded and (iii) an
attached copy of the resolutions of the board of directors of the Company
evidencing the Board Approval, and stating that such resolutions have not been
amended, modified, revoked or rescinded.
 
(p)           Termination of Terminated Benefit Plans. The Company shall have
delivered to Parent satisfactory evidence of the termination or cancellation of
all Terminated Benefit Plans in accordance with Section 5.7(b).
 
(q)           Company PPP Loan. The Company shall have delivered to Parent
evidence that an aggregate amount equal to the principal amount of, all accrued
and unpaid interest on, and all other amounts incurred and payable in respect of
Company PPP Loan has been deposited to an escrow account with or for the benefit
of Primary Bank in a manner satisfactory to Parent (the “PPP Loan Escrow
Account”) or evidence of forgiveness from Primary Bank of the entire Company PPP
Loan, including all accrued and unpaid interest thereon, and all other amounts
incurred and payable in respect of the Company PPP Loan.
 
(r)           Section 280G. The Company shall have delivered to Parent
satisfactory evidence of the stockholder vote or analysis required by Section
5.11.
 
(s)           FIRPTA. Parent shall have received a properly executed certificate
in accordance with the requirements of Treasury Regulation Sections 1.897-2(h)
and 1.1445-2(c)(3), and in the form attached hereto as Exhibit I, certifying
that the Company is not a “United States real property holding corporation”
within the meaning of Section 897(c)(2) of the Code and, as agent for the
Company, a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) along with written
authorization for Parent to deliver such notice form to the Internal Revenue
Service on behalf of the Company upon the Closing, in form and substance
satisfactory to Parent.
 
(t)           Exchange of Convertible Notes. The Company shall have completed
the exchange and the holders of the convertible notes of the Company described
in Section 2.4(c) shall have completed the exchange of such convertible notes
for an aggregate 148,006 shares of Company Common Stock in accordance with the
terms of Section 2.4(c), and such convertible notes shall have been delivered by
the holders thereof to the Company for cancellation.
 
7.3           Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by the Company, to the extent permitted by Law:
 
(a)           Representations and Warranties. As of the Agreement Date and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent such representations and warranties are made only as of a specific
earlier date, in which case as though made as of such earlier date), (i) each of
the Fundamental Representations of Parent and Merger Sub other than those set
forth in Section 4.4 shall be true and correct in all respects (subject only to
de minimis exceptions) and (ii) each of the representations and warranties of
Parent and Merger Sub, other than such Fundamental Representations, shall be
true and correct in all respects, except, in the case of this clause (ii), where
the failure of such representations and warranties to be so true and correct
would not have a Material Adverse Effect on the Parent or Merger Sub; and the
Company shall have received a certificate signed on behalf of Parent by an
officer of Parent to such effect.
 
 
 
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(b)           Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date; and the Company shall have received a certificate signed on behalf of
Parent by an officer of Parent to such effect.
 
(c)           Exchange Agent Agreement. Parent and the Exchange Agent shall have
executed and delivered to Representative the Exchange Agent Agreement.
 
(d)           Employment Matters. Parent has executed and delivered to each Key
Employee the Employment Documents, and the Employment Documents remain in full
force and effect, without any such Employment Document having been repudiated or
purportedly revoked by Parent.
 
(e)           Closing Statement. Parent shall have delivered to the Company the
Parent Closing Statement in accordance with Section 2.10.
 
ARTICLE 8
 
TERMINATION OF AGREEMENT
 
8.1           Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned, notwithstanding the delivery of Written
Consents, at any time prior to the Effective Time by the mutual written consent
of Parent and the Company.
 
8.2           Unilateral Termination.
 
(a)           Either Parent or the Company, by giving written notice to the
other, may terminate this Agreement if (i) a court of competent jurisdiction or
other Governmental Authority of competent jurisdiction shall have issued a final
judgment or taken any action (and the final appeal of such judgment or action
has been denied) having the effect of permanently restraining or enjoining or
otherwise prohibiting the Merger or any other material transaction contemplated
by this Agreement or (ii) there has been adopted an applicable Law that makes
the consummation of the Merger on the terms and conditions contemplated by this
Agreement illegal.
 
(b)           Either Parent or the Company, by giving written notice to the
other, may terminate this Agreement if the Merger shall not have been
consummated by 5:00 p.m. Eastern time on December 31, 2020 if the conditions to
the terminating party’s obligations to Closing under Article 7 (other than
conditions pertaining to covenants to be performed as part of effectuating the
Closing) have not been satisfied and the terminating party has not waived such
unsatisfied conditions by such date; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.2(b) shall not be available
to any party whose breach of a representation or warranty or covenant made under
this Agreement by such party results in the failure of any condition set forth
in Article 7 to be fulfilled or satisfied on or before such date.
 
(c)           The Company, by giving written notice to Parent, may terminate
this Agreement at any time prior to the Effective Time if Parent or Merger Sub
has committed a breach of (i) any of their representations or warranties under
Article 4, or (ii) any of their covenants under this Agreement, and (A) has not
cured such breach within twenty (20) Business Days after the Company has given
Parent written notice of such breach and its intention to terminate this
Agreement pursuant to this Section 8.2(c); provided, however, that no such cure
period shall be available or applicable to any such breach which by its nature
cannot be cured and (B) if not cured on or prior to the Closing Date, or if not
curable, such breach would result in the failure of any of the conditions set
forth in Article 7 to be fulfilled or satisfied; provided, however, that the
right to terminate this Agreement under this Section 8.2(c) shall not be
available to the Company if the Company is at that time in material breach of
this Agreement.
 
 
 
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(d)           Parent, by giving written notice to the Company, may terminate
this Agreement at any time prior to the Effective Time if the Company has
committed a breach of (i) any of its representations or warranties under Article
3, or (ii) any of its covenants under this Agreement, and (A) has not cured such
breach within twenty (20) Business Days after Parent has given the Company
written notice of such breach and its intention to terminate this Agreement
pursuant to this Section 8.2(d); provided, however, that no such cure period
shall be available or applicable to any such breach which by its nature cannot
be cured and (B) if not cured on or prior to the Closing Date, or if not
curable, such breach would result in the failure of any of the conditions set
forth in Article 7 to be fulfilled or satisfied; provided, however, that the
right to terminate this Agreement under this Section 8.2(d) shall not be
available to Parent if Parent or Merger Sub are at that time in material breach
of this Agreement.
 
8.3           Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1 or Section 8.2, this Agreement shall forthwith
become void and there shall be no Liability or obligation on the part of Parent,
Merger Sub or the Company or their respective officers, directors, managers,
stockholders, members or Affiliates; provided, however, that (a) the provisions
of this Section 8.3, Article 11 and all applicable definitions shall remain in
full force and effect and survive any termination of this Agreement, and (b)
nothing herein shall relieve any party hereto from Liability in connection with
any Fraud in connection with, or any willful breach of, this Agreement prior to
such termination.
 
ARTICLE 9
 
NO SURVIVAL/REPRESENTATION AND WARRANTY INSURANCE
 
9.1           No Survival. All representations and warranties contained in this
Agreement shall terminate upon the Closing and shall not survive the Closing for
any purpose, and thereafter, except for Fraud, there shall be no Liability on
the part of, nor shall any claim be made by, any party or any of their
respective Affiliates in respect thereof. All covenants and agreements contained
in this Agreement to be performed in whole at or prior to the Closing shall
terminate upon the Closing and shall not survive the Closing for any purpose,
and thereafter there shall be no Liability on the part of, nor shall any claim
be made by, any party or any of their respective Affiliates in respect thereof.
All covenants and agreements contained in this Agreement to be performed in
whole or in part, or which prohibit actions, subsequent to the Closing Date,
shall survive the Closing for the period specified therein; provided, however,
that the maximum Liability for breach of any covenant shall not exceed the
Merger Consideration and, in the case of any breach by the Company, the
Liability shall be several and pro rata and not joint among the Company
Stockholders. Notwithstanding the foregoing, the period in which a claim may be
brought for a breach of a representation or warranty made by any Company
Stockholder or Parent hereunder may be extended, solely for the purpose of
claims that may be made under the R&W Policy, in accordance with the terms of
the R&W Policy.
 
9.2           R&W Insurance. The parties acknowledge and agree that the R&W
Policy is intended to be a Contract between Parent and the R&W Insurer, separate
and apart from this Agreement. As such, notwithstanding anything to the contrary
in Section 9.2 or elsewhere in this Agreement, nothing in this Article 9
(including the limitations or exceptions set forth in this Article 9) or
elsewhere in this Agreement shall be deemed to limit the rights of Parent and
any Affiliates of Parent (including, following the Closing, the Surviving
Entity) from making claims as provided for under the R&W Policy, subject to the
terms and conditions thereof.
 
ARTICLE 10
 
TAX MATTERS
 
10.1           Tax Returns. Parent shall prepare or cause to be prepared and
file or cause to be filed all Tax Returns of the Surviving Entity that are due
after the Closing Date.
 
 
 
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10.2           Cooperation. Parent and the Representative agree to furnish or
cause to be furnished to the other, upon request, as promptly as practicable,
such information and assistance relating to Taxes, including access to Books and
Records, as is reasonably necessary for the filing of all Tax Returns by Parent
or the Representative, the making of any election relating to Taxes, the
preparation for any audit by any Tax authority and the prosecution or defense of
any claim, suit or proceeding relating to any Tax. Parent, the Company and the
Representative shall each retain all Books and Records in their possession with
respect to Taxes for a period of at least seven (7) years following the Closing
Date. Notwithstanding the foregoing or any other provision herein to the
contrary, in no event shall the Representative be entitled to review or
otherwise have access to any income Tax Return, or information related thereto,
of Parent or its Affiliates (other than income Tax Returns of the Company for
Pre-Closing Tax Periods).
 
10.3           Tax Audits.
 
(a)           If notice of any Action or threatened Action with respect to Taxes
of the Company (a “Tax Claim”) shall be received by any party for which any
other party may reasonably be expected to defend, the notified party shall
notify such other party or parties in writing of such Tax Claim.
 
(b)           Parent shall have the right to control the conduct of any Tax
Claim of the Company. To the extent a Tax Claim relates to Taxes attributable to
a Pre-Closing Tax Period, Parent shall (i) keep the Representative reasonably
informed of all material developments on a timely basis and (ii) provide to the
Representative copies of any and all material correspondence from any
Governmental Authority related to such Tax Claim.
 
ARTICLE 11
 
MISCELLANEOUS
 
11.1           Appointment of Representative.
 
(a)           By voting in favor of the adoption of this Agreement, executing
and delivering a Support Agreement and/or participating in the Merger and
receiving the benefits thereof, each Company Stockholder shall be deemed to have
approved the designation of, and hereby designates, the Representative as the
representative of the Company Stockholders and as the attorney-in-fact and agent
for and on behalf of each Company Stockholder, to act on behalf of each Company
Stockholder with the same effect as if taken by the Company Stockholders for all
purposes in connection with this Agreement and the agreements ancillary hereto,
including to institute, make or pursue claims, counterclaims or defenses, enter
into, modify, amend, implement or waive any contract, compromise, settle or
surrender any disputes or claims or make any other determination or take any
other action or assert or compromise any claim in connection with all matters
relating to the Merger, this Agreement, the Exchange Agent Agreement, the R&W
Policy, and any of the transactions contemplated hereby or thereby, including
the receipt and delivery at Closing of certificates and other documents and the
giving and receipt of notices by and on behalf of the Company Stockholders for
all purposes under Section 2.10 and otherwise under and in relation to this
Agreement and the transactions contemplated hereby. The Representative hereby
accepts the appointment as “Representative” pursuant to this Agreement effective
on the Agreement Date, in accordance with the terms set forth in this Section
11.1.
 
(b)           Without limiting the foregoing, the Representative is authorized,
on behalf of the Company Stockholders, to take any and all actions and make any
decisions required or permitted to be taken by the Representative under this
Agreement, including the exercise of the power to: (i) give and receive notices
and communications (on behalf of itself or any other Company Stockholder)
relating to this Agreement or any of the transactions and other matters
contemplated hereby; and (ii) take all actions necessary or appropriate in the
judgment of the Representative for the accomplishment of the foregoing. The
Company Stockholders and their respective successors, heirs, estates and assigns
shall be bound by all actions taken and documents executed by the Representative
pursuant to this Section 11.1, and Parent and the other Parent Indemnified
Parties shall be entitled to rely on any action or decision of the
Representative.
 
 
 
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(c)           The Company Stockholders recognize and intend that the power of
attorney granted in this Section 11.1 and the powers, immunities and rights to
indemnification granted to the Representative hereunder: (i) are coupled with an
interest and are irrevocable; (ii) may be delegated by the Representative; and
(ii) shall survive the death, incapacity, dissolution, liquidation, bankruptcy
or winding up of each of the Company Stockholders and shall be binding on any
successor thereto.
 
(d)           The Representative may engage attorneys, accountants and other
professionals and experts. The Representative may in good faith rely
conclusively upon information, reports, statements and opinions prepared or
presented by such professionals, and any action taken by the Representative
based on such reliance shall be deemed conclusively to have been taken in good
faith.
 
(e)           Notices or communications to or from the Representative shall
constitute notice to or from each of the Company Stockholders. Parent may
conclusively rely, without independent verification or investigation, upon any
action of the Representative as being the binding decision or action of the
Company Stockholders, and Parent shall not be liable to any Company Stockholder
or any other Person for any actions taken or omitted from being taken by them or
by Parent in accordance with or reliance upon any decision or action of the
Representative.
 
(f)           The Person serving as the Representative may be replaced from time
to time by Company Stockholders holding not less than a majority of the Company
Capital Stock. After the Effective Time, the Person serving in such capacity up
to the Effective Time shall no longer serve as the Representative but shall
continue to be entitled to the benefits and protections afforded to the
Representative pursuant to this Section 11.1 but shall no longer have the rights
and powers of the Representative pursuant to this Agreement, including this
Section 11.1. After the Effective Time, the Person designated in the preamble to
this Agreement as being the Representative after the Effective Time shall become
the Representative and shall have the rights, powers, duties and obligations of
the Representative pursuant to this Agreement. In the event that, after the
Effective Time, there shall exist any event, any duty or matter requiring the
attention of or action or failure to act by the Representative pursuant to this
Agreement or any Company Ancillary Agreement, the Representative shall recuse
himself from taking any action on the part of Parent or any of its Affiliates,
whether as a director, officer or otherwise, relating thereto or, except for
being present as may be required for the attainment of a quorum, otherwise
participating in any meeting on behalf of Parent or any of its Affiliates,
including as a director, officer or otherwise, relating thereto.
 
(g)           In performing the functions specified in this Agreement, the
Representative shall not be liable to any Company Stockholder in the absence of
gross negligence or willful breach on the part of the Representative. The
Company Stockholders shall, on a several basis in accordance with their
respective Merger Consideration Pro Rata Shares shall indemnify, defend and hold
harmless the Representative from and against any and all Losses, Liabilities,
damages, claims, penalties, fines, forfeitures, actions, fees, costs and
expenses (including the fees and expenses of counsel and experts and their
staffs and all expense of document location, duplication and shipment)
(collectively, “Representative Losses”) arising out of or in connection with the
Representative’s execution and performance of this Agreement and any agreements
ancillary hereto, in each case as such Representative Loss is suffered or
incurred; provided, that in the event that any such Representative Loss is
finally adjudicated to have been directly caused by the gross negligence or
willful misconduct of the Representative, the Representative shall reimburse
such Company Stockholders the amount of such indemnified Representative Loss to
the extent attributable to such gross negligence or willful misconduct. The
Representative shall be entitled to recover any such Representative Losses which
are indemnifiable hereunder by recourse directly to the Company Stockholders
based on their respective Merger Consideration Pro Rata Shares; provided that
this does not prevent the Representative from seeking any remedies available to
it at law or otherwise. The foregoing indemnities shall survive the Closing, the
resignation or removal of the Representative or the termination of this
Agreement.
 
 
 
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(h)           The Representative represents and warrants to Parent and Merger
Sub as of the Agreement Date and as of the Closing Date as follows: (i) the
Representative has all requisite power and authority to execute and deliver this
Agreement and any other applicable Contract, instrument or document contemplated
hereby and to perform its obligations hereunder and thereunder; (ii) the
execution, delivery and performance by the Representative of this Agreement and
any other applicable Contract, instrument or document contemplated hereby have
been duly and validly authorized by the Representative and no other act or
proceeding on the part of the Representative or its equity holders is necessary
to authorize the execution, delivery or performance of this Agreement or any
other applicable Contract, instrument or document contemplated hereby; and (iii)
this Agreement and any other applicable Contract, instrument or document
contemplated hereby has been duly executed and delivered by the Representative
and constitutes a valid and binding obligation of the Representative,
enforceable in accordance with its terms.
 
11.2           Governing Law; Jurisdiction; Venue. This Agreement shall be
governed and construed in accordance with the internal Laws of the State of
Delaware, irrespective of its conflicts of law principles and any other Law that
would cause the application of the Laws (including the statute of limitations)
of any jurisdiction other than the State of Delaware. The parties hereto hereby
irrevocably submit to the exclusive jurisdiction of the Court of Chancery of the
State of Delaware (unless the Federal courts have exclusive jurisdiction over
the matter, in which case the United States District Court for the District of
Delaware) for any action, suit or proceeding arising out of or relating to this
Agreement and of any of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby and thereby, and hereby
irrevocably waive, and agree not to assert, as a defense in any action, suit or
proceeding arising out of or relating to this Agreement and of any of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby and thereby, that it is not subject thereto or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that this Agreement
or any such document may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action, suit or
proceeding shall be heard and determined in the Court of Chancery of the State
of Delaware or the United States District Court for the District of Delaware.
 
11.3           Assignment; Binding Upon Successors and Assigns. Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
may be assigned or delegated, in whole or in part, by operation of law or
otherwise by any of the parties hereto without the prior written consent of the
other parties hereto, and any such assignment without such prior written consent
shall be null and void. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by, the parties
hereto and their respective successors and assigns.
 
11.4           Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be declared invalid,
illegal or unenforceable, then the remainder of this Agreement shall remain in
full force and effect and the application of such provision to other Persons or
circumstances shall be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that shall
achieve, to the maximum extent permitted by Law, the original economic, business
and other purposes of the void or unenforceable provision.
 
11.5           Counterparts. This Agreement may be executed in any number of
counterparts (including via facsimile, electronic or e-mail in PDF format), each
of which shall be an original as regards any party whose signature appears
thereon and all of which together shall constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all parties
reflected hereon as signatories.
 
 
 
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11.6           Other Remedies. Except as otherwise expressly provided herein,
any and all remedies herein expressly conferred upon a party hereunder shall be
deemed cumulative with and not exclusive of any other remedy conferred hereby or
by Law or equity on such party, and the exercise of any one remedy shall not
preclude the exercise of any other. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached, and that money damages would not be an adequate remedy for any such
damage. The parties hereto agree that the parties shall be entitled to equitable
relief by way of an injunction or injunctions, specific performance or otherwise
(without posting a bond or other security) to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any State having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
 
11.7           Amendments and Waivers. This Agreement may be amended in writing
by the parties hereto; provided, however, that after the receipt of Written
Consent constituting the Stockholder Approval, no amendment shall be made that
requires further approval by the Company Stockholders under the DGCL or the
Company Charter Documents without obtaining such Stockholder Approval. No waiver
shall be binding unless executed in writing by the party making the waiver. No
waiver of any of the provisions of this Agreement shall be deemed to be or shall
constitute a continuing waiver. No delay in exercising any right under this
Agreement shall constitute a waiver of such right, and no waiver of any breach
or default shall be deemed a waiver of any other breach or default of the same
or any other provision in this Agreement.
 
11.8           Expenses. Except as otherwise expressly provided herein, whether
or not the Merger is successfully consummated, each party shall bear its own
respective legal, accounting, and financial advisory fees and other expenses
incurred with respect to this Agreement, the Merger and the transactions
contemplated hereby.
 
11.9           Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be either hand
delivered in person, sent by electronic mail, sent by certified or registered
first-class mail, postage pre-paid, or sent by nationally recognized express
overnight service. Such notices and other communications shall be effective and
be deemed delivered and received (a) upon receipt if hand delivered, (b) on the
date of transmission if transmitted by electronic mail by 5:00 p.m. (Eastern
time) on a Business Day, otherwise on the next Business Day after transmission,
(c) three (3) Business Days after mailing if sent by mail, and (d) one (1)
Business Day after dispatch if sent by overnight courier, to the addresses set
forth on Schedule 11.9, or such other addresses as any party may notify the
other parties in accordance with this Section 11.9.
 
11.10                      WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10.
 
 
 
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11.11                      Third-Party Beneficiary Rights. Except as is set
forth in Section 5.10, none of the provisions of this Agreement are intended,
nor shall be interpreted, to provide or create any third party beneficiary
rights or any other rights of any kind in any client, customer, employee,
Affiliate, stockholder, partner or any party hereto or any other Person unless
specifically provided otherwise herein and, except as so provided, all
provisions hereof shall be personal solely between the parties to this
Agreement.
 
11.12                      Public Announcement. Parent may issue such press
releases, and make such other public announcements and disclosures relating to
this Agreement, the Merger or the other transactions contemplated hereby as it
determines are required under applicable securities Laws or regulatory or stock
exchange rules or as it deems otherwise appropriate. Neither the Company nor the
Representative shall, and each shall cause its respective Affiliates and
representatives not to, issue any press releases or make any public
announcements or disclosures relating to this Agreement, the Merger or the other
transactions contemplated hereby without Parent’s prior written consent.
 
11.13                      Confidentiality. The parties acknowledge that the
Company and Parent previously have executed the Confidentiality Agreement, which
shall continue in full force and effect in accordance with its terms until the
Effective Time, at which time, and without further action by any party hereto,
it shall terminate and be of no further force and effect; provided that nothing
in the Confidentiality Agreement shall be deemed to restrict Parent’s rights
under Section 11.12. If this Agreement is, for any reason, terminated prior to
the Closing, the Confidentiality Agreement shall continue in full force and
effect in accordance with its terms.
 
11.14                      Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. Unless the context expressly requires
otherwise: (a) the words “hereof,” “herein” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; (b) words defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa; (c) words importing the masculine gender shall include the feminine and
neuter genders, and vice versa; (d) “Dollars” and “$” mean U.S. dollars; (e)
references herein to a specific Article, Section, Exhibit or Schedule shall
refer, respectively, to an Article, a Section, Exhibit or Schedule of this
Agreement; (f) wherever the word “include,” “includes” or “including” is used in
this Agreement, it shall be deemed to be followed by the words “without
limitation” or “but not limited to”, as applicable; (g) the word “or” shall be
disjunctive but not exclusive; and (h) “writing,” “written” and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. Each of the parties acknowledges that each
party to this Agreement has been represented by legal counsel and tax advisors
in connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the drafting
party has no application and is expressly waived by all parties.
 
11.15                      Conflicts Waiver; Privilege.
 
(a)           Each of the parties acknowledges and agrees that (i) Nixon Peabody
LLP (“Nixon”) has acted as counsel to Parent and Merger Sub, (ii) Richards,
Layton & Finger, PA (“RLF”), has acted as counsel to the Strategy Committee, and
(iii) Goodwin Procter LLP (“Goodwin”) has acted as counsel to the Company, each
in connection with the negotiation of this Agreement and consummation of the
transactions contemplated hereby. Each party hereby (x) consents to the
continued representation of the other party by such law firm in connection with
the negotiation of this Agreement and consummation of the transactions
contemplated hereby, notwithstanding the fact that such law firm may have
represented, and may currently or in the future represent, such party and/or any
of its Affiliates with respect to unrelated matters, and (y) waives any actual
or alleged conflict and actual or alleged violation of ethical or comparable
rules applicable to such law firm that may arise from its representation of the
other party in connection with the negotiation of this Agreement and
consummation of the transactions contemplated hereby, including representing the
other party against such party and/or any of its Affiliates in litigation,
arbitration or mediation in connection therewith. In addition, each party hereby
acknowledges that its consent and waiver under this Section 11.15(a) is
voluntary and informed, and that it has obtained independent legal advice with
respect to this consent and waiver.
 
 
 
-56-

 
 
(b)           Parent further agrees, on behalf of itself and, after the Closing,
on behalf of the Surviving Entity, that all communications in any form or format
whatsoever between or among any of Goodwin, the Company, the Representative,
and/or any Company Stockholder, or any of their respective representatives that
relate in any way to the negotiation, documentation and consummation of the
transactions contemplated by this Agreement or any dispute arising under this
Agreement (collectively, the “Deal Communications”) shall be deemed to be
retained and owned collectively by the Company Stockholders, shall be controlled
by the Representative on behalf of the Company Stockholders and shall not pass
to or be claimed by Parent or the Surviving Entity. All Deal Communications that
are attorney-client privileged (the “Privileged Deal Communications”) shall
remain privileged after the Closing and the privilege and the expectation of
client confidence relating thereto shall belong solely to the Representative and
the Company Stockholders, shall be controlled by the Representative on behalf of
the Company Stockholders and shall not pass to or be claimed by Parent or the
Surviving Entity.
 
(c)           Notwithstanding the foregoing, in the event that a dispute arises
between Parent or the Surviving Entity, on the one hand, and a third party other
than the Representative, on the other hand, Parent and the Surviving Entity may
assert the attorney-client privilege to prevent the disclosure of the Privileged
Deal Communications to such third party; provided, however, that none of Parent
or the Surviving Entity shall waive such privilege without the prior written
consent of the Representative. In the event that Parent or the Surviving Entity
is legally required by governmental order or otherwise to access or obtain a
copy of all or a portion of the Privileged Deal Communications, Parent shall
promptly (and, in any event, within three (3) Business Days) notify the Company
(if prior to Closing) or the Representative (if after Closing) in writing
(including by making specific reference to this Section 11.15(c)) so that the
Company or the Representative, as applicable, can seek a protective order and
Parent agrees to use all commercially reasonable efforts to assist therewith.
 
(d)           To the extent that files or other materials maintained by Goodwin
constitute Deal Communications, only the Representative shall hold property
rights therein and Goodwin shall have no duty to reveal or disclose any such
files or other materials or any Privileged Deal Communications by reason of any
attorney-client relationship between Goodwin, on the one hand, and Parent or the
Company, on the other hand.
 
(e)           Parent agrees that it shall not, and that it shall cause the
Surviving Entity not to, (i) access or use the Privileged Deal Communications,
including by way of review of any electronic data, communications or other
information, or by seeking to have the Representative waive the attorney-client
or other privilege, or by otherwise asserting that Parent or the Company has the
right to waive the attorney-client or other privilege or (ii) seek to obtain the
Deal Communications from Goodwin.
 
11.16                      Entire Agreement. This Agreement, the Exhibits and
Schedules hereto, the Company Ancillary Agreements, the Disclosure Schedules,
the Parent Ancillary Agreements, the Confidentiality Agreement and the Merger
Sub Ancillary Agreements constitute the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto or thereto. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof.
 
[Signature Pages Follow]
 
 
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In Witness Whereof, the parties hereto have executed this Agreement and Plan of
Merger as of the date first above written.

 
 
PARENT:
 
ZOOM TELEPHONICS, INC.
 
By: /s/ Jacquelyn Barry Hamilton
Name: Jacquelyn Barry Hamilton
Title: Chief Financial Officer
 

MERGER SUB:
 
ELM ACQUISITION SUB, INC.
 
By: /s/ Jacquelyn Barry Hamilton
Name: Jacquelyn Barry Hamilton
Title: Authorized Officer
 
 
COMPANY:
 
MINIM INC.
 
By: /s/ Graham Chynoweth
Name: Graham Chynoweth
Title: Chief Executive Officer
 
 
REPRESENTATIVE UNTIL THE EFFECTIVE TIME:
 
/s/ Graham Chynoweth
Name: Graham Chynoweth
 
 
REPRESENTATIVE AFTER THE EFFECTIVE TIME:
 
/s/ David Aronoff
Name: David Aronoff

 
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]

 

 
EXHIBIT A
 
Defined Terms
 
“Accounting Principles” means GAAP, applied in a manner consistent with the
Company’s historical accounting methods, principles and practices.
 
 “Acquisition Proposal” means any agreement, offer, proposal or bona fide
indication of interest (other than this Agreement or any other offer, proposal
or indication of interest by Parent or any Affiliate of Parent), or any public
announcement of intention to enter into any such agreement or of (or intention
to make) any offer, proposal or bona fide indication of interest, relating to,
or involving: (i) any acquisition or purchase by any Person of any securities of
the Company or Parent or any tender offer or exchange offer for outstanding
securities of the Company or Parent or any merger, consolidation, business
combination or similar transaction involving the Company or any of its
securities, (ii) any sale, lease, mortgage, pledge, exchange, transfer, license,
acquisition, or disposition of any of the assets of the Company or Parent in any
single transaction or series of transactions (other than in the ordinary course
of business), or (iii) any other transaction outside of the ordinary course of
business the consummation of which would materially impede, interfere with,
prevent or delay, or would reasonably be expected to materially impede,
interfere with, prevent or delay, the consummation of the Merger or the other
transactions contemplated hereby.
 
“Action” means any action, order, writ, injunction, demand, claim, suit,
litigation, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, arbitration, mediation, audit,
dispute, examination or investigation commenced, brought, conducted or heard by
or before, any court or other Governmental Authority or any arbitrator or
arbitration panel.
 
“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, and 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 such Person, whether through ownership of voting
securities, by Contract or otherwise. References herein to Affiliates of Parent
shall be deemed to include the Surviving Entity following the Effective Time.
 
“Agreement” has the meaning provided in the Preamble.
 
“Agreement Date” has the meaning provided in the Preamble.
 
“Balance Sheet Date” means September 30, 2020.
 
“Board Approval” has the meaning provided in Section 3.3(c).
 
“Book-Entry Share” has the meaning set forth in Section 2.3(c).
 
“Books and Records” has the meaning provided in Section 3.18(a).
 
“Bribery Act” has the meaning provided in Section 3.23(a).
 
“Business” means the business of the Company as presently conducted and as
conducted as of the Closing Date, including the provision of (i) technology and
services related to revenue cycle management and (ii) any of the Company
Offerings.
 
“Business Day” means any day that is not a Saturday, Sunday or other day on
which banks are required or authorized by Law to be closed in Boston,
Massachusetts.
 
 
 

 
 
“Canceled Shares” has the meaning provided in Section 2.3(a).
 
“CARES Act” has the meaning provided in Section 3.25.
 
“CCPA” has the meaning provided in the definition of “Privacy Laws”.
 
“Certificate” has the meaning set forth in Section 2.3(c).
 
“Certificate of Merger” has the meaning provided in Section 2.1.
 
“Charter Documents” has the meaning provided in Section 3.1.
 
“Claims” has the meaning set forth in Section 6.4(e)(i).
 
“Closing” has the meaning provided in Section 2.1.
 
“Closing Date” has the meaning provided in Section 2.1.
 
“Closing Employee Payment” means: (i) any severance, retention, bonus, change in
control or other similar payment or benefit obligation arising or being
accelerated as a result of the Merger, this Agreement or the transactions
contemplated by this Agreement; (ii) any unpaid compensation, wages, bonus
amounts, plan contributions or premiums, commission amounts, vacation and
paid-time-off entitlements and the like for any employee attributable to any
period prior to the Closing Date (whether or not accrued and whether or not due
or payable as a result of the Merger); and (iii) the employer portion of any
payroll, employment, or similar Tax related to any of the foregoing payments.
 
“Closing Payment” has the meaning provided in Section 2.6(b).
 
“Closing Reference Price” means $2.3498 per share of Parent Common Stock, as
adjusted, with respect to any calculations made in respect to calculations made
after the Effective Time, to appropriately reflect any stock split, reverse
stock split, stock dividend, reorganization, reclassification, combination,
recapitalization or other like change with respect to Parent Common Stock
occurring after the Effective Time.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Commercially Available Software” means Software that are licensed or made
available to Company pursuant to a Contract that meets the following conditions:
(i) such Contract grants a non-exclusive license to download or use generally
commercially available, non-customized Software subject to terms and conditions
that are non-negotiated, including, without limitation, with respect to pricing
terms, (ii) such Software is not included, incorporated or embedded in any
Company Offering or distributed to any third parties, (iii) such Software is not
Open Source Software, (iv) such Contract does not require the Company to pay any
ongoing fees that exceed Ten Thousand Dollars ($10,000) per year and was not
originally licensed by the Company for a one-time license fee of more than Fifty
Thousand Dollars ($50,000), and (v) the Company uses such Software in the
Ordinary Course of Business.
 
“Company” has the meaning provided in the Preamble.
 
“Company Ancillary Agreement” means each agreement or document (other than this
Agreement) that the Company is to enter into as a party thereto pursuant to this
Agreement.
 
“Company Application” has the meaning provided in Section 3.25.
 
 
 

 
 
“Company Balance Sheet” means the unaudited balance sheet of the Company as of
the Balance Sheet Date that is included in the Company Financial Statements.
 
“Company Benefit Arrangement” has the meaning provided in Section 3.17(h).
 
“Company Capital Stock” means the Company Common Stock and the Company Preferred
Stock.
 
“Company Closing Statement” has the meaning provided in Section 2.10.
 
“Company Common Stock” means the Company’s common stock, par value $0.0001 per
share.
 
“Company Customer” has the meaning provided in Section 3.21(a).
 
“Company Data” means all data, meta-data, or information (i) transmitted to the
Company or any of its subcontractors or agents by users or customers of any of
the Company’s Offering, or (ii) contained in any IT Systems or other databases
of the Company or any of its subcontractors or agents (including any and all
Proprietary Information, User Data, listings and other content displayed or
distributed on or through any Company Offering or Company Software) and all
other information, data and compilations thereof used by, or necessary to the
Business.
 
“Company Employee Agreement” means each employment, retention, change in
control, severance, Tax gross-up, consulting, relocation or other similar
Contract between the Company, on the one hand, and any employee, officer,
independent contractor, director or other service provider of the Company, on
the other hand.
 
“Company Employee Plan” means, other than a Company Employee Agreement, each
pension benefit, 401(k), profit sharing, retirement, deferred compensation,
welfare, insurance, health benefit, sick or disability pay, cafeteria, fringe
benefit, death benefit, membership interest, unit, option or other equity-based
compensation, bonus, incentive compensation, vacation or other paid-time off,
change of control, severance or retention pay and other similar plans, programs
and agreements, whether reduced to writing or not, maintained or contributed by
the Company or any ERISA Affiliate that relate to the current or former
employees, contractors, or directors of the Company or any ERISA Affiliate, or
with respect to which the Company or ERISA Affiliate has any current or
potential Liability.
 
“Company Financial Statements” means, collectively, the (i) unaudited balance
sheet of the Company as of December 31, 2019 and the related statements of
income (loss), stockholders’ equity (deficit) and cash flows for the fiscal year
ended December 31, 2019; and (ii) the Company Balance Sheet and the related the
related statement of income (loss), stockholders’ equity (deficit) and cash
flows for the nine (9) month period ended September 30, 2020.
 
“Company Intellectual Property Right” means any Intellectual Property Right that
is owned, purported to be owned, used, held for use, or practiced by, or
exclusively licensed to, the Company, including any Intellectual Property Right
incorporated into any Company Offering or Company Data.
 
“Company Material Contract” means any (i) Contract listed or required to be
listed on Schedule 3.8, Schedule 3.12 or Schedule 3.14 (whether or not so
listed) and (ii) any Contract between the Company, on the one hand, and any
Significant Customer or Significant Supplier, on the other hand.
 
“Company Offering” means (i) any Company Software, product (including any
application programming interface (API) and any software development kit (SDK))
or service (including hosted software or cloud services) offered, licensed,
provided, sold or distributed by or for the Company, whether already developed
or otherwise under development, (ii) each website owned, maintained, or operated
by or on behalf of the Company, and (iii) the Company Data.
 
 
 

 
 
“Company PPP Loan” has the meaning provided in Section 3.25.
 
“Company Preferred Stock” means the Company’s preferred stock, par value $0.0001
per share.
 
“Company Restricted Stock” has the meaning provided in Section 2.4(b).
 
“Company Stockholders” means each of the holders of Company Common Stock and/or
Company Preferred Stock.
 
“Company Stock Option” has the meaning provided in Section 2.4(a).
 
“Company Stock Plan” means any plan, arrangement(s) or agreement(s) by which
compensation in the form of direct or indirect equity in the Company (including
without limitation Company Stock Options, restricted stock, phantom stock, or
stock units) is provided to employees, directors, consultants, or other service
providers to the Company.
 
“Company Software” means all Software owned by or developed by the Company.
 
“Company Transaction Expense” means any cost or expense of any kind or nature
incurred by, paid by, or to be paid by, the Company in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement,
including, without duplication: (i) all fees and expenses of any investment
banker, financial advisor, legal counsel, accountant or other professional
advisor; (ii) fifty percent (50%) of the estimated fees and expenses of the
Exchange Agent; (iii) all Closing Employee Payments; (iv) all amounts due and
owing in connection with the termination of any Terminated Benefit Plan, as is
described in Section 5.7(b); and (v) any payment, consideration, costs or fees
associated with obtaining any permits, authorizations, consents, waivers, orders
or approvals of, or making any filings or providing notices to, any Governmental
Authority or any other Person in connection with the Merger and the transactions
contemplated hereby.
 
“Confidentiality Agreement” means that certain Mutual Non-Disclosure Agreement,
by and between Parent and the Company, dated as of September 24, 2020.
 
“Contract” means any legally-binding written or oral contract, agreement,
instrument, arrangement, commitment, understanding or undertaking (including
leases, licenses, mortgages, notes, guarantees, sublicenses, subcontracts,
purchase orders and sale orders).
 
“Copyright” means any copyright, mask work right, exclusive exploitation right,
or similar or equivalent right with respect to works of authorship and mask
works and any registration of the foregoing or application for the foregoing
(including any moral or economic right, however denominated).
 
“Deal Communications” has the meaning provided in Section 11.15(b).
 
“DGCL” has the meaning provided in the Recitals.
 
“Disclosure Schedules” has the meaning provided in Article 3.
 
 “Dissenting Shares” has the meaning provided in Section 2.7.
 
“D&O Indemnified Parties” has the meaning provided in Section 5.10.
 
“Domain Name” means any website domain name, uniform resource locator or other
name or locator associated with the Internet or social media identifier.
 
“Effective Time” has the meaning provided in Section 2.1.
 
 
 

 
 
“Employment Documents” has the meaning provided in the Recitals.
 
“Encumbrance” means, with respect to any asset, any mortgage, deed of trust,
lien, pledge, charge, security interest, title retention device, collateral
assignment, adverse claim, Action, exclusive license or covenant, option to
obtain an exclusive license or covenant, restriction or other encumbrance of any
kind in respect of such asset.
 
“Environmental Law” means any Law relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata), including any Law or regulation relating to
any emission, discharge, release or threatened release of Hazardous Materials.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“ERISA Affiliate” means any entity that would have ever been considered a single
employer with the Company under Section 4001(b) of ERISA or part of the same
“controlled group” as the Company for purposes of Section 302(d)(3) of ERISA.
 
“Estimated Company Transaction Expenses” has the meaning provided in Section
2.10.
 
“Estimated Parent Transaction Expenses” has the meaning provided in Section
2.10.
 
“Exchange Agent” has the meaning provided in Section 2.5(a).
 
“Exchange Agent Agreement” has the meaning provided in Section 2.5(a).
 
“Exchange Fund” has the meaning provided in Section 2.5(a).
 
“Exchange Ratio” means 0.80106.
 
“Executory Period” has the meaning provided in Section 5.1.
 
“FCPA” has the meaning provided in Section 3.23(a).
 
“FINRA” has the meaning set forth in Section 6.4(c)(iii).
 
“Form S-1” means a Registration Statement on Form S-1, under the Securities Act,
or any successor forms thereto.
 
“Foreign Person” has the meaning provided in Section 3.23(a).
 
“Fraud” means, with respect to a Person, any knowing (with actual knowledge) and
intentional misrepresentation or omission of material facts with an intent to
deceive that constitutes actionable fraud under Delaware Law; provided, however
that the foregoing shall not include any claim for equitable fraud, promissory
fraud, unfair dealings fraud, or any torts based on negligence.
 
“Fundamental Representations” means the representations and warranties of the
Company set forth in Sections 3.1 (Organization and Good Standing), 3.2
(Subsidiaries), 3.3 (Power, Authorization and Validity), 3.4 (Capitalization of
the Company; Indebtedness), 3.5 (No Conflict; Consents), 3.7 (Taxes), 3.26 (No
Brokers), 4.1 (Organization and Good Standing), 4.2 (Subsidiaries), 4.3 (Power,
Authorization and Validity), 4.4 (No Conflict; Consents) and 4.16 (No Brokers).
 
“GAAP” means United States generally accepted accounting principles as in effect
for the applicable period or date, consistently applied.
 
 
 

 
 
“GDPR” has the meaning provided in the definition of “Privacy Laws”.
 
“General Enforceability Exceptions” has the meaning provided in Section 3.3(b).
 
“Goodwin” has the meaning provided in Section 11.15(a).
 
“Governmental Authority” means any (i) federal, state, local, municipal, foreign
or other government or (ii) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, bureau,
commission, instrumentality, official, organization, unit, body, subdivision,
court, arbitrator or other tribunal and any authority with responsibility for
overseeing and/or enforcing Privacy Laws).
 
“Governmental Permits” has the meaning provided in Section 3.16(b).
 
“Hazardous Materials” means any chemical, pollutant, contaminant, waste, toxic
substance, petroleum or petroleum product or any other substance that is
currently regulated by an Environmental Law or that is otherwise a danger to
health, reproduction or the environment.
 
“HIPAA” means the Administrative Simplification provisions of title II, subtitle
F, of the Health Insurance Portability and Accountability Act of 1996 (Pub. L.
104-191), the Health Information Technology for Economic and Clinical Health
Act, included in division A, title XIII, subtitle D of the American Recovery and
Reinvestment Act of 2009 (Pub. L. 111-5), and all rules and regulations
promulgated thereunder, including the requirements of 45 CFR Parts 160, 162 and
164.
 
“Indebtedness” means, without duplication, (i) all obligations (including the
principal amount thereof and the amount of accrued and unpaid interest thereon)
of the Company, whether or not represented by bonds, debentures, notes or other
securities (whether or not convertible into any other security), for the
repayment of money borrowed, whether owing to banks, financial institutions or
otherwise, (ii) all deferred indebtedness of the Company for the payment of the
purchase price of property or assets purchased (other than accounts payable
incurred in the Ordinary Course of Business that are not then past due, but
including all seller notes and “earn-out” payments), (iii) all obligations of
the Company under any lease which is required to be classified as a capital
lease in accordance with GAAP, (iv) all outstanding reimbursement obligations of
the Company with respect to letters of credit, bankers’ acceptances or similar
facilities, (v) all obligations of the Company under any interest rate swap
agreement, forward rate agreement, interest rate cap or collar agreement or
other financial agreement or arrangement entered into for the purpose of
limiting or managing interest rate risks, (vi) all obligations secured by any
Encumbrance existing on property owned by the Company, (vii) all premiums,
penalties, fees, expenses, breakage costs and change of control payments
required to be paid or offered in respect of any of the foregoing on payment or
prepayment (regardless if any of such are actually paid), as a result of the
consummation of the Merger or any of the other transactions contemplated hereby
or in connection with any consent of any counterparty with respect to any such
Indebtedness, and (viii) all guaranties, endorsements, assumptions and other
contingent obligations of the Company in respect of, or to purchase or to
otherwise acquire, any of the obligations and other matters of the kind
described in any of the clauses (i) through (vii) appertaining to third parties.
 
“Information Statement” has the meaning provided in Section 5.4(b).
 
“Insurance Policies” has the meaning provided in Section 3.19.
 
 
 

 
 
“Intellectual Property Right” means all (i) Patents, (ii) Copyrights, (iii)
other rights with respect to Software, including any registration of such right
or any application to register such right, (iv) industrial designs right or
registration of such right and any application to register such right, (v) right
with respect to any Marks, and any registration for any Mark and any application
to register any Mark, along with all goodwill associated with each of the
foregoing, (vi) rights with respect to any Domain Name, including any
registration for any Domain Name, along with all goodwill associated with each
of the foregoing, (vii) rights with respect to any Proprietary Information,
including any right to limit the use or disclosure of Proprietary Information by
any Person, (viii) rights with respect to any database, including any
registration of such right and any application to register such right, (ix)
rights of publicity and personality, including any right with respect to use of
a Person’s name, signature, likeness, image, photograph, voice, identity,
personality, and biographical and personal information and materials, (x) moral
rights, (xi) renewal, reissue, reversion, reexamination, or extension of any of
the foregoing, and (xii) any rights equivalent or similar to any of the
foregoing.
 
“Internal Controls” has the meaning provided in Section 3.18(b).
 
“Invention Assignment Agreement” has the meaning provided in Section 3.14(i).
 
“Investor” has the meaning provided in Section 7.2(i).
 
“Investor Non-Solicitation Agreement” has the meaning provided in Section
7.2(i).
 
“Investor Questionnaires” has the meaning provided in Section 5.6(a).
 
“IRS” means the United States Internal Revenue Service.
 
“IT System” means any information technology and computer system (including
Software, information technology and telecommunication hardware, network and
other equipment) relating to the transmission, storage, maintenance,
organization, presentation, generation, processing or analysis of data and
information and any support, disaster recovery and online service whether or not
in electronic format, used in or necessary to the conduct of the Business.
 
“Key Employee” means each Person identified on Schedule 1.1(b).
 
“Knowledge of the Company” means the actual knowledge of Graham Chynoweth and
Sean Doherty and the actual knowledge that any such Person should have had
following a reasonable investigation in the course of such Peron’s duties on
behalf of the Business.
 
“Law” means any law, statute, ordinance, regulation, rule, order, ruling, writ,
injunction, award, judgment or decree (and any regulations promulgated
thereunder), of any Governmental Authority.
 
“Letter of Transmittal” has the meaning provided in Section 2.5(b).
 
“Liability” means any debt, duty, Tax, obligation or liability of any kind or
nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, duty, Tax,
obligation or liability would be required to be disclosed on a balance sheet
prepared in accordance with GAAP and regardless of whether such debt, duty,
liability, Tax or obligation is immediately due and payable.
 
“Licensed IP” has the meaning provided in Section 3.14(c).
 
“Lock Up Period” has the meaning provided in Section 6.4(b).
 
 
 

 
 
“Losses” means, collectively, any and all deficiencies, judgments, settlements,
Actions or threatened Actions, assessments, Liabilities, losses, claims,
damages, interest, fines, penalties, costs, Taxes, and expenses of any kind or
nature (including reasonable legal, accounting and other costs and expenses of
professionals, and those incurred in connection with investigating, defending,
settling or otherwise satisfying any of the foregoing, and in seeking and
enforcing rights to indemnification hereunder); provided that “Losses” shall not
include punitive damages except those awarded to a third party in connection
with a third party claim.
 
“Major Stockholders” has the meaning provided in the Recitals.
 
“Mark” means any trademark, service mark, logo and design mark, trade dress,
trade name, fictitious or other business name, and brand name, together with all
goodwill associated with any of the foregoing.
 
“Material Adverse Effect” when used in connection with an entity means any
change, event, circumstance, condition or effect (each, an “Effect”) that is, or
would reasonably be expected to be, individually or in the aggregate, materially
adverse to the condition (financial or otherwise), assets, Liabilities,
business, employees, management, operations or results of operations of such
entity or the business thereof, taken as a whole; provided, however, that in no
event shall any Effect arising out of or in connection with or resulting from
any of the following be deemed, either alone or in combination, to constitute, a
Material Adverse Effect with respect to such entity: (i) changes in general
economic or political conditions, (ii) changes affecting such entity’s industry
generally, (iii) any acts of war or terrorism, (iv) changes in Law or GAAP
occurring after the Agreement Date, (v) adverse changes in general financial or
capital market conditions, including interest rates or currency exchange rates,
or (vi) any earthquake, hurricane or other natural disaster, weather-related
event, act of God or global pandemics, including the COVID-19 pandemic, and
compliance with any declaration of martial law, quarantine or similar binding
directive, or any guidance, policy or other similar action by any Governmental
Authority.
 
“Merger” has the meaning provided in the Recitals.
 
“Merger Consideration” has the meaning set forth in Section 2.6(a).
 
“Merger Consideration Pro Rata Share” means with respect to each Company
Stockholder, a fraction (expressed as a percentage), (a) the numerator of which
is the number of shares of Company Capital Stock held by such Company
Stockholder and (b) the denominator of which is the aggregate number of shares
of Company Capital Stock.
 
“Merger Sub” has the meaning provided in the Preamble.
 
“Merger Sub Ancillary Agreements” means each agreement or document (other than
this Agreement) that Merger Sub is to enter into as a party thereto pursuant to
this Agreement.
 
“Multiemployer Plan” has the meaning set forth in Section 3(37) of ERISA.
 
“MTRLC” has the meaning set forth in Section 4.2.
 
“Nixon” has the meaning provided in Section 11.15(a).
 
“Open Source Software” means all Software that contains any open source code,
free code, community source code or similar software code or is otherwise
distributed as “open source software” or freeware, shareware or public library
software, or other software under a similar licensing or distribution model, the
terms of which impose any restrictions on the use of any Software in the
Business, requires Company to make object or source code available to third
parties or which in any way limit the Company’s ownership of and freedom to act
regarding any Intellectual Property Right associated with such Software or
Company Offering that the Company has developed using or incorporating such
third party software or work.
 
 
 

 
 
“Ordinary Course of Business” means a course of business that is in the ordinary
course of business of the Company, consistent with the past custom and practices
of the Company and the Business, including with respect to frequency and
amounts.
 
“Owned Company IP” has the meaning provided in Section 3.14(c).
 
“Parent” has the meaning provided in the Preamble.
 
“Parent Ancillary Agreements” means each agreement or document (other than this
Agreement) that Parent is to enter into as a party thereto pursuant to this
Agreement.
 
“Parent Application” has the meaning provided in Section 4.15.
 
“Parent Closing Statement” has the meaning provided in Section 2.10.
 
“Parent Common Stock” means the Common Stock, $0.01 par value per share, of
Parent.
 
“Parent Equity Awards” means a Parent Stock Option or a share of Parent
Restricted Stock, as the case may be.
 
“Parent Indemnified Party” means each of Parent and its Affiliates (including,
following the Effective Time, the Surviving Entity) and its and their respective
officers, managers, directors, and employees.
 
“Parent PPP Loan” has the meaning provided in Section 4.15.
 
“Parent Restricted Stock” means any Parent Common Stock subject to vesting,
repurchase, or other lapse of restrictions granted by Parent.
 
“Parent SEC Reports” has the meaning provided in Section 4.8.
 
“Parent Stock Option” means any option to purchase Parent Common Stock granted
under any Parent Stock Plan.
 
“Parent Stock Plans” means the following plans, in each case as amended: Zoom
Telephonics, Inc. 2019 Stock Option Plan and Zoom Telephonics, Inc. 2019
Directors Stock Option Plan.
 
“Parent Transaction Expense” means any cost or expense of any kind or nature
incurred by, paid by, or to be paid by, Parent or Merger Sub in connection with
the Merger, this Agreement and the transactions contemplated by this Agreement,
including, without duplication: (i) all fees and expenses of any investment
banker, financial advisor, legal counsel, accountant or other professional
advisor; (ii) fifty percent (50%) of the estimated fees and expenses of the
Exchange Agent; and (iii) any payment, consideration, costs or fees associated
with obtaining any permits, authorizations, consents, waivers, orders or
approvals of, or making any filings or providing notices to, any Governmental
Authority or any other Person in connection with the Merger and the transactions
contemplated hereby.
 
“Party Representatives” has the meaning provided in Section 5.5(a).
 
“Patent” means any patent or patent application, utility model or application
for any utility model, inventor’s certificate or application for any inventor’s
certificate, or invention disclosure statement.
 
 
 

 
 
“Permitted Encumbrance” means (i) any lien for Taxes not yet due or being
contested in good faith by appropriate proceedings, in each case, for which
adequate reserves (as determined in accordance with GAAP) have been established
on the most recently dated Company Financial Statements; (ii) any mechanics’,
carriers’, workers’, repairers’ or other similar lien arising or incurred in the
Ordinary Course of Business relating to obligations as to which there is no
default on the part of the Company or the validity or amount of which is being
contested in good faith by appropriate proceedings; (iii) with respect to any
real property leased by the Company, (a) any Encumbrance on leases, subleases,
easements, licenses, rights of use, rights to access and rights of way arising
therefrom or benefiting or created by any superior estate, right or interest,
(b) any Encumbrance that would be set forth in any title policies, endorsements,
title commitments, title certificates and/or title reports and any zoning,
entitlement, conservation restriction and other land use and environmental
regulations by Governmental Authorities, and (c) any minor encroachment;
provided, however, that none of the foregoing Encumbrances or encroachments
described in clause (iii) would, individually or in the aggregate, impair, in
any material respect, the continued use and operation of the property to which
they relate in the Business; and (iv) in the case of equity securities,
restrictions arising under applicable securities Laws.
 
“Permitted Transferee” has the meaning provided in Section 6.4(b)(A).
 
“Person” means any individual, corporation, company, limited liability company,
partnership, limited partnership, limited liability partnership, trust, estate,
proprietorship, joint venture, association, organization, or other entity of any
kind or nature or any Governmental Authority.
 
“Personal Information” means, in addition to all information defined or
described by the Company as “personal data,” “personal information,” “personally
identifiable information,” “PII,” or any similar term in the Company’s privacy
policies or other public-facing statement, any information that is subject to
any applicable Privacy Laws. Personal Information may relate to any individual,
including any user of any Internet or device application who views or interacts
with any Company Offering, or a current, prospective or former customer,
employee or vendor of any Person. Personal Information includes information in
any form, including paper, electronic and other forms.
 
“PPP Loan Escrow Account” has the meaning provided in Section 7.2(q).
 
“Pre-Closing Tax Period” means any Tax period ending on or before the Closing
Date and that portion of any Straddle Period ending on and including the Closing
Date.
 
 “Privacy Law” means any applicable Law that governs the receipt, collection,
compilation, use, storage, processing, sharing, safeguarding, security,
disposal, destruction, disclosure or transfer of Personal Information or User
Data and any such Law governing breach notification, any penalties and
compliance with any order, including, without limitation, the Children’s Online
Privacy Protection Act, the Telephone Consumer Protection Act, the California
Online Privacy Protection Act, the California Consumer Privacy Act, the Video
Privacy Protection Act, the Communications Decency Act, the CAN-SPAM Act and
Canada’s Anti-Spam Legislation, HIPAA, the UK Data Protection Act 2018,
Regulation (EU) 2016/679 of the European Parliament and of the Council of 27
April 2016 (General Data Protection Regulation or “GDPR”), EU Directive
2002/58/EC and any Law or regulation implementing either or both of the GDPR and
EU Directive 2002/58/EC (each as amended from time to time), the California
Consumer Privacy Act (“CCPA”) applicable industry standards, including the
Payment Card Industry Standard, regulatory and self-regulatory guidelines and
codes, and all consumer protection or privacy laws relating to the receipt,
collection, compilation, use, storage, processing, sharing, safeguarding,
security, disposal, destruction, disclosure, or transfer of Personal Information
(including employee data), and published interpretations by Governmental
Authorities of any of the foregoing.
 
“Private Transaction” has the meaning provided in Section 6.4(b)(B).
 
 
 

 
 
“Privileged Deal Communications” has the meaning provided in Section 11.15(b).
 
“Proprietary Information” means any information or material not generally known
to the public, including any trade secret, know-how or other confidential and
proprietary information.
 
“R&W Insurer” means Dual Transactional Risk.
 
“R&W Policy” means a representations and warranties insurance policy issued in
the name of Parent, substantially in the policy form attached hereto as Exhibit
K, the cost of which shall be paid entirely by Parent.
 
“Registered Company Intellectual Property Right” means (i) any issued Patent,
pending Patent application, Mark registration, application for Mark
registration, Copyright registration, application for Copyright registration and
Domain Name registration owned, purported to be owned, filed or applied for by
or on behalf of the Company, and (ii) any other application and registration
filed by or on behalf of the Company (or otherwise authorized by or in the name
of the Company) with respect to any Company Intellectual Property Right.
 
“Registrable Securities” means the Parent Common Stock issued solely pursuant to
this Agreement as of the Closing Date, in respect of which the holders thereof
shall have delivered to Parent their agreement to be bound by the terms of
Article 6 hereof; provided, however, that any such securities shall cease to be
Registrable Securities when (i) a Securities Act registration statement covering
such Registrable Securities has been declared effective and such Registrable
Securities have been disposed of pursuant to such effective registration
statement, (ii) such Registrable Securities are distributed to the public
pursuant to Rule 144 under the Securities Act, as such rule may be amended from
time to time, or any other similar regulation hereafter adopted by the SEC
(“Rule 144”), or (iii) after such time as the Registrable Securities become
eligible for resale without volume or manner-of-sale restrictions and without
current public information requirements pursuant to Rule 144 or Rule 145 under
the Securities Act, as such rule may be amended from time to time, or any other
similar regulation hereafter adopted by the SEC (“Rule 145”) and Parent has
caused its transfer agent to remove any legends notated on the Registrable
Securities pursuant to Section 6.3; provided further, however, that if such
securities become ineligible for resale pursuant to Rule 144 or Rule 145 under
the foregoing circumstances due to the holder thereof being deemed an Affiliate
of Parent, such securities shall again become Registrable Securities until such
time as they thereafter cease to be Registrable Securities pursuant to any of
the foregoing clauses (i), (ii) or (iii).
 
“Registration Period” means the later of (i) one hundred eighty (180) days
following the Effective Time and (ii) one hundred eighty (180) days following
the filing of a Form 8-K by Parent containing the audited financial statements
of the Company, as may be necessary for Parent to comply with its SEC reporting
and disclosure requirements.
 
“Registration Statement” means each of the following: a Registration Statement
contemplated by Section 6.4 of this Agreement, including, in each case, the
prospectus, amendments and supplements to each such registration or prospectus
(including any substitute or replacement of any of the foregoing), and any pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statement.
 
“Related Parties” has the meaning provided in Section 3.8.
 
“Released Matters” has the meaning provided in Section 5.12(a).
 
“Released Party” has the meaning provided in Section 5.12(a).
 
“Releasing Party” has the meaning provided in Section 5.12(a).
 
 
 

 
 
“Representative” has the meaning provided in the Preamble.
 
“Representative Losses” has the meaning provided in Section 11.1(g).
 
“Requisite Stockholders” means those Company Stockholders that hold at least (i)
a majority in voting power of the outstanding stock of the Company entitled to
vote thereon, (ii) a majority in voting power of the outstanding Company Common
Stock entitled to vote thereon, (iii) a majority in voting power of the
outstanding Company Common Stock and of the outstanding shares of Company
Preferred Stock (voting together as a single class and not as separate series,
and on an as converted to the Company Common Stock basis) and (iv) sixty percent
(60%) of the then outstanding shares of Company Preferred Stock (voting together
as a single class and not as separate series, and on an as converted to the
Company Common Stock basis).
 
“RLF” has the meaning provided in Section 11.15(a).
 
“SEC” means the U.S. Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Services Agreements” has the meaning provided in Section 3.14(n).
 
“Significant Customer” has the meaning provided in Section 3.21(a).
 
“Significant Supplier” has the meaning provided in Section 3.21(b).
 
“Software” means any (i) computer program, including any API or SDK, software
implementation of any algorithm, model or methodology, whether in source code,
object or executable code, or other form, (ii) database, (iii) descriptions,
flow-charts and other work product used to design, plan, organize and develop
any of the foregoing, screens, subroutines, user interfaces, report formats,
firmware, development tools, templates, menus, buttons and icons and (iv)
documentation, including user manuals and other training documentation, related
to any of the foregoing, including, in each case, for the avoidance of doubt,
any Software hosted or “software-as-a-service” basis.
 
“Standard EULAs” has the meaning provided in Section 3.12(d).
 
“Straddle Period” means any Tax period beginning before or on the Closing Date
and ending after the Closing Date.
 
“Stockholder Approval” has the meaning provided in Section 3.3(d).
 
“Strategy Committee” has the meaning provided in the Recitals.
 
“Subsidiary” means any Person of which (i) a majority of the outstanding share
capital, voting securities or other equity interests is owned, directly or
indirectly, by the Company, or (ii) the Company is entitled, directly or
indirectly, to appoint a majority of the board of directors, board of managers
or comparable body of such Person.
 
“Support Agreement” has the meaning provided in the Recitals.
 
“Surviving Entity” has the meaning provided in the Recitals.
 
 
 

 
 
“Tax” (and, with correlative meaning, “Taxes”) means (i) any federal, state,
local or foreign income, alternative or add-on minimum, gross income, gross
receipts, sales, use, VAT, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental, escheat, unclaimed property, estimated or windfall profit tax,
custom duty, national insurance tax, health tax or other tax or other like
assessment or charge in the nature of a tax, together with any interest or any
penalty, addition to tax or additional amount imposed by any Governmental
Authority responsible for the imposition of any such tax (domestic or foreign),
whether disputed or not, (ii) any Liability for the payment of any amount of the
type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any Tax period, and (iii)
any Liability for the payment of any of the type described in clause (i) or (ii)
as a result of being a transferee of or successor to any Person or as a result
of any express or implied obligation to indemnify any other Person, by Contract
or otherwise.
 
“Tax Claim” has the meaning provided in Section 10.3(a).
 
“Tax Return” means any return, amended return, election declaration, report,
voluntary disclosure, claim for refund, information return or statement filed or
required to be filed in respect of Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
 
“Tax Sharing Agreement” means any Tax sharing, Tax indemnity, or Tax allocation
agreement (other than any commercial agreement entered into in the ordinary
course of business, the principal purpose of which is not related to Taxes).
 
“Terminated Agreement” has the meaning provided in Section 7.2(j).
 
“Terminated Benefit Plan” has the meaning provided in Section 5.7(b).
 
“Third-Party Platform” means any other Person’s device, platform, server,
application, operating system, website, networked physical object (including
Internet of Things (IoT)), software as a service, platform as a service,
infrastructure as a service, cloud service or similar service.
 
“Transfer” means, with respect to any security, to sell, offer, pledge, contract
to sell, grant any option, right or contract to purchase, or otherwise transfer
(including by gift or operation of law), dispose of, hypothecate or encumber,
directly or indirectly, such security.
 
“Treasury Regulations” means the United States Treasury Regulations promulgated
under the Code.
 
“User Data” means any Personal Information or other data or information
collected by or on behalf of the Company from any user of any website or any
Company Offering.
 
“VAT” means any ad valorem, value added, goods and services or similar Tax.
 
“Virtual Data Room” has the meaning provided in Article 3.
 
“WARN Act” means the Workers Adjustment and Retraining Notification Act, as
amended, and all state and local statutory equivalents.
 
“Written Consent” has the meaning provided in the Recitals.