Document:

zmtp_ex10-1

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.

 

 

 

-2-

 

 

(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.

 

 

 

-7-

 

 

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.

 

 

 

-8-

 

 

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”).

 

 

 

-9-

 

 

(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.

 

 

 

-13-

 

 

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.

 

 

 

-29-

 

 

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.

 

 

 

-30-

 

 

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.

 

 

 

-31-

 

 

(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.

 

 

 

-32-

 

 

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.

 

 

 

-33-

 

 

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.

 

 

 

-34-

 

 

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).

 

 

 

-37-

 

 

(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.

 

 

 

-38-

 

 

(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.

 

 

 

-39-

 

 

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.

 

 

 

-40-

 

 

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.

 

 

 

-42-

 

 

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.

 

 

 

-51-

 

 

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.

 

 

 

-53-

 

 

(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.

 

 

 

-54-

 

 

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.

 

 

 

-55-

 

 

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]

 

 

-57-

 

 

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.Document

Exhibit 4.1
EXECUTION VERSION

			
	

REVLON CONSUMER PRODUCTS CORPORATION,
as Borrower

________________________

SECOND AMENDED AND RESTATED 
2019 SENIOR UNSECURED LINE OF CREDIT AGREEMENT

Dated as of September 28, 2020
_________________________
MACANDREWS & FORBES GROUP, LLC,

as Lender
			
	

        

TABLE OF CONTENTS
Page
						
	SECTION 1. DEFINITIONS
	1

	1.1    Defined Terms
	1

	1.2    Other Definition Provisions
	4

	SECTION 2. AMOUNT AND TERMS OF COMMITMENT
	4

	2.1    The Commitment
	4

	2.2    Procedure for Borrowing
	4

	2.3    Voluntary Termination or Reduction of the Commitment
	5

	2.4    Repayment of Loans; Evidence of Debt
	5

	SECTION 3. PROVISIONS RELATING TO THE LOANS
	5

	3.1    Optional Prepayments
	5

	3.2    Mandatory Prepayments
	6

	3.3    Interest Rate and Payment Dates
	6

	3.4    Method of Payments
	7

	SECTION 4. REPRESENTATIONS AND WARRANTIES
	7

	4.1    Corporate Existence
	7

	4.2    Corporate Power
	7

	4.3    No Legal Bar to Loans
	7

	4.4    Use of Proceeds
	8

	SECTION 5. CONDITIONS PRECEDENT
	8

	5.1    Conditions to Initial Loan
	8

	5.2    Conditions to Each Loan
	8

	SECTION 6. FURTHER ASSURANCES
	9

	6.1    Notices; Further Assurances
	9

	SECTION 7. EVENTS OF DEFAULT
	9

	7.1    Events of Default
	9

	SECTION 8. MISCELLANEOUS
	11

	8.1    Amendments and Waivers
	11

	8.2    Notices
	11

	8.3    No Waiver; Cumulative Remedies
	11

	8.4    Survival of Representations and Warranties
	12

	8.5    Payment of Expenses; General Indemnity
	12

	8.6    Successors and Assigns
	12

	8.7    Counterparts
	13

	8.8    Severability
	13

	8.9    Integration
	13

	8.10    GOVERNING LAW
	13

	8.11    Submission To Jurisdiction; Waivers
	13

	8.12    WAIVERS OF JURY TRIAL
	14

	8.13    Effect of Amendment and Restatement
	14

	8.14    Covenant Regarding Foreign Asset-Based Term Loan Agreement
	14

    -1-

SECOND AMENDED AND RESTATED 2019 SENIOR UNSECURED LINE OF CREDIT AGREEMENT
SECOND AMENDED AND RESTATED 2019 SENIOR UNSECURED LINE OF CREDIT AGREEMENT, dated as of September 28, 2020, between REVLON CONSUMER PRODUCTS CORPORATION, a Delaware corporation (the “Borrower”), and MACANDREWS & FORBES GROUP, LLC, a Delaware limited liability company (the “Lender”).
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lender to extend credit on an unsecured basis in order to enable the Borrower, subject to the terms and conditions of this Agreement, to borrow on a revolving basis from time to time prior to the Termination Date;
WHEREAS, the Lender is willing to make such loans to the Borrower only on the terms and subject to the conditions set forth herein; and
WHEREAS, the Lender is willing to make the commitments set forth in Section 8.14 hereof, in lieu of but not in addition to the Loans (as defined below), subject to the terms set forth in Section 8.14;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1Defined Terms
.  Except as qualified by Section 8.14, as used in this Agreement, the following terms shall have the following respective meanings (such definitions to be equally applicable to the singular and plural forms thereof):
“2020 Term Loan Agreement” means the BrandCo Credit Agreement, dated as of May 7, 2020, by and among the Borrower, Revlon, Inc., certain financial institutions from time to time parties thereto, and Jefferies Finance LLC, as administrative and collateral agent.
“Affiliate” of any Person means any Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person.  As used in this definition, “control” (including with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
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“Agreement” shall mean this Second Amended and Restated 2019 Senior Unsecured Line of Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time.
“Applicable Bank Account” is defined in Section 2.2(a) hereof.
“Bank Revolving Credit Agreement” means the Asset-Based Revolving Credit Agreement, dated as of September 7, 2016, as amended and restated as of April 17, 2018, by and among the Borrower, certain Local Borrowing Subsidiaries from time to time parties thereto, Revlon, Inc., certain financial institutions from time to time parties thereto, and Citibank, N.A., as Administrative Agent, as amended March 6, 2019, April 17, 2020, May 7, 2020 and as further, supplemented and otherwise modified from time to time.
“Bankruptcy Law” means Title 11 of the United States Code or any similar Federal or state law for the relief of debtors.
“Borrower” is defined in the introductory paragraph of this Agreement.
“Borrowing Amount”, “Borrowing Date” and “Borrowing Notice” are each defined in Section 2.2(a) hereof.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
“Commitment” means the obligation of the Lender to make Loans to the Borrower hereunder in an aggregate principal amount at any one time outstanding of up to $30,000,000, as such obligation may be reduced from time to time in accordance with Section 2.3 hereof.
“Commitment Period” means the period from and including the Effective Date to but not including the Termination Date.
“Contractual Obligation” means, with respect to any Person, any provision of any material debt security or of any material preferred stock or other equity interest issued by such Person or of any material indenture, mortgage, agreement, guarantee, instrument or undertaking to which such Person is a party or by which it or any of its material property is bound.
“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
“Default” means any of the events specified in Section 7.1 hereof, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition specifically set forth therein, has been satisfied.
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“Dollars” and “$” mean dollars in lawful currency of the United States of America.
“Effective Date” is defined in Section 5.1 hereof.
“Event of Default” means any of the events specified in Section 7.1 hereof; provided, that any requirement for the giving of notice, the lapse of time, or both, or any other condition specifically set forth therein, has been satisfied.
“Foreign Asset-Based Term Loan Agreement” means the Asset-Based Term Loan Credit Agreement, dated as of July 9, 2018, among Revlon Holdings B.V. and Revlon Finance LLC, as borrowers, certain subsidiaries of the Borrower, as guarantors, certain financial institutions from time to time parties thereto, and Citibank, N.A., as administrative agent and collateral agent, as amended May 4, 2020 and as further amended, supplemented and otherwise modified from time to time.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including, without limitation, any governmental department, commission, board, bureau, agency or instrumentality, or other court or arbitrator, in each case whether of the United States of America or foreign).
“Interest Payment Date” means, as to any Loan, and December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and December 31 2020.
“Lender” is defined in the introductory paragraph of this Agreement.
“Loans” is defined in Section 2.1(a) hereof.
“Person” means an individual, a partnership, a corporation, a business trust, a joint stock company, a limited liability company, a trust, an unincorporated association, a joint venture, a Governmental Authority or any other entity of any nature whatsoever.
“Requirement of Law” means, for any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property or to which such Person or any of its material property is subject.
“Restricted Subsidiary” has the meaning set forth in the Bank Revolving Credit Agreement.
“Significant Subsidiary” means any Subsidiary other than an “Immaterial Subsidiary” (as defined in the Bank Revolving Credit Agreement).
-3-

“Subsidiary” of any Person means a corporation or other entity of which shares of capital stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person; provided, that (a) unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower and (b) unless otherwise qualified, all references to a “wholly-owned Subsidiary” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower of which the Borrower directly or indirectly owns all of the capital stock or other ownership interests (other than directors’ qualifying shares).
“Termination Date” means December 31, 2020 or, if earlier, the date upon which the Commitment shall terminate in accordance with the terms hereof.
“Term Loan Agreement” means the Term Credit Agreement, dated as of September 7, 2016, by and among the Borrower, Revlon, Inc., certain financial institutions from time to time parties thereto, and Citibank, N.A., as Administrative Agent, as amended May 7, 2020 and as further amended, supplemented and otherwise modified from time to time.
SECTION 1.Other Definition Provisions.
(a)All terms defined in this Agreement shall have such defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto unless otherwise defined therein.
(b)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; and Section and subsection references contained in this Agreement are references to Sections and subsections in or to this Agreement, unless otherwise specified.
SECTION 2.AMOUNT AND TERMS OF COMMITMENT
2.1The Commitment.
(a)Subject to the terms and conditions hereof, the Lender agrees to make revolving loans (“Loans”) in Dollars to the Borrower from time to time during the Commitment Period with an aggregate principal amount outstanding at any one time not to exceed the amount of the Commitment then in effect.
(b)During the Commitment Period, the Borrower may use the Commitment by borrowing, prepaying the Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.
-4-

2.2Procedure for Borrowing.
(a)The Borrower may borrow under the Commitment during the Commitment Period on any Business Day; provided, that, unless the Lender otherwise agrees, the Borrower shall deliver to the Lender a written notice (or provide a telephonic notice promptly confirmed in writing) (a “Borrowing Notice”) which must (i) specify the date on which such borrowing is to be made (the “Borrowing Date”), the amount to be borrowed from the Lender on such Borrowing Date (the “Borrowing Amount”), and the bank account and other pertinent wire transfer instructions to which such borrowing is to be deposited by the Lender (the “Applicable Bank Account”), (ii) certify that all applicable conditions to such borrowing hereunder have been satisfied and (iii) be received by the Lender prior to 1:00 p.m., New York City time, at least one Business Day prior to such Borrowing Date or, in the case of a Loan to be made on the Effective Date, on or before the Borrowing Date.
(b)On each Borrowing Date set forth in a Borrowing Notice, the Lender will make a Loan to the Borrower in an amount equal to the lesser of (i) the Borrowing Amount set forth in such Borrowing Notice, and (ii) the undrawn portion of the Commitment as then in effect by making the proceeds thereof available to the Borrower in immediately available funds in Dollars not later than 4:00 p.m., New York City time, on such Borrowing Date to the Applicable Bank Account.
2.3Voluntary Termination or Reduction of the Commitment.  
The Borrower shall have the right, in its sole discretion, to terminate the Commitment or, from time to time, to permanently reduce the Commitment during the Commitment Period by delivering to the Lender a written notice specifying such termination or the amount of such reduction. Any termination of or permanent reduction in the Commitment pursuant to this Section 2.3 shall take effect on the date specified in such written notice.

2.4Repayment of Loans; Evidence of Debt.
i.The Borrower hereby unconditionally promises to pay to the Lender the then unpaid principal amount of each Loan on the Termination Date.  The Borrower hereby further agrees to pay to the Lender interest on the unpaid principal amount of each Loan from time to time outstanding from the date hereof until payment in full thereof at the rates per annum and in the manner set forth in Section 3.4 hereof.
ii.The Lender shall maintain an account evidencing the indebtedness of the Borrower to the Lender resulting from the Loans, including the outstanding principal amount of each Loan, accrued and unpaid interest outstanding in respect thereof and the amount of any sum received by the Lender hereunder from the Borrower in respect of the Loans and the manner in which it was applied.  The entries made in such account of the Lender shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of the Lender to maintain any such account, 
-5-

or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans in accordance with the terms of this Agreement.  
SECTION 3PROVISIONS RELATING TO THE LOANS
3.1Optional Prepayments
.  The Borrower may prepay the Loans, in whole or in part, at any time without premium or penalty, together with any interest accrued but unpaid on the amount prepaid.  Each such optional prepayment shall be applied, first, to the aggregate principal amount outstanding under the Loans, and, second, to any accrued and unpaid interest on the Loans.
3.2Mandatory Prepayments.  
(a)If, at any time, the aggregate outstanding principal amount of the Loans exceeds the Commitment then in effect, the Borrower shall immediately repay the principal amount of the Loans in an amount equal to such excess, together with any interest accrued but unpaid on the amount prepaid.
(b)Upon the effective date of any reduction in the Commitment pursuant to Section 2.3 hereof, the Borrower shall prepay on such date the aggregate principal amount of the Loans then outstanding in excess of the Commitment after giving effect to such reduction, together with any interest accrued but unpaid on the amount prepaid.
(c)If on any date for any reason the Borrower and its Subsidiaries have available unrestricted cash in excess of amounts required in the Borrower’s reasonable judgment to run the operations of the Borrower and its Subsidiaries in the ordinary course of business, Borrower shall prepay on such date the aggregate principal amount of the Loans then outstanding in an amount equal to such available borrowing capacity or excess cash, as applicable (except to the extent that using such excess cash to prepay Loans would result in material adverse tax consequences after taking into account all relevant factors), together with interest accrued but unpaid on such amount.
(d)On the Termination Date, the Commitment shall terminate and the Borrower shall cause all outstanding Loans, together with any interest accrued but unpaid thereon, to be paid in full.
3.3Interest Rate and Payment Dates.
(a)Each Loan shall bear interest on the unpaid principal amount thereof at a rate per annum from time to time equal to 8.00%. 
-6-

(b)If all or a portion of any Loan, any interest payable thereon or any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration, as a result of an event requiring a mandatory prepayment or otherwise), then, for so long as such amount remains unpaid, such overdue amount shall bear interest at a rate per annum equal to the rate otherwise in effect plus 2%.
(c)Interest accrued from time to time in respect of each Loan shall be payable in cash in arrears on each Interest Payment Date; provided, that interest accruing pursuant to paragraph (b) of this Section 3.3 shall be payable from time to time on demand.  Any accrued and unpaid interest on the Loans shall be payable in full in cash on the Termination Date.
(d)Interest shall be calculated on the basis of a 365 (or 366, as the case may be) day year for the actual days elapsed.
3.4Method of Payments.
(a)All payments (including prepayments) to be made by the Borrower on account of principal, interest, costs and expenses shall be made without set-off, counterclaim, deduction or withholding and shall be made to the Lender at such location or to such account as the Lender may specify to the Borrower, on or prior to 1:00 p.m., New York City time, on the due date thereof, in Dollars and in immediately available funds.
(b)If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and interest thereon shall be payable at the then applicable rate during such extension.
SECTION 4.REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the Loans hereunder, the Borrower hereby represents and warrants to the Lender that:
4.1Corporate Existence
.  The Borrower is duly incorporated, validly existing and in good standing under the laws of the State of Delaware.
4.2Corporate Power.
(a)The Borrower has the corporate power, authority and legal right to execute, deliver and perform this Agreement and to borrow hereunder, and it has taken as of the Effective Date all necessary corporate action to authorize its borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement.
-7-

(b)No consent of any other Person (including, without limitation, stockholders or creditors of the Borrower or of any parent entity of the Borrower), and no consent, license, permit, approval or authorization of, exemption by, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement by or against the Borrower, except for any consents, licenses, permits, approvals or authorizations, exemptions, registrations, filings or declarations that have already been obtained and remain in full force and effect.
(c)This Agreement has been executed and delivered by a duly authorized officer of the Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms except as enforceability may be limited by Bankruptcy Laws or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity.
4.3No Legal Bar to Loans
The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, will not violate any Contractual Obligation or material Requirement of Law to which the Borrower or any of its Subsidiaries is a party, or by which the Borrower or any of its Subsidiaries or any of their respective material properties or assets may be bound, and will not result in the creation or imposition of any lien on any of their respective material properties or assets pursuant to the provisions of any such Contractual Obligation. 
4.4Use of Proceeds
.  The Borrower will use the proceeds of the Loans hereunder to provide working capital for the Borrower and its Subsidiaries and for other general corporate purposes.
SECTION 5CONDITIONS PRECEDENT
SECTION 1Conditions to Initial Loan
.  The obligation of the Lender to make the initial Loan requested to be made by it shall be subject to the satisfaction or waiver by the Lender of the following conditions precedent (the date on which said conditions are satisfied or waived being herein called the “Effective Date”):
(a)Agreement.  The Lender shall have received this Agreement, executed and delivered by a duly authorized officer of the Borrower.
(b)Additional Matters.  All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to 
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the Lender, and the conditions set forth in Section 5.2 hereof shall have been satisfied or waived by the Lender.
SECTION 2Conditions to Each Loan
.  The obligation of the Lender to make any Loan requested to be made on any Borrowing Date (including, without limitation, the initial Loan) shall be subject to the satisfaction or waiver by the Lender of the following conditions precedent:
(a)Credit Availability.  The amount of the Loan requested to be made on such Borrowing Date shall not exceed the amount that the Lender is obligated to make in accordance with Section 2.1(a) hereof.
(b)Representations and Warranties.  Each of the representations and warranties made by the Borrower in or pursuant to this Agreement (other than Section 4.4 hereof) shall be true and correct in all material respects on and as of such Borrowing Date as if made on and as of such date and the representations and warranties made by the Borrower in Section 4.4 hereof shall be true and correct on and as of such Borrowing Date as if made on and as of such date, in all cases both before and after giving effect to such Loan and the use of the proceeds thereof.
(c)No Default.  No Default or Event of Default shall have occurred and be continuing on such Borrowing Date, both before and after giving effect to the Loan requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the Borrowing Date thereof that the conditions contained in this Section 5.2 have been satisfied.
SECTION 6FURTHER ASSURANCES
6.1Notices; Further Assurances
.  The Borrower shall notify the Lender in writing promptly following the occurrence of any Event of Default, as defined in any of the Bank Revolving Credit Agreement, the Foreign Asset-Based Term Loan Agreement, the Term Loan Agreement, the 2020 Term Loan Agreement and the indentures for the 2021 Notes and the 2024 Notes (each as defined in the Bank Revolving Credit Agreement).  Upon the request of the Lender, the Borrower will execute and deliver such further instruments, provide such further information and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Agreement.
SECTION 7EVENTS OF DEFAULT
7.1Events of Default
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.  An “Event of Default” occurs if:
(a)the Borrower defaults in any payment of interest on any Loan when the same becomes due and payable and such default continues for a period of 30 days;
(b)the Borrower defaults in the payment of the principal of any Loan when the same becomes due and payable;
(c)the Borrower fails to comply with any of the other material covenants or agreements applicable to it in this Agreement (other than those referred to in (a) or (b) above) and such failure continues for 60 days after receipt of written notice thereof from the Lender;
(d)any representation or warranty made or deemed made by the Borrower in this Agreement shall prove to have been incorrect, false or misleading in any material respect on or as of the date when made or deemed to have been made;
(e)an Event of Default, as defined in any of the Bank Revolving Credit Agreement, the Foreign Asset-Based Term Loan Agreement, the Term Loan Agreement, the 2020 Term Loan Agreement and the indentures for the 2021 Notes and the 2024 Notes (each as defined in the Bank Revolving Credit Agreement), occurs and is continuing;
(f)the Borrower or any Restricted Subsidiary of the Borrower that is a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
1.commences a voluntary case;
2.consents to the entry of an order for relief against it in an involuntary case;
3.consents to the appointment of a Custodian of it or for any substantial part of its property; or
4.makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign Bankruptcy Laws;
(g)a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
1.is for relief against the Borrower or any Restricted Subsidiary of the Borrower that is a Significant Subsidiary in an involuntary case;
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2.appoints a Custodian of the Borrower or any Restricted Subsidiary of the Borrower that is a Significant Subsidiary for any substantial part of the Borrower’s property; or
3.orders the winding up or liquidation of the Borrower or any Restricted Subsidiary of the Borrower that is a Significant Subsidiary;
or any similar relief is granted under any foreign Bankruptcy Laws and the order or decree remains unstayed and in effect for 60 consecutive days; or
(h)any final judgment or final judgments for the payment of money in excess (net of amounts covered by third-party insurance with insurance carriers who in the reasonable judgment of the Borrower are creditworthy and who have not disclaimed liability with respect to such judgment or judgments) of $50 million or its foreign currency equivalent is entered against the Borrower or any Restricted Subsidiary of the Borrower that is a Significant Subsidiary and is not discharged and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (B) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed and, in the case of (B), such default continues for 60 consecutive days.
For the avoidance of doubt, after the commencement of an event specified in paragraph (f) or (g) of this Section 7.1 with respect to a Restricted Subsidiary that is not a Significant Subsidiary, if such Restricted Subsidiary subsequently becomes a Significant Subsidiary, the occurrence of any events specified in paragraph (f) or (g) of this Section 7.1 with respect to such Restricted Subsidiary arising from or in connection with such previously commenced event shall not constitute an Event of Default pursuant to such paragraph (f) or (g).
If an Event of Default shall have occurred and is continuing, (A) if such event is an Event of Default specified in paragraph (f) or (g) of this Section 7.1 with respect to the Borrower, automatically the Commitment shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken:  (i) the Lender may by notice to the Borrower declare the Commitment to be terminated forthwith, whereupon such Commitment shall immediately terminate; and (ii) the Lender may by notice to the Borrower declare the Loans hereunder (with accrued interest thereon) and all other amounts owing by the Borrower under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable.  Except as expressly provided above in this Section 7.1, presentment, demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 8MISCELLANEOUS
8.1Amendments and Waivers
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.  This Agreement shall not be amended, supplemented or otherwise modified, except by written instrument which has been duly executed and delivered by each party hereto.  In the case of any waiver of the terms hereof, the parties to this Agreement shall be restored to their former positions and rights hereunder, and any Default or any Event of Default waived shall, to the extent provided in such waiver, be deemed to be cured and not continuing; but, no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.
8.2Notices
.  All notices, consents, requests and demands to or upon the respective parties hereto to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, certified mail, return receipt requested, postage prepaid, or, in the case of electronic mail notice, when sent and receipt has been confirmed, addressed as follows (or to such other address as may be hereafter notified by any of the respective parties hereto):
Borrower:    Revlon Consumer Products Corporation
One New York Plaza
New York, New York 10004
Attention:  Michael Sheehan

Lender:    MacAndrews & Forbes Group, LLC
35 East 62nd Street
New York, New York 10065
Attention:  Frances Townsend

provided, that any notice, request or demand to or upon the Lender pursuant to Sections 2 and 3 shall not be effective until received.
8.3No Waiver; Cumulative Remedies
.  No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
8.4Survival of Representations and Warranties
.  All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.
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8.5Payment of Expenses; General Indemnity
.  The Borrower agrees (a) to pay or reimburse the Lender for all of its reasonable out-of-pocket attorneys’ fees and expenses incurred in connection with the preparation, execution and delivery of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith (including without limitation any documentation relating to the Foreign Facility referred to below), and the consummation of the transactions contemplated hereby and thereby, (b) to pay or reimburse the Lender for all its reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents, (c) to pay, indemnify, and to hold the Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay caused by the Borrower in paying, stamp, excise and other similar taxes, if any, if legal, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement and any such other documents, and (d) to pay, indemnify, and hold harmless the Lender from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, reasonable attorneys’ fees and expenses) with respect to the execution, delivery, consummation, enforcement, performance and administration of this Agreement and any such other documents (all of the foregoing, collectively, the “indemnified liabilities”); provided, that the Borrower shall have no obligation hereunder with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of the Lender, (ii) legal proceedings commenced against the Lender by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such or (iii) amounts of the types referred to in clauses (a) through (c) above except as provided therein.  The agreements in this Section 8.5 shall survive the termination of the Commitment and the repayment of the Loans and all other amounts payable hereunder.
8.6Successors and Assigns
.  This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and permitted assigns and, except as set forth below, neither the Borrower nor the Lender may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other party.  This Agreement, or the Lender’s obligations hereunder, may be assigned, delegated or transferred, in whole or in part, by the Lender to any Affiliate of the Lender over which the Lender or any of its Affiliates exercises investment authority, including, without limitation, with respect to voting and dispositive rights; provided any such assignee assumes the obligations of the Lender hereunder and agrees in writing to be bound by the terms of this Agreement in the same manner as the Lender.  Notwithstanding the foregoing, no such assignment shall relieve the Lender of its obligations hereunder if such assignee fails to perform such obligations.  Without 
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complying with the provisions of this Section 8.6, the Lender may satisfy its obligations under Sections 2.1 or 2.2 hereof by causing an Affiliate of the Lender to satisfy its obligations under such Sections.
8.7Counterparts
.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
8.8Severability
.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
8.9Integration
.  This Agreement represents the agreement of the Borrower and the Lender with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Lender for the benefit of the Borrower relative to the subject matter hereof not expressly set forth or referred to herein.
8.10GOVERNING LAW
.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.11Submission To Jurisdiction; Waivers
.  The Borrower hereby irrevocably and unconditionally:
(a)submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;
(b)consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
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(c)agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in Section 8.2 or at such other address of which the Lender shall have been notified pursuant thereto;
(d)agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e)waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages.
8.12WAIVERS OF JURY TRIAL
.  THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.13Effect of Amendment and Restatement
.  This Agreement amends, restates and supersedes in its entirety that certain Amended and Restated 2019 Senior Unsecured Line of Credit Agreement, dated as of November 7, 2019, between the Lender and the Borrower.
8.14Covenant Regarding Foreign Asset-Based Term Loan Agreement.  
(a)Subject to the prior repayment in full of the Loans and the termination of the Commitment, and subject to the remainder of this Section 8.14, the Lender shall, promptly at the request of the Borrower (and in no event later than five (5) Business Days after such request accompanied by documentation satisfying the terms set forth in Section 8.14(b)), become party to the Foreign Asset-Based Term Loan Agreement, as the same shall be amended and extended or refinanced (the “Amended Foreign Loan Agreement”) or, in the event the Borrower is not successful in extending or refinancing the Foreign Asset-Based Term Loan Agreement, enter into a new loan agreement (the credit facility thereunder, a “Stand Alone Foreign Facility”) and related security and other documents necessary to effect the transactions contemplated thereby, in each case as a lender and on the terms and conditions set forth in Section 8.14(b) (the foregoing undertaking, the “Secured Commitment”).
(b)The amendment and/or loan documentation referred to in Section 8.14(a) and all related documentation shall (i) include the terms set forth below, and (ii) otherwise be substantially the same as those governing the Foreign Asset-Based 
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Term Loan Agreement or, to the extent not the same, reasonably acceptable to Borrower and Lender:
1.Lender will provide a $30,000,000 senior secured term loan facility to be drawn in full or in part, at the Borrower’s option, under the Amended Foreign Loan Agreement (the “FILO Facility” and together with the Stand Alone Foreign Facility, the “Foreign Facility”) or under a new loan agreement governing the  Stand Alone Foreign Facility;
2.the borrower and guarantors under the Foreign Facility shall be the same as under the Foreign Asset-Based Term Loan Agreement;
3.the FILO Facility will mature on the same date as the maturity date of any extended or refinanced Foreign Asset-Based Term Loan Agreement, and the maturity date of the Foreign Facility will be July 9, 2022; 
4.the Foreign Facility shall bear interest at a rate of LIBOR plus 10.00%;
5.the interest payment dates for the Foreign Facility shall be consistent with the Foreign Asset-Based Term Loan Agreement; 
6.the Foreign Facility shall be secured by the same assets that secure the Foreign Asset-Based Term Loan Agreement and subject to a customary borrowing base;
7.(a) the FILO Facility shall be first-in/last-out as to payment priority, permitting not less than $27,000,0001 of senior priority loans secured by the same collateral and not more than $35,000,000 of senior priority loans, whether at closing or thereafter, except to the extent that the FILO Facility is reduced on a dollar-for-dollar basis by the amount of senior priority loans in excess of $35,000,000 (i.e., the aggregate of the FILO Facility and the senior priority tranche shall not exceed $65,000,000); and (b) the Stand Alone Foreign Facility shall have a first lien on the collateral;
8.the collateral eligibility requirements for the Foreign Facility shall be the same as under the Foreign Asset-Based Term Loan Agreement and the borrowing base advance rates against the NOLV of eligible inventory and against receivables shall not exceed 95.0%; 
9.the amount available to draw under the FILO Facility at any time shall be the lesser of (x) $30,000,000 (as reduced in accordance with clause (x) below) and (y)(i) the borrowing base at such time minus (ii) the aggregate principal amount of senior priority loans outstanding at such time (inclusive of any fees payable in connection therewith) to third party lenders;

1 Based on €48,500,000 outstanding currently. 
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10.in the event the Foreign Asset-Based Term Loan Agreement is extended or refinanced, other than by Lender, in an aggregate principal amount in excess of $35,000,000, the $30,000,000 commitment amount referred to in Section 8.14(b)(i) shall be reduced on a dollar-for-dollar basis by the amount of such excess; 
11.for the avoidance of doubt, no fees shall be payable in connection with the Secured Commitment or the funding thereof (other than, without duplication, costs and expenses to the extent payable pursuant to Section 8.5 or the corresponding provisions of the Foreign Asset-Based Term Loan Agreement); 
12.the Foreign Facility shall contain a cross-default to the Term Loan Agreement, Bank Revolving Credit Agreement and 2020 Term Loan Agreement for the benefit of Lender, and absence of default shall be a condition to draw on the Foreign Facility; and
13.availability of the Foreign Facility shall be conditioned upon the consummation by Borrower of an exchange offer for its 5.75% Senior Notes due 2021 on terms, including the minimum tender condition, not materially less favorable to the Borrower in the aggregate than those set forth in the confidential Offering Memorandum and Consent Solicitation Statement, provided to the Lender on or prior to the date hereof. 
(c)The Secured Commitment shall terminate on the latest to occur of (i) the Termination Date, (ii) the date on which the undertakings of this Section 8.14 are satisfied and (iii) July 9, 2021. 
(d)This Section 8.14 shall, as applicable, survive the Termination Date and terminate as set forth in section (c) above.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
REVLON CONSUMER PRODUCTS CORPORATION
By:      /s/ Victoria L. Dolan    
Name:    Victoria L. Dolan
Title:    Chief Financial Officer
MACANDREWS & FORBES GROUP, LLC
By:      /s/ Jeffrey Brodsky    
Name:  Jeffrey Brodsky
Title: Chief Financial Officer

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