BNZIW Banzai International Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): January 23, 2025

 

Banzai International, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		001-39826		85-3118980
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

435 Ericksen Ave, Suite 250 Bainbridge Island, Washington		98110
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (206) 414-1777

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, par value $0.0001 per share		BNZI		The Nasdaq Capital Market
Redeemable Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $575.00		BNZIW		The Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01. Entry into a Material Definitive Agreement

 

Agreement and Plan of Merger

 

On January 22, 2025, Banzai International, Inc. (“Banzai” or the “Company”), a Delaware corporation, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Act-On Software Inc., a Delaware corporation (“Act-On”), and Banzai Passage Inc., a Delaware corporation and wholly owned subsidiary of Banzai (“Merger Sub”) that was formed solely for purposes of consummating the transactions contemplated in the Merger Agreement (the “Merger”). Pursuant to the Merger Agreement, subject to the satisfaction or waiver of the conditions set forth therein, upon closing of the Merger (the “Closing”), Act-On will merge with and into Merger Sub, with Act-On surviving the Merger (the “Surviving Entity”), thereafter being a direct, wholly owned subsidiary of Banzai. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.  

 

Merger Consideration

 

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the aggregate merger consideration to be issued to Act-On Stockholders and certain Management Employees (as defined in the Merger Agreement) shall be a total of approximately $35,050,000, payable in cash and in shares of Class A common stock of Banzai, par value $0.0001 per share (the “Class A Common Stock”) subject to adjustment as set forth in the Merger Agreement (the “Merger Consideration”). The adjustments to the Merger Consideration in the Merger Agreement include a customary working capital adjustment based on the amount by which certain working capital items at Closing are greater or less than the target working capital as defined in the Merger Agreement. In addition to the Merger Consideration, at the Effective Time, Banzai will fully pay off a certain loan owed to a certain lender of Act-On as of Closing (the “Payoff Amount”) and the out-of-pocket expenses incurred by Act-On in connection with the Merger (the “Transaction Expenses”) in cash to Act-On Stockholders, and issue a number of shares of Class A Common Stock (the “Share Consideration”) (or pre-funded warrants in lieu thereof, the “Pre-Funded Warrants”) to Act-On Stockholders and Management Employees that equal to the quotient of $33,200,000 divided by the average of the daily volume-weighted average trading prices of Class A Common Stock for the consecutive five (5) Trading Days (as defined in the Merger Agreement) immediately prior to and including the Trading Day immediately preceding the date of Closing (the “Closing Date”) (the “Banzai 5-Day VWAP”).  

 

Notwithstanding anything in the Merger Agreement to the contrary, Banzai shall not issue any shares of Class A Common Stock, to the extent that the issuance of shares of Class A Common Stock as Share Consideration would result in the Act-On Stockholders and Management Employees receiving an aggregate number of shares of Class A Common Stock exceeding 19.99% of the total shares of Class A Common Stock and shares of Class B common stock of Banzai, par value $0.0001 per share (the “Class B Common Stock”, together with Class A Common Stock, the “Common Stock”) issued and outstanding immediately prior to the Effective Time (the “Nasdaq Ownership Limitation”). In addition, notwithstanding anything in the Merger Agreement and Pre-Funded Warrants to the contrary, Banzai shall not issue any shares of Class A Common Stock, to the extent that any issuance of the shares of Class A Common Stock as Share Consideration would result in an Act-On Stockholder or a Management Employee, together with its affiliates, beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated thereunder) more than 4.99% of the Class A Common Stock issued and outstanding immediately following such issuance (the “Beneficial Ownership Limitation” and, together with Nasdaq Ownership Limitation, the “Ownership Limitations”). If and to the extent either of the Ownership Limitations prevents Banzai from issuing Share Consideration comprised exclusively of shares of Class A Common Stock, then Banzai instead will issue as Share Consideration (i) the maximum number of shares of Class A Common Stock that may be issued without exceeding either Ownership Limitation, and (ii) Pre-Funded Warrants exercisable for the number of shares of Class A Common Stock the issuance of which was prevented by application of the Ownership Limitations.

 

 

Some of the shares of Class A Common Stock and Pre-Funded Warrants will be issued to the Management Employees under Banzai’s 2023 equity incentive plan, as amended, pursuant to the registration statement on Form S-8, as amended (File No. 333-278218) and some of the shares of Class A Common Stock and Pre-Funded Warrants will be issued to certain Act-On Stockholders and Management Employees in reliance upon exemption provided by Rule 506(b) of Regulation D promulgated thereunder of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a subscription booklet (the “Subscription Booklet”).

 

A copy of the form of Subscription Booklet is filed herewith as Exhibit 10.1 and incorporated herein by reference. The above description of the Subscription Booklet is qualified in its entirety by reference to such exhibit.

 

Terms of Pre-Funded Warrants

 

Each Pre-Funded Warrant shall have an exercise price of $0.001 per each share of Class A Common Stock issuable thereunder. The Pre-Funded Warrants will be registered in Banzai’s books and will not be listed for trading on any stock exchange or trading market. The terms of the Pre-Funded Warrants will provide that Banzai shall not issue shares of Class A Common Stock to any holder of a Pre-Funded Warrant upon the exercise thereof to the extent that after giving effect to such issuance, such holder would beneficially own a number of shares of Class A Common Stock in excess of the Nasdaq Ownership Limitation. Notwithstanding the foregoing, the Nasdaq Ownership Limitation shall not apply following the receipt of the Banzai stockholder approval contemplated by Rule 5635 of the Nasdaq listing rules with respect to the issuance of shares of Class A Common Stock upon exercise of the Pre-Funded Warrants in excess of the Nasdaq Ownership Limitation (the “Stockholder Approval”). The Pre-Funded Warrants also contain a beneficial ownership limitation that provides that the Company shall not effect any exercise of the Pre-Funded Warrants, and the holders of the Pre-Funded Warrants shall not have the right to exercise any portion of the Pre-Funded Warrants, to the extent that after giving effect to such issuance after exercise, the holder would beneficially own in excess of the Beneficial Ownership Limitation.

 

A copy of the form of Pre-Funded Warrant is filed herewith as Exhibit 10.2 and incorporated herein by reference. The above description of the Pre-Funded Warrants is qualified in its entirety by reference to such exhibit.

 

Special Meeting; Voting and Support Agreement

 

Following the Closing, Banzai will convene and hold a special meeting of its stockholders to obtain the Stockholder Approval (the “Special Meeting”). In connection with the Special Meeting, on January 22, 2025, Joseph P. Davy, Banzai’s Chief Executive Officer, who holds approximately 78.55% of Banzai’s total voting power as of the date of the Merger Agreement, entered into a Voting and Support Agreement, with Banzai (the “Voting and Support Agreement”) that obligates him to vote all the shares of Class B Common Stock beneficially owned by him in favor of the Stockholder Approval.

 

A copy of the Voting and Support Agreement is filed herewith as Exhibit 10.4 and incorporated herein by reference. The above description of the Voting and Support Agreement is qualified in its entirety by reference to such exhibit.

 

Holdback Amount; Share Consideration Escrow Agreement

 

Pursuant to the Merger Agreement, Banzai will withhold from the Share Consideration a number of shares of Class A Common Stock equal to the quotient of $2,000,000 divided by the Banzai’s 5-Day VWAP, as adjusted pursuant to the Merger Agreement (the “Indemnification Holdback Amount”), as security for the obligations of Act-On Stockholders pursuant to the Merger Agreement. The Indemnification Holdback Amount shall be held for a period of twelve (12) months following the Closing Date (the “Indemnification Holdback Period”) and shall be released to Act-On Stockholders and Management Employees (in accordance with the Allocation Schedule) within ten (10) business days of the expiration of the Indemnification Holdback Period. The released aggregate amount shall be equal to (a) the Indemnification Holdback Amount, as allocated to Act-On Stockholders and Management Employees in accordance with the Allocation Schedule, less (b) any amounts set off against the Indemnification Holdback Amount pursuant to the Merger Agreement. The Indemnification Holdback amount shall be held by the Transfer Agent for the benefit of Act-On Stockholders and Management Employees and shall be released to Act-On Stockholders and Management Employees pursuant to the terms of a certain share consideration escrow agreement (the “Escrow Agreement”) by and among Banzai, Act-On, each of Act-On Stockholders and Management Employees and Continental Stock Transfer & Trust Company, a New York limited purpose trust company (the “Escrow Agent”).

 

 

On or prior to the consummation of the Merger, parties will enter into the Escrow Agreement, pursuant to which, the Escrow Agent shall hold, for the benefit of Banzai, the Indemnification Holdback Amount. The Escrow Agent shall administer the Indemnification Holdback Amount in accordance with the written instructions jointly provided by Banzai and Act-On to the Escrow Agent to release the Indemnification Holdback Amount, or any portion thereof, as set forth in such instruction.

 

A copy of the form of Escrow Agreement is filed herewith as Exhibit 10.5 and incorporated herein by reference. The above description of the Escrow Agreement is qualified in its entirety by reference to such exhibit.

 

Registration Rights Agreement

 

On or prior to the consummation of the Merger, Banzai shall execute and deliver to the Act-On Stockholders and Management Employees a registration rights agreement (the “Registration Rights Agreement”), pursuant to which, among other things, Banzai will agree to register for resale, within five (5) Business Days (as defined in the Merger Agreement) following the Closing, on an applicable registration statement under the Securities Act, the shares of Class A Common Stock, to be issued to the Act-On Stockholders and Management Employees pursuant to the Merger Agreement and the shares of Class A Common Stock issuable upon exercise of the Pre-Funded Warrants.

 

A copy of the form of Registration Rights Agreement is filed herewith as Exhibit 10.6 and incorporated herein by reference. The above description of the Registration Rights Agreement is qualified in its entirety by reference to such exhibit.

 

Corporate Governance

 

Pursuant to the Merger Agreement, effective as of the Effective Time, Joe Davy shall be the sole member on the board of directors of the Surviving Entity, holding office in accordance with the Organizational Documents of the Surviving Entity, as a direct, wholly owned subsidiary of Banzai.

 

Closing Conditions

 

The Closing of the Merger by each of Banzai, Merger Sub, and Act-On is subject to customary conditions, including (1) (A) adoption of the Merger Agreement by the Act-On Stockholders that hold the requisite percentage necessary to approve the Merger under Act-On’s Amended and Restated Certificate of Incorporation and (B) approval of the Transaction by Banzai’s board of directors, (2) authorization for listing on the Nasdaq Capital Market of the shares of Class A Common Stock to be issued in the Merger, subject to official notice of issuance, and (3) the absence of any order, injunction, decree or other legal restraint preventing the completion of the Merger or making the completion of the Merger illegal. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including subject to certain exceptions, the accuracy of the representations and warranties of the other party and performance in all material respects by the other party of its obligations under the Merger Agreement. The Merger Agreement also contains customary representations, warranties, and indemnities of Banzai and Act-On.  

 

 

Important Statement Regarding Merger Agreement

 

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.

 

The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact. In addition, such representations, and warranties (1) will not survive consummation of the Merger, and (2) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any factual information regarding Banzai or Act-On, or their respective businesses. 

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. The securities sold as part of the Merger were offered and sold in transactions exempt from registration under the Securities Act, in reliance on Section 4(a)(2) thereof and Regulation D thereunder. Each of the Investors represented that it was an “accredited investor,” as defined in Regulation D, and is acquiring the Securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities have not been registered under the Securities Act and such Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. Neither this Current Report on Form 8-K nor any of the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy shares of common stock or any other securities of Banzai.

 

Item 7.01. Regulation FD Disclosure

 

On January 23, 2025, Banzai and Act-On issued a joint press release announcing the execution of the Merger Agreement. A copy of the joint press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

 

This information (including Exhibit 99.1) is being furnished under Item 7.01 hereof and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

 

Forward Looking Statements

 

Certain statements contained in this filing may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the transaction and the ability to consummate the merger. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Forward-looking statements speak only as of the date they are made, and Banzai undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors (1) conditions to the closing of the transaction may not be satisfied; (2) the transaction may involve unexpected costs, liabilities or delays; and (3) Banzai and Act-On may be adversely affected by other economic, business, and/or competitive factors. Additional factors that may affect the future results of Banzai are set forth in its filings with the SEC, including Banzai’s most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the SEC, which are available on the SEC’s website at www.sec.gov, specifically under the heading “Risk Factors.” The risks and uncertainties described above and in Banzai’s filings with the SEC are not exclusive. Readers are urged to consider these factors carefully in evaluating these forward-looking statements, and not to place undue reliance on any forward-looking statements.

 

Item 9.01 Exhibits

 

(d) Exhibits

 

Exhibit No.		Description
2.1*		Agreement and Plan of Merger, dated January 22, 2025, by and between Banzai International, Inc. and Act-On Software, Inc.
10.1		Form of Subscription Booklet
10.2		Form of Pre-Funded Warrant
10.3		Voting and Support Agreement, dated January 22, 2025, by and between Banzai International, Inc. and Joseph Davy
10.4		Form of Share Consideration Escrow Agreement
10.5		Form of Registration Rights Agreement
99.1		Press Release dated January 23, 2025, issued by Banzai International, Inc. and Act-On Software, Inc.
104		Cover Page Interactive Data File, formatted in Inline XBRL

 

* Exhibits and Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted exhibits and schedules upon request by the Securities and Exchange Commission.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: January 23, 2025

 

	BANZAI INTERNATIONAL, INC.
	By:	/s/ Joseph Davy
		Joseph Davy
		Chief Executive Officer

 

 

Exhibit 2.1

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

BANZAI INTERNATIONAL, INC.,

 

BANZAI PASSAGE INC.,

 

and

 

ACT-ON SOFTWARE, INC.

 

dated as of

 

January 22, 2025

 

 

Table of Contents

 

Article I CERTAIN DEFINITIONS		3
	Section 1.01 Definitions	3
	Section 1.02 Construction	11
Article II THE MERGER; CLOSING		12
	Section 2.01 The Merger	12
	Section 2.02 Closing	12
	Section 2.03 Effective Time	12
	Section 2.04 Effect of the Merger	12
	Section 2.05 Governing Documents	13
	Section 2.06 Board of Directors of the Surviving Entity	13
	Section 2.07 Effect of the Merger on Equity Securities	13
	Section 2.08 Withholding Rights	16
	Section 2.09 Company’s Dissenting Shares	17
	Section 2.10 Payment of Merger Consideration	17
	Section 2.11 Exchange Agent	18
	Section 2.12 Holdback Amount	19
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		19
	Section 3.01 Corporate Organization of the Company	19
	Section 3.02 Subsidiaries	19
	Section 3.03 Due Authorization	19
	Section 3.04 No Conflict	20
	Section 3.05 Governmental Authorities Consents	20
	Section 3.06 Capitalization	20
	Section 3.07 Capitalization of Subsidiaries	21
	Section 3.08 Sufficiency of Assets	21
	Section 3.09 Financial Statements; Absence of Changes	21
	Section 3.10 Undisclosed Liabilities	22
	Section 3.11 Litigation and Proceedings	22
	Section 3.12 Compliance with Laws	22
	Section 3.13 Contracts; No Defaults	23
	Section 3.14 Labor Matters	23
	Section 3.15 Tax Matters	24
	Section 3.16 Real Property	24
	Section 3.17 Intellectual Property, Privacy and Data Security	25
	Section 3.18 Brokers’ Fees	26
	Section 3.19 Related Party Transactions	26
	Section 3.20 Information Supplied	26
	Section 3.21 Insurance	26
	Section 3.22 U.S. Business	26
	Section 3.23 No Other Representations	26
Article IV REPRESENTATIONS AND WARRANTIES OF LISTCO AND MERGER SUB		26
	Section 4.01 Corporate Organization	26
	Section 4.02 Due Authorization	27
	Section 4.03 No Conflict	27
	Section 4.04 Litigation and Proceedings	28
	Section 4.05 Governmental Authorities; Consents	28
	Section 4.06 Brokers’ Fees	28
	Section 4.07 SEC Reports; Financial Statements; Sarbanes-Oxley Act; Undisclosed Liabilities	28
	Section 4.08 Compliance with Laws	30
	Section 4.09 Tax Matters	30
	Section 4.10 Capitalization	31

 

 

	Section 4.11 Material Contracts; No Defaults	33
	Section 4.12 Related Party Transactions	33
	Section 4.13 ListCo Benefit Plans	33
	Section 4.14 Labor Matters	34
	Section 4.15 Investment Company Act	34
	Section 4.16 Business Activities; Absence of Changes	34
	Section 4.17 Nasdaq Listing	34
	Section 4.18 Information Supplied	35
	Section 4.19 Real Property	35
	Section 4.20 Intellectual Property, Privacy and Data Security	35
	Section 4.21 Sufficiency of Funds; Solvency	36
	Section 4.22 Insurance	36
	Section 4.23 New Subsidiaries	36
	Section 4.24 No Other Representations	37
	Section 4.25 SEPA Financing.	37
	Section 4.26 Non-Reliance	37
Article V COVENANTS OF THE COMPANY		37
	Section 5.01 Conduct of Business	37
	Section 5.02 Inspection	39
	Section 5.03 No Trading	39
	Section 5.04 Taxes Relating to the Company Securities	40
	Section 5.05 Termination of the Company Stockholder Agreements..	40
Article VI COVENANTS OF LISTCO		40
	Section 6.01 Conduct of Business	40
	Section 6.02 Inspection	42
	Section 6.03	42
	Section 6.04 Reserved. ListCo Listing	42
	Section 6.05 SEPA Financing..	42
	Section 6.06 D&O Insurance.	43
	Section 6.07 Notification of Certain Matters	43
Article VII JOINT COVENANTS		43
	Section 7.01 Efforts to Consummate	43
	Section 7.02 Resale Registration Statement, Form 8-K, LAS Form	44
	Section 7.03 Indemnification	46
	Section 7.04 Corporate Approval	48
	Section 7.05 Exclusivity	49
	Section 7.06 Tax Matters	49
	Section 7.07 Confidentiality; Publicity	50
	Section 7.08 Accredited Investor Status.	51
	Section 7.09 Subscription Booklet.	51
Article VIII CONDITIONS TO OBLIGATIONS		51
	Section 8.01 Conditions to Obligations of All Parties	51
	Section 8.02 Additional Conditions to Obligations of ListCo and Merger Sub	51
	Section 8.03 Additional Conditions to the Obligations of the Company	52
Article IX TERMINATION		53
	Section 9.01 Termination	53
	Section 9.02 Effect of Termination	54
Article X MISCELLANEOUS		55
	Section 10.01 Waiver	55
	Section 10.02 Notices	55

 

 

	Section 10.03 Assignment	56
	Section 10.04 Rights of Third Parties	56
	Section 10.05 Expenses	56
	Section 10.06 Governing Law	56
	Section 10.07 Captions; Counterparts	56
	Section 10.08 Schedules and Exhibits	56
	Section 10.09 Entire Agreement	56
	Section 10.10 Amendments	56
	Section 10.11 Severability	57
	Section 10.12 Consent to Jurisdiction	57
	Section 10.13 WAIVER OF TRIAL BY JURY	57
	Section 10.14 Equitable Remedies	57
	Section 10.15 Non-Recourse	57
	Section 10.16 Non-Survival	57
	Section 10.17 Acknowledgements	58

 

SCHEDULES
Schedule 1.01(A)	59
Schedule 1.01(B)	60

 

EXHIBITS
Exhibit A Form of Pre-Funded Warrants	A-1
Exhibit B Form of Subscription Booklet	B-1
Exhibit C Form of Letter of Transmittal	C-1
Exhibit D Form of Share Consideration Escrow Agreement	D-1
Exhibit E Form of Registration Rights Agreement	E-1

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of January 22, 2025 by and among Banzai International, Inc., a Delaware corporation (“ListCo”), Banzai Passage Inc., a Delaware corporation wholly owned by ListCo (“Merger Sub”), and Act-On Software, Inc., a Delaware corporation (the “Company”). ListCo, Merger Sub, and the Company are collectively referred to herein as the “Parties” and individually as a “Party” All capitalized terms used in this Agreement shall have the meanings ascribed to such terms in or as otherwise defined elsewhere in this Agreement.

 

RECITALS

 

WHEREAS, ListCo is a company listed on the Nasdaq Capital Market;

 

WHEREAS, The Parties intend to effect the merger of Merger Sub with and into the Company, with the Company continuing as the Surviving Entity (as defined in Section 2.01) as contemplated by this Agreement and the other Ancillary Documents (the “Transactions”);

 

WHEREAS, as a result of the Transaction, (i) all of the issued and outstanding capital stock of the Company immediately prior to the Effective Time, shall no longer be outstanding and shall automatically be converted or cancelled (and shall cease to exist), in exchange for the right for each Company Stockholder to receive its portion of the Merger Consideration (as defined herein), (ii) the Company Options (as defined herein) shall be canceled and replaced with ListCo Options (as defined herein) exercisable into shares of ListCo Class A Common Stock, all upon the terms and subject to the conditions set forth in this Agreement, and (iii) the Company Preferred Warrant (as defined herein) shall be converted to ListCo Class A Common Stock, all upon the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Company and its Subsidiaries (as defined below) operate the businesses of providing marketing automation solutions and services (the “Business”);

 

WHEREAS, subject to the terms and conditions hereof and in accordance with the Delaware General Corporation Law, as amended (the “DGCL”), in exchange for the Merger Consideration, at the Closing, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as the Surviving Entity;

 

WHEREAS, on or before Closing, ListCo shall, subject to the terms of this Agreement, deliver and pay the Payoff Amount to the Company Lender and the Transaction Expenses to the Persons listed to receive such on the Allocation Schedule.

 

WHEREAS, at Closing, ListCo shall, subject to the terms of this Agreement, deliver, pay and issue to the Management Employees and the Company Stockholders (as defined below) the Cash Consideration (defined below) and $33,200,000 worth of shares of ListCo Class A Common Stock (as defined below) and/or Pre-Funded Warrants (as defined below), in accordance with the terms of this Agreement.

 

WHEREAS, the board of directors of ListCo (the “ListCo Board”) has unanimously: (a) approved and declared advisable this Agreement and the other Ancillary Documents, and (b) determined that this Agreement and the Transactions are in the best interest of ListCo and the ListCo Stockholders;

 

WHEREAS, the board of directors of the Company (the “Company Board”) has unanimously: (a) approved this Agreement and the other Ancillary Documents to which it is a party and the Transactions, and (b) determined that this Agreement, and such other Ancillary Documents and the Transactions are in the best interest of Company and the Company Stockholders;

 

WHEREAS, as of the date hereof, each of the Management Employees and each of the Company Stockholders (as hereinafter defined) shall have executed a subscription booklet, substantially in the form attached hereto as Exhibit B, with regard to their acquisition of the Merger Consideration (as defined in Section 2.07(b));

 

 

WHEREAS, upon Closing, ListCo shall execute and deliver a registration rights agreement (the “Registration Rights Agreement”) substantially in the form attached hereto as Exhibit E, to the Management Employees and the Company Stockholders, pursuant to which, among other things, ListCo will agree to register for resale on an applicable Securities Act registration statement the shares of ListCo Class A Common Stock and the Pre-Funded Warrants to be issued pursuant to this Agreement and the shares of ListCo Class A Common Stock issuable upon exercise of the Pre-Funded Warrants;

 

WHEREAS, on or prior to the date hereof, the ListCo Major Stockholder executed and delivered a voting and support agreement (the “Voting and Support Agreement”) to ListCo, pursuant to which, among other things, the ListCo Major Stockholder agreed to, at any duly called annual or special meeting of the ListCo Stockholders, and in any action by written consent of the ListCo Stockholders, vote or consent all of the shares of ListCo Class B Common Stock beneficially owned by the ListCo Major Stockholder as of the date thereof, in favor of a proposal to approve the issuance of shares of ListCo Class A Common Stock underlying the Pre-Funded Warrants, as contemplated by this Agreement and required by Nasdaq listing standards; and

 

WHEREAS, for U.S. federal income Tax purposes, the Parties intend that (a) the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and the Treasury Regulations promulgated thereunder, and (b) this Agreement is hereby adopted as a “plan of reorganization” with respect to the Merger within the meaning of Sections 354, 361 and 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) (the “Intended Tax Treatment”).

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:

 

Article I

CERTAIN DEFINITIONS

 

Section 1.01 Definitions.

 

For purposes of this Agreement, the following capitalized terms have the following meanings:

 

“Action” means any Proceeding, action, suit, audit, examination, arbitration or legal, judicial or administrative proceeding (whether at law or in equity) by or before any Governmental Authority.

 

“Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise. The term “control” means the ownership of a majority of the voting securities of the applicable Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the applicable Person, whether through ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.

 

“Ancillary Documents” means this Agreement, the Pre-Funded Warrants, the Registration Rights Agreement, the Voting and Support Agreement, the Share Consideration Escrow Agreement, the Certificate of Merger, the Subscription Booklets, and all the agreements, documents, instruments and certificates entered into in connection herewith or therewith and any and all exhibits and schedules thereto.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in San Francisco, California are authorized or required by Law to be closed for business.

 

“Cash” means, without duplication, the aggregate amount of all cash, cash equivalents, cash in transit, bank deposits, investment accounts, credit card receivables, certificates of deposit, marketable securities, short-term deposits and other similar cash items of the Company (including any accrued interest and any deposited checks or other payments received but not cleared, reduced by any outstanding checks of the Company that have not yet cleared), in each case determined as of immediately prior to the Closing and prepared in accordance with GAAP.

 

 

“Claim” means any and all threatened or actual claims, actions, demands, suits, Proceedings, or investigations, and any and all Losses arising therefrom, which such Party or any of its Affiliates may have against such party as of the date hereof.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Company Bylaws” means the bylaws of the Company, as may be amended from time to time.

 

“Company Charter” means the Amended and Restated Certificate of Incorporation of the Company, as may be amended from time to time.

 

“Company Common Stock” means a share of common stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Disclosure Schedule” means the disclosure schedule delivered by the Company to and accepted by ListCo on the date hereof.

 

“Company Employee” means current or former employee, officer or director of the Company or its Subsidiaries.

 

“Company Equity Plan” means that certain 2018 Equity Incentive Plan of Act-On, Inc., the Management Carve Out Plan, and each other plan that provides for the award, grant or issuance to any current or former director, manager, officer, employee, individual independent contractor or other service provider of the Company of rights of any kind to receive Equity Securities of the Company or benefits measured in whole or in part by reference to Equity Securities of the Company.

 

“Company Key Employees” means Roger Rowe, Jeffery Day, Jeffery Coleman, Olaf Kowalik, Syed Ahmed, Brian Anderson, Dawn Glockler, and Bill Ziske.

 

“Company Lender” means Beedie Investments Ltd.

 

“Company Options” means, as of any determination time, each option to purchase Company Common Stock that is outstanding and unexercised, whether granted under a Company Equity Plan or otherwise.

 

“Company Preferred Stock” means the Company Series A Preferred Stock, the Company Series A-1 Preferred Stock, the Company Series B Preferred Stock, the Company Series C Preferred Stock, the Company Series D Preferred Stock, the Company Series E Preferred Stock, the Company Series E-1 Preferred Stock, and the Company Series F Preferred Stock.

 

“Company Preferred Warrant” means the Company Series F Warrant.

 

“Company Series A Preferred Stock” means a share of series A preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series A-1 Preferred Stock” means a share of series A-1 preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series B Preferred Stock” means a share of series B preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series C Preferred Stock” means a share of series C preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series D Preferred Stock” means a share of series D preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

 

“Company Series E Preferred Stock” means a share of series E preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series E-1 Preferred Stock” means a share of series E-1 preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series F Preferred Stock” means a share of series F preferred stock of the Company, par value US$0.0001 each, with the rights and privileges as set forth in the Company Charter.

 

“Company Series F Warrant” means the warrant to purchase the Company Series F Preferred Stock held by Beedie Investments Ltd.

 

“Company Stockholders” means the holders of issued and outstanding shares of Company Stock as set forth in Schedule 6.01.

 

“Company Stockholder Agreements” means (a) that certain Series F Preferred Stock Purchase Agreement, by and among the Company and the Company Series F Preferred Stockholders dated and effective as of March 16, 2021, (b) that certain Amended and Restated Investor Rights Agreement, by and among the Company and the Company Series F Preferred Stockholders dated and effective as of March 16, 2021, (c) that certain Amended and Restated Voting Agreement by and among the Company and the Company Series F Preferred Stockholders dated and effective as of March 16, 2021, and (d) that certain Amended and Restated Right of First Refusal and Co-Sale Agreement by and among the Company and the Company Series F Preferred Stockholders dated and effective as of March 16, 2021.

 

“Company Stockholder Approval” means the vote and/or consent of the Company Stockholders required to approve the Agreement, the other Ancillary Documents, and the Transactions, as determined in accordance with applicable Law and the Company Organizational Documents.

 

“Company Stockholder Fraud” means any Fraud committed by a Company Stockholder.

 

“Company Stockholder Representative” means Katherine Johnson.

 

“Company Stock” means the Company Common Stock and the Company Preferred Stock as set forth in Schedule 6.01.

 

“Confidential Information” means, with respect to a Party, all confidential or proprietary documents and information concerning such Party or any of its Affiliates and its and their respective Representatives, disclosed by or on behalf of such Party (or any of its Representatives) to another Party (or any of its Representatives) in connection with this Agreement or any other Ancillary Document or the transactions contemplated hereby or thereby and whether disclosed prior to or after the Effective Time; provided, however, that Confidential Information shall not include any information which, (i) is or becomes generally available publicly not due to any disclosure in breach of this Agreement or (ii) at the time of the disclosure by such Party or its Representatives, was previously known by such receiving Party or its Representatives without violation of Law or any confidentiality obligation by such receiving Party or its Representatives.

 

“Contracts” means any legally binding contracts, agreements, licenses, subcontracts, leases, subleases, franchise and other legally binding commitment.

 

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof.

 

“COVID-19 Measures” means any mandatory quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other Law, directive or guidelines by any Governmental Authority in relation to COVID-19.

 

 

“Current Assets” means the aggregate current assets of the Company (including accounts receivable, inventory and prepaid expenses), but excluding (a) deferred Tax assets; (b) receivables from any of the Company’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, determined in accordance with GAAP; and (c) Cash.

 

“Current Liabilities” means current liabilities of the Company determined in accordance with GAAP, provided that, in no event shall Current Liabilities include (i) any components (assets or liabilities) included in the calculation of Indebtedness; (ii) any current liabilities that will be paid off prior to or on Closing (including Indebtedness and Transaction Expenses) or which will otherwise be released prior to or at the Closing; or (iii) any current assets or liabilities with respect to any federal Income Taxes or any Tax reportable on a consolidated, combined or unitary Tax return or any deferred Income Tax assets or liabilities, in each case determined in accordance with GAAP.

 

“Data Security Requirements” means, with respect to a Party, all of the following, in each case to the extent relating to any Processing of any Personal Information or any IT Systems: (i) Laws related to data privacy, data security, cybersecurity or national security; (ii) such Party’s and each of its Subsidiaries’ own respective internal and external rules, policies, and procedures; and (iii) Contracts which such Party or any of its Subsidiaries is bound by or has made.

 

“Equity Securities” means, with respect to any Person, (i) any shares of capital or capital stock, registered capital, partnership, membership, joint venture or similar interest, or other voting securities of, or other ownership interest in, such Person, (ii) any securities of such Person (including debt securities) convertible into or exchangeable or exercisable for shares of capital or capital stock, partnership, membership, joint venture or similar interest, or other voting securities of, or other ownership interests in, such Person, (iii) any warrants, calls, options or other rights to acquire from such Person, or other obligations of such Person to issue, any shares of capital or capital stock, partnership, membership, joint venture or similar interest, or other voting securities of, or other ownership interests in, or securities convertible into or exchangeable or exercisable for shares of capital or capital stock, partnership, membership, joint venture or similar interest, or other voting securities of, or other ownership interests in, such Person, and (iv) any restricted shares, stock appreciation rights, restricted units, performance units, contingent value rights, “phantom” stock or similar securities or rights (including, for the avoidance of doubt, interests with respect to an employee share ownership plan) issued by or with the approval of such Person that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any shares of capital or capital stock or other voting securities of, other ownership interests in, or any business, products or assets of, such Person.

 

“Exchange Act” means the United States Securities Exchange Act of 1934.

 

“Force Majeure” means, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes, acts of God, storms, floods, riots, fires, pandemics, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources.

 

“Fraud” means, with respect to any Person, intentional (and not constructive) misrepresentation of a fact by such Person with respect to the making of the representations and warranties in Article III or IV (as applicable), any Ancillary Documents, or any certificate delivered in connection with this Agreement.

 

“GAAP” means the accounting principles generally accepted in the United States of America.

 

“Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, legislative, judicial, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, arbitral body (public or private) or tribunal, and the governing body of any securities exchange or other self-regulating organization.

 

“Governmental Order” means any order, judgment, injunction, decree, writ, ruling, stipulation, determination or award, in each case, entered by or with any Governmental Authority.

 

 

“Group Company” means each of the Company and its Subsidiaries.

 

“Holdback Percentage” means 5.31911%.

 

“Indebtedness” means, with respect to any Person, without duplication, any obligations, contingent or otherwise, in respect of (a) the principal of and premium (if any) in respect of all indebtedness for borrowed money, including accrued interest and any per diem interest accruals, and any amount required to redeem any redeemable securities, (b) the principal and interest components of capitalized lease obligations under GAAP or IFRS, (c) amounts drawn (including any accrued and unpaid interest) on letters of credit, bank guarantees, bankers’ acceptances and other similar instruments, (d) the principal of and premium (if any) in respect of obligations evidenced by bonds, debentures, notes and similar instruments, (e) the unpaid Taxes for all taxable periods (or portions thereof) ending on or prior to the Closing Date, to the extent due and payable, calculated on a jurisdiction-by-jurisdiction basis in amounts not less than zero, (f) the termination value of interest rate protection agreements and currency obligation swaps, hedges or similar arrangements (without duplication of other indebtedness supported or guaranteed thereby), (g) the principal component of all obligations to pay the deferred and unpaid purchase price of property and equipment which have been delivered, including “seller notes”, (h) breakage costs, prepayment or early termination premiums, penalties, or other fees or expenses payable as a result of the consummation of the Transactions in respect of any of the items in the foregoing clauses (a) through (g), and (i) all Indebtedness of another Person referred to in clauses (a) through (h) above guaranteed directly or indirectly, jointly or severally.

 

“Intellectual Property” means all intellectual property, industrial property and proprietary rights anywhere in the world, including: (i) patents, patent applications, patent disclosures, invention disclosures, industrial designs, utility models, design patents and inventions (whether or not patentable), (ii) trademarks, service marks, trade names, trade dress, corporate names, logos, and other indicia of source or origin, and all registrations, applications and renewals in connection therewith, together with all goodwill associated therewith, (iii) copyrights, works of authorship, moral rights, and all registrations and applications in connection therewith, (iv) internet domain names and social media accounts, (v) trade secrets, know-how and confidential information, and (vi) Software.

 

“IT Systems” means all software, computer systems, servers, networks, computer hardware and equipment, data processing, information, record keeping, communications, telecommunications, interfaces, platforms and other information technology platforms, networks and systems that are owned or controlled by the Company or any of its Subsidiaries or used in the conduct of their businesses, in each case, whether outsourced or not, together with data and information stored or contained in, or transmitted by, any of the foregoing, and documentation relating to any of the foregoing.

 

“Knowledge” means, with respect to the Company, the knowledge that each of the individuals listed on Schedule 1.01(A) actually has; and with respect to ListCo, the knowledge that each of the individuals listed on Schedule 1.01(B) actually has.

 

“Law” or “Laws” means any statute, act, code, law (including common law), ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority that is applicable to a Person.

 

“Letter of Transmittal” means that form of letter of transmittal addressed to the Agent and from a Company Stockholder for purposes of exchanging Company Stock for ListCo Class A Common Stock, in the form attached hereto as Exhibit C.

 

“Lien” means any mortgage, charge, deed of trust, pledge, license, covenant not to sue, option, right of first refusal, offer or negotiation, hypothecation, encumbrance, easement, security interests, or other lien of any kind (other than, in the case of a security, any restriction on transfer of such security arising under Securities Laws).

 

“ListCo 5-Day VWAP” means the average of the daily volume-weighted average trading prices of ListCo Class A Common Stock for the consecutive five (5) Trading Days immediately prior to and including the Trading Day immediately preceding the Closing Date.

 

 

“ListCo Class A Common Stock” means each Class A common stock, par value US$0.0001 per share, of ListCo, subject to adjustments to reflect the effect of any stock split, reverse stock split, stock dividend.

 

“ListCo Class B Common Stock” means each Class B common stock, par value US$0.0001 per share, of ListCo, subject to adjustments to reflect the effect of any stock split, reverse stock split, stock dividend.

 

“ListCo Common Stock” means collectively, the ListCo Class A Common Stock and the ListCo Class B Common Stock, or either of Class A Common Stock or Class B Common Stock (as the case may be).

 

“ListCo Disclosure Schedules” means the disclosure schedules delivered by ListCo and Merger Sub to and accepted by the Company dated as of the date of this Agreement.”ListCo Impairment Effect” means an event, circumstance, fact, change or development that has a Material Adverse Effect on the ability of ListCo to consummate the Transactions, which shall include the failure by ListCo to maintain ListCo’s continuous listing on, or the continuous listing of ListCo Class A Common Stock on, the Nasdaq.

 

“ListCo Group Company” means each of ListCo and its Subsidiaries.

 

“ListCo Organizational Documents” means the Organizational Documents of ListCo, as amended and/or restated (where applicable).

 

“ListCo Major Stockholder” means Joseph Davy.

 

“ListCo Preferred Stock” means each share of preferred stock, par value US$0.0001 per share, of ListCo, subject to adjustments to reflect the effect of any stock split, reverse stock split, stock dividend.

 

“ListCo Stock” means the LisctCo Common Stock, the ListCO Preferred Stock and any other Equity Securities convertible or exchangeable for ListCo Common Stock or ListCo Preferred Stock.

 

“ListCo Stockholders” means any holder of ListCo Stock.

 

“Management Carve Out Plan” means that certain Amended and Restated Act-On Software, Inc. Liquidity Event Bonus Plan adopted as of March 16, 2021, pursuant to which, Management Employees shall receive the Merger Consideration in connection with the Transaction as identified in the Allocation Schedule.

 

“Management Employee” means those certain employees of the Company who receive the Merger Consideration pursuant to the Management Carve Out Plan as identified in the Allocation Schedule.

 

“Material Adverse Effect” means, with respect to a Party, an effect, development, circumstance, fact, change or event that, in the aggregate, has a material adverse effect on (x) the operations or financial condition of such Party and its Subsidiaries in each case, taken as a whole or (y) the ability of such Party and its Subsidiaries to consummate the Transactions; provided, however, that, solely with respect to the foregoing clause (x), in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Material Adverse Effect” (a) any change in Law, regulatory policies, accounting standards or principles (including GAAP and IFRS) or any guidance relating thereto or interpretation thereof, in each case after the date hereof; (b) any change in interest rates or economic, political, business or financial market conditions generally (including any changes in credit, financial, commodities, securities or banking markets); (c) any change affecting any of the industries in which such Party and its Subsidiaries operate or the economy as a whole; (d) any epidemic, pandemic or disease outbreak (including COVID-19 and any COVID-19 Measures), (e) the announcement or the execution of this Agreement, the pendency of the Transactions, or the performance of this Agreement, including losses or threatened losses of employees, customers, suppliers, vendors, distributors or others having relationships with the Party and its Subsidiaries; (f) any weather conditions, earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other natural disaster, act of God or other Force Majeure event; (g) any acts of terrorism, sabotage, war, riot, the outbreak or escalation of hostilities, or change in geopolitical conditions; (h) any failure of the Party and its Subsidiaries to meet, with respect to any period or periods, any internal or industry analyst projections, forecasts, estimates or business plans (provided, however, that this clause (h) shall not prevent a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in a Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Material Adverse Effect)); (i) with respect to a Material Adverse Effect of Company (i) the occurrence of any broad-based cyber, military or terrorist attack, whether inside or outside the United States; (ii) actions or omissions taken or not taken by Company that are requested by, required by, or taken with the consent of ListCo (or its Affiliates) in connection with or pursuant to this Agreement; (iii) where such Material Adverse Effect arises form or relates to a breach of this Agreement by ListCo (or its Affiliates); or (iv) compliance with applicable Law; provided, further, that any effect referred to in clauses (a), (b), (c), (d), (f) (g) or (i) above may be taken into account in determining if a Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on such Party and its Subsidiaries or the results of operations or financial condition of such Party and its Subsidiaries, in each case, taken as a whole, relative to other similarly situated businesses in the industries in which such Party and its Subsidiaries operate.

 

 

“Nasdaq” means The Nasdaq Stock Market LLC.

 

“Nasdaq Rules” means the Nasdaq Rulebook, which sets forth the rules and qualification requirements for companies listed on the Nasdaq.

 

“Net Working Capital Adjustment” means the difference between the Target Working Capital and the Working Capital of the Company as of the Closing Date, estimated for the purposes of the Estimated Closing Statement and the actual amount for the purposes of the Final Closing Statement. For purposes of clarity, where the Target Working Capital is a negative number, the Net Working Capital Adjustment may be a positive number to the extent Working Capital is greater than the Target Working Capital (and increase the Merger Consideration) or negative number to the extent that Working Capital is less than the Target Working Capital (and decrease the Merger Consideration).

 

“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

“Order” means judgments, writs, decrees, directives, rulings, compliance agreements, injunctions, awards, assessments, writs, stipulations, determination of awards, settlement agreements or orders of any Governmental Authority or arbitrator.

 

“Organizational Documents” means, with respect to any Person that is not an individual, the articles or certificate of incorporation, registration or organization, bylaws, memorandum and articles of association, limited partnership agreement, partnership agreement, limited liability company agreement, stockholders agreement and other similar organizational documents of such Person.

 

“Owned Intellectual Property” means all Intellectual Property that is owned or purported to be owned by the Group Companies or the ListCo Group Companies (as applicable).

 

“Permitted Liens” means (i) statutory or common law Liens of mechanics, materialmen, warehousemen, landlords, carriers, repairmen, construction contractors and other similar Liens that arise in the ordinary course of business, that relate to amounts not yet delinquent or that are being contested in good faith through appropriate Actions or that may thereafter be paid without penalty to the extent appropriate reserves have been established in accordance with the applicable accounting standards, (ii) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice, (iii) Liens for Taxes not yet delinquent or which are being contested in good faith through appropriate Actions for which appropriate reserves have been established in accordance with the applicable accounting standards, (iv) leases, subleases and similar agreements with respect to the Leased Company Real Property, (v) Liens, defects or imperfections on title, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that (A) are matters of record, (B) would be discovered by a current, accurate survey or physical inspection of such real property or (C) do not materially interfere with the present uses of such real property, (vi) Liens (except with respect to Intellectual Property) that are not material to the Company and its Subsidiaries, taken as a whole, (vii) non-exclusive licenses of Intellectual Property granted to customers or other third parties of the Company and its Subsidiaries and entered into in the ordinary course of business, (viii) Liens that secure obligations that are reflected as liabilities on the December 31, 2024 (which such Liens are referenced, or the existence of which such Liens is referred to, in the notes to December 31, 2024), (ix) Liens securing any indebtedness of the Company or its Subsidiaries (including pursuant to existing credit facilities), (x) Liens arising under applicable Securities Laws, and (xi) with respect to an entity, Liens arising under the Organizational Documents of such entity.

 

 

“Person” means any individual, corporation, company, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other organization or entity of any kind or nature.

 

“Pre-Funded Warrants” means, collectively, the pre-funded ListCo Class A Common Stock purchase warrants delivered to the Company Stockholders at the Closing in accordance with Section 2.07 hereof, in substantially the form of Exhibit A attached hereto, which Pre-Funded Warrants shall be exercisable immediately at the Effective Time (subject to Section 2.07(a(vii)).

 

“Proceeding” means any lawsuit, litigation, action, audit, demand, examination, hearing, claim, charge, complaint, audit, investigation, inquiry, proceeding, suit or arbitration (in each case, whether civil, criminal or administrative and whether public or private) by or before or otherwise involving any Governmental Authority or arbitrator.

 

“Process” (or “Processing” or “Processed”) means any access, collection, use, processing, storage, sharing, distribution, transfer, disclosure, sorting, treatment, manipulation, interruption, performance of operations on, enhancement, aggregation, alteration, destruction, security or disposal of any data of information (including Personal Information), or any IT System.

 

“Related Party” means, with respect to a Party, (a) any member, stockholder or equity interest holder who, together with its Affiliates, directly or indirectly holds no less than 5% of the total outstanding share capital of such Party or any of its Subsidiaries, (b) any director or officer of such Party or any of its Subsidiaries, in each case of clauses (a) and (b), excluding such Party or any of its Subsidiaries.

 

“Representative” means, as to any Person, any of the officers, directors, managers, employees, counsel, accountants, financial advisors, consultants, agents and other representatives of such Person.

 

“SEC” or “Commission” means the United States Securities and Exchange Commission.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Securities Laws” means the securities Laws of any Governmental Authority and the rules and regulations promulgated thereunder (including the Securities Act and the Exchange Act and the rules and regulations thereunder).

 

“Security Incident” means cyber or security incident with respect to any system (including IT Systems) or any data or information (including Personal Information), including any occurrence that actually jeopardizes the confidentiality, integrity, or availability of any system or any data or information, and any incident of security breach or intrusion, or denial of service, or any unauthorized Processing of any IT System or any data or information, or any loss, distribution, compromise or unauthorized access to, or disclosure of, any of the foregoing.

 

“Share Consideration Escrow Agreement” means the Share Consideration Escrow Agreement in the form attached hereto as Exhibit D.

 

“Social Security Benefits” means any social insurance, pension insurance benefits, medical insurance benefits, work-related injury insurance benefits, maternity insurance benefits, unemployment insurance benefits and public housing provident fund benefits or similar benefits, in each case as required by any applicable Law or contractual arrangements.

 

 

“Subsidiary” means, with respect to a Person, any corporation, company or other organization (including a limited liability company or a partnership), whether incorporated or unincorporated, of which such Person directly or indirectly owns or controls a majority of the Equity Securities having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation, company or other organization or any organization of which such Person or any of its Subsidiaries is, directly or indirectly, a general partner or managing member, including those controlled through a variable-interest-entity structure or other similar contractual arrangement, and those whose assets and financial results are consolidated with the net earnings of such Person and are recorded on the books of such Person for financial reporting purposes in accordance with applicable accounting principles.

 

“Target Working Capital” means $9,565,000.00.

 

“Tax” or “Taxes” means any federal, state, provincial, territorial, local, non-U.S. and other net income tax, alternative or add-on minimum tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, social security or national health insurance), ad valorem, transfer, franchise, license, excise, severance, stamp, occupation, premium, personal property, real property, capital stock, profits, disability, registration, value added, estimated, customs duties, and sales or use tax, commodity tax or other tax or like assessment or charge, in each case imposed by any Governmental Authority, together with any interest, indexation, penalty, addition to tax or additional amount imposed with respect thereto (or in lieu thereof) by a Governmental Authority.

 

“Tax Return” means any return, report, statement, refund, claim, declaration, information return, statement, estimate or other document filed or required to be filed with a Governmental Authority in respect of Taxes, including any schedule or attachment thereto and including any amendments thereof.

 

“Transaction Expenses” means the out-of-pocket costs, fees, and expenses incurred by the Company in connection with the negotiation, execution and consummation of the Transactions, including legal, financial, accounting, and investment banking fees, in each case as set forth in the Allocation Schedule.

 

“Treasury Regulations” means the regulations promulgated under the Code.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the ListCo Class A Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Transfer Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of ListCo, with a mailing address of 1 State St 30th floor, New York, NY 10004, and an email address of administration@continentalstock.com, and any successor transfer agent of ListCo.

 

“Warrantors” means, collectively, ListCo and Merger Sub, and each, a “Warrantor”.

 

Section 1.02 Construction.

 

(a) Unless expressly stated otherwise, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (iv) the terms “Article”, “Section”, “Schedule” and “Exhibit” refer to the specified Article, Section, Schedule or Exhibit of or to this Agreement unless otherwise specified, (v) the word “including” shall mean “including without limitation,” (vi) the word “or” shall be disjunctive but not exclusive and have the meaning represented by the term “and/or”, (vii) the phrase “to the extent” means the degree to which a subject matter or other thing extends, and such phrase shall not mean simply “if”, and (viii) the words “shall” and “will” have the same meaning.

 

(b) Unless expressly stated otherwise, references to Contracts shall be deemed to include all subsequent amendments and other modifications thereto (subject to any restrictions on amendments or modifications set forth in this Agreement).

 

 

(c) Unless expressly stated otherwise, references to statutes shall include all regulations promulgated thereunder and references to Laws shall be construed as including all Laws consolidating, amending or replacing the Law.

 

(d) Any share number or per share amount referred to in this Agreement shall be appropriately adjusted to take into account any bonus share issue, share split, reverse share split, share dividend, reclassification, combination, exchange of shares, change or readjustment in change or similar event affecting the Company Stock or the ListCo Common Stock after the date of this Agreement.

 

(e) The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent and no rule of strict construction shall be applied against any Party.

 

(f) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.

 

(g) The phrases “provided to” , “delivered to”, “furnished to,” or “made available to” a Party and phrases of similar import when used herein, unless the context otherwise requires, means that a copy of the information or material referred to has been made available to that Party no later than 11:59 p.m. (Eastern Time) on the day prior to the date of this Agreement by delivery to that Party or its legal counsel via electronic mail or hard copy form.

 

(h) References to “$” or “dollar” or “US$” shall be references to United States dollars.

 

Article II THE MERGER; CLOSING

 

Section 2.01 The Merger. Upon the terms and subject to the conditions set forth in this Agreement or waiver by the Party having the benefit of such condition, at the Effective Time, the Merger Sub shall be merged with and into the Company, with the Company being the surviving company (which is hereinafter referred to for the periods at and after the Effective Time as the “Surviving Entity”) following the Merger and the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Entity after the Merger and as a direct, wholly-owned subsidiary of ListCo. The Merger shall be consummated in accordance with this Agreement and evidenced by a Certificate of Merger in a form mutually agreed upon by the Parties (the “Certificate of Merger”) executed by the Company in accordance with the relevant provisions of the DGCL.

 

Section 2.02 Closing. On the terms and subject to the conditions of this Agreement, the consummation of the Merger (the “Closing”) shall take place electronically by the mutual exchange of electronic signatures (including portable document format (“pdf”)) as soon as is reasonably practical (but in any event no later than the second (2^nd) Business Day) following the satisfaction or waiver of all conditions set forth in Article VIII (other than those conditions that by their terms or nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or at such other place, time or date as ListCo and the Company may mutually agree in writing. The date on which the Closing occurs is referred to herein as the “Closing Date”.

 

Section 2.03 Effective Time. On the Closing Date, ListCo and the Company shall cause the Certificate of Merger to be executed and ListCo shall cause the Certificate of Merger to be duly submitted for filing with the Secretary of State of the State of Delaware as provided in Section 251 of the DGCL. The Merger shall become effective at the time when the Certificate of Merger has been filed or at such later time as may be agreed by the ListCo and the Company in writing and specified in the Certificate of Merger in accordance with the DGCL (the “Effective Time”).

 

Section 2.04 Effect of the Merger. The effect of the Merger shall be as provided in this Agreement, the Certificate Merger and any Ancillary Documents. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of Merger Sub and the Company shall become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Entity, which shall include the assumption by the Surviving Entity of any and all agreements, covenants, duties and obligations of Merger Sub and the Company set forth in this Agreement to be performed after the Effective Time.

 

 

 

Section 2.05 Governing Documents. At the Effective Time, the Certificate of Incorporation and Bylaws of the Company shall be automatically amended and restated in their entirety to read identically to the Certificate of Incorporation and Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, and such amended and restated Certificate of Incorporation and Bylaws shall become the respective Certificate of Incorporation and Bylaws of the Surviving Entity, except that the name of the Surviving Entity in such Certificate of Incorporation and Bylaws shall be amended to be Act-On, Inc., in each case, until thereafter changed or amended as provided therein or by applicable Law.

 

Section 2.06 Board of Directors of the Surviving Entity. At the Effective Time, each member of the Company Board shall resign and the sole director of the Merger Sub shall be the board of directors of the Surviving Entity, holding office in accordance with the Organizational Documents of the Surviving Entity.

 

Section 2.07 Effect of the Merger on Equity Securities.

 

(a) On the terms and subject to the conditions set forth herein, at the Effective Time, by virtue of the Merger and without any further action on the part of any Party or any other Person, the following shall occur:

 

(i) Company and Merger Sub Treasury Stock. Any shares of Company Common Stock or Company Preferred Stock held in the treasury of the Company or held or owned by the Company or Merger Sub immediately prior to the Effective Time, if any, shall be canceled and retired without any conversion and shall cease to exist, and no consideration shall be delivered in exchange therefor;

 

(ii) Conversion of the Company Common Stock. Subject to the Ownership Limitations as set forth in Section 2.07(a)(vii), the conversion of the Company Preferred Stock (in accordance with the Allocation Schedule), and the adjustments set forth in Section 2.10, each share of Company Common Stock outstanding immediately prior to the Effective Time (excluding shares to be canceled pursuant to Section 2.09) shall be automatically converted solely into the Merger Consideration as adjusted in accordance with Section 2.07(c) and Section 2.07(d) and set forth on the Allocation Schedule;

 

(iii) Conversion of the Company Preferred Stock. Subject to the Ownership Limitations as set forth in Section 2.07(a)(vii) and the adjustments set forth in Section 2.10, each share of Company Preferred Stock that is issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) shall be cancelled in exchange for the Merger Consideration as adjusted in accordance with Section 2.07(c) and Section 2.07(d) and set forth on the Allocation Schedule;

 

(iv) Treatment of the Company Options Held by Current Service Providers. As of the Effective Time, each Company Option, whether vested or unvested, that is outstanding immediately prior to the Effective Time and held by a holder of such Company Option (“Company Option Holder”) who is providing services to the Company immediately prior to the Effective Time shall be canceled and extinguished and each Company Option Holder will cease to have any rights with respect thereto. As of the Effective Time, ListCo will grant to each Company Option Holder an option (a “ListCo Option”) under the ListCo 2023 Equity Incentive Plan (“ListCo Option Plan”) with respect to a number of shares of ListCo Class A Common Stock and at an exercise price per ListCo Class A Common Stock to be determined by the ListCo immediately prior to Closing; provided, that the exercise price and the number of shares of ListCo Class A Common Stock subject to the ListCo Option shall be determined in a manner consistent with the requirements of Section 409A of the Code, and, in the case of each Company Option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code, consistent with the requirements of Section 424 of the Code. Each ListCo Option that is issued as a replacement for a Company Option will reflect the terms and vesting schedule as approved by the ListCo Board.

 

(v) Reserved.

 

 

(vi) Treatment of the Company Preferred Warrant. Subject to the Ownership Limitations as set forth in Section 2.07(a)(vii), and the adjustments set forth in Section 2.10, each Company Preferred Warrant that is issued and outstanding immediately prior to the Effective Time shall be cancelled in exchange for such number of validly issued, fully paid and non-assessable ListCo Class A Common Stock and/or Pre-funded Warrants, as adjusted in accordance with Section 2.07(c) and Section 2.07(d) and set forth on the Allocation Schedule;

 

(vii) Ownership Limitations. Notwithstanding any other provision of this Agreement, under no circumstances shall the ListCo issue shares of ListCo Class A Common Stock to any Company Stockholder or Management Employees pursuant to the terms of this Agreement, to the extent that the aggregate number of shares so issued would exceed 19.99% of the total number of shares of ListCo Class A Common Stock and shares of ListCo Class B Common Stock outstanding immediately prior to the Effective Time (the “Nasdaq Ownership Limitation”). In addition, notwithstanding any other provision of this Agreement, under no circumstances shall the ListCo issue shares of ListCo Class A Common Stock to any Company Stockholder or any Management Employee pursuant to the terms of this Agreement, to the extent that after giving effect to such issuance, the Company Stockholder or any Management Employee, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the total number of shares of ListCo Class A Common Stock outstanding immediately after giving effect to such issuance (the “Beneficial Ownership Limitation”, together with the Nasdaq Ownership Limitation, the “Ownership Limitations”). If the ListCo cannot issue shares of ListCo Class A Common Stock due to be any Ownership Limitations, the ListCo shall (i) issue all such shares of ListCo Class A Common Stock that may be issued without causing a Company Stockholder to exceed either Ownership Limitation, and (ii) issue the Pre-Funded Warrants in lieu of shares of ListCo Class A Common Stock not so provided to such Company Stockholders or Management Employees. Each ListCo Pre-Funded Warrant shall be exercised for $0.001 per each share of ListCo Class A Common Stock at the Effective Time and shall not be exchangeable for cash. The Pre-Funded Warrants will be registered in the ListCo’s books and will not be listed for trading on any stock exchange or trading market; provided, however that the ListCo Class A Common Stock issuable upon exercise of the Pre-Funded Warrants shall be registered for resale under the Resale Registration Statement pursuant to Section 7.02.

 

Following the Effective Time, on the following matters presented to the ListCo Stockholders for their action or consideration at any meeting of the ListCo Stockholders, the Persons who receive shares of ListCo Class A Common Stock pursuant to this Agreement, in their positions as holders of any ListCo Common Stock, shall not be entitled to vote: (i) to approve any amendment to this Agreement or the Pre-Funded Warrant to remove the Nasdaq Ownership Limitation as set forth herein or therein, (ii) to approve the increase of any Ownership Limitation set forth in this Agreement or the Pre-Funded Warrant to a percentage in excess of 20.00%, or (iii) to approve and effect any other matters to the extent that ListCo will issue such number of shares of ListCo Class A Common Stock under this Agreement or upon exercise of the Pre-Funded Warrants exceeding the Nasdaq Ownership Limitation.

 

(b) Merger Consideration. Subject to the adjustments set forth in Section 2.07(c), Section 2.07(d), and Section 2.10(c), the Merger Consideration (defined in Section 2.10 and consisting of the Cash Consideration and the Share Consideration), shall be payable in accordance with Section 2.10.

 

(c) Fractional Shares. Notwithstanding anything in this Agreement to the contrary, no fractional shares of ListCo Class A Common Stock shall be issued in connection with the Merger, and no certificates or scrip for any such fractional shares shall be issued. Any holder of shares of Company Stock who would otherwise be entitled to receive a fraction of a share of ListCo Class A Common Stock shall not receive such fraction, and shall instead receive such amount rounded up to the nearest whole number of shares of ListCo Class A Common Stock.

 

(d) Adjustment to Merger Consideration.

 

(i) Share Consideration The shares of ListCo Class A Common Stock issuable pursuant to this Section 2.07 shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into ListCo Class A Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the number of the shares of ListCo Class A Common Stock outstanding after the date hereof and prior to the Effective Time so as to provide the Company Stockholders (excluding the Dissenting Stockholders) with the same economic effect as contemplated by this Agreement prior to such event.

 

 

(ii) Estimated Closing Statement. The Company shall deliver to the ListCo, at least five (5) Business Days prior to the Closing Date, a statement setting forth the Company’s estimation of (1) Indebtedness and the Payoff Amount, (2) Cash, (3) the Transaction Expenses, (4) the Net Working Capital Adjustment, (5) the payment and allocation of the Merger Consideration (“Estimated Merger Consideration Payable”), and (6) the allocation of the Estimated Merger Consideration Payable among the Persons reflected thereon, including the Company Stockholders (excluding the Dissenting Stockholders) and the Management Employees) (this subsection (6) hereinafter referred to as the “Allocation Schedule”), in each case as set forth in on the Allocation Schedule (such statement inclusive of items in subsections (1) through (6) the “Estimated Closing Statement”). The Merger Consideration shall be paid in accordance with Section 2.10, as adjusted pursuant to the Estimated Closing Statement. The Company acknowledges and agrees that the Allocation Schedule is and will be prepared in accordance with the Organizational Documents of the Company, the Company Stockholder Agreements, and applicable Law. The Allocation Schedule will set forth (A) the name, mailing address, email address and wire information (where applicable) for each Person receiving any Merger Consideration, (B) the number and class of Equity Securities of the Company owned by each Company Stockholder or Company Option holder as of immediately prior to the Effective Time, and (C) the portion of the Merger Consideration allocated to each Company Stockholder (divided into applicable Cash Consideration, ListCo Class A Common Stock and/or Pre-Funded Warrants in lieu thereof, additional shares of ListCo Class A Common Stock, if any, to be issued pursuant to Section 2.07(d)(i)).

 

(iii) Final Closing Adjustment. Within 60 days after the Closing Date, ListCo shall prepare and deliver to the Company Stockholder Representative a statement (the “Final Closing Statement”) setting forth the ListCo’s good faith calculation of the actual amounts of each item estimated in the Estimated Closing Statement (as of the Closing Date) and used in the calculation of the Net Working Adjustment and the resulting payments of the Merger Consideration, including: (1) the Cash; (2) the Indebtedness and the Payoff Amount; (3) the Transaction Expenses; (4) the Net Working Capital Adjustment; and (5) the resulting Merger Consideration payable (the “Final Merger Consideration Payable”). The Final Closing Statement shall be prepared in accordance with GAAP and the same methodology as the Company used to prepare the Estimated Closing Statement. If the Final Merger Consideration Payable is greater than the Estimated Merger Consideration Payable, ListCo will pay to the Company Stockholders the difference between the Final Merger Consideration Payable and the Estimated Merger Consideration Payable, which amount shall be allocated to the Company Stockholders in ListCo Class A Stock on a pro-rata basis (applied in accordance with the Allocation Schedule and the Organizational Documents) by dividing such amount by the ListCo 5-Day VWAP and allocating such ListCo Class A Stock to the Company Stockholders using the same methodology as was used to allocate the Merger Consideration in the Allocation Schedule. If the Final Merger Consideration Payable is less than the Estimated Merger Consideration Payable, then the Merger Consideration payable to the Company Stockholders and Management Employees shall be reduced by such amount, and each Company Stockholder’s and Management Employee’s Share Consideration shall be reduced in accordance with their pro-rata allocation of the Merger Consideration (the “Pro Rata Allocation”; such reduction to be applied in accordance with the Allocation Schedule and the Organizational Documents); provided that, each Company Stockholder’s or and Management Employee’s consideration shall be reduced by (i) first reducing such Company Stockholder’s or such Management Employee’s Pre-Funded Warrants issued to such Company Stockholder or such Management Employee; (ii) second, to the extent such Company Stockholder’s or such Management Employee’s Pre-Funded Warrants are insufficient, then such Company Stockholder’s or such Management Employee’s ListCo Class A Common Stock issued at Closing shall be reduced in accordance with its Pro Rata Allocation and returned to ListCo for cancellation; and (iii) lastly, if such Company Stockholder’s or such Management Employee’s ListCo Class A Common Stock issued at Closing is insufficient or has been sold or transferred by such Company Stockholder or Management Employee, then such Company Stockholder’s or such Management Employee’s ListCo Class A Common Stock held as part of the Indemnification Holdback Amount shall be reduced and released from the Indemnification Holdback Amount to ListCo. In no event shall any Company Stockholder or Management Employee be required to return Cash Consideration, if any, to ListCo.

 

 

(iv) Review and Objection. The Company Stockholder Representative will have thirty (30) days after its receipt of the Final Closing Statement to review the Final Closing Statement (the “Review Period”). During such thirty (30) day period, ListCo shall provide to the Company Stockholder Representative reasonable access to ListCo’s, Merger Co’s and the Company’s books and records (including financial records and supporting documents) and reasonable access to employees of ListCo, Merger Sub and the Company, in each case, as the Company Stockholder Representative may reasonably request for the purpose of verifying the calculation of the Final Closing Statement, including the final Working Capital Adjustment.  

 

(v) The Company Stock Representative may notify ListCo in writing prior to the expiration of the Review Period of any dispute or objection pertaining to the Final Closing Statement (any such written dispute or objection being referred to as an “Objection”), setting forth in reasonable detail the basis for its dispute or objections and the specific adjustments (including dollar amounts) to the Final Closing Statement that Company Stockholder Representative believes should be made. ListCo and Company Stockholder Representative will, within thirty (30) days (or such longer period as they may agree in writing) following delivery of an Objection to the Buyer (the “Resolution Period”), attempt in good faith to resolve their differences, and any resolution by them as to any disputed amounts will be final, binding and conclusive with respect to the Post-Closing Adjustment. Any items agreed to by the Company Stockholder Representative and ListCo in writing, together with any items not disputed or objected to by the Company Stockholder Representative in the Objection, are collectively referred to herein as the “Resolved Matters”. If at the end of the Resolution Period the Company Stockholder Representative and ListCo have been unable to resolve any differences that they may have with respect to the matters specified in the Objection, the Company Stockholder Representative and ListCo shall refer all such unresolved matters that remain in dispute (the “Unresolved Matters”) to a mutually agreed upon accounting firm (the “Accounting Referee”). With respect to each Unresolved Matter, the Accounting Referee’s determination, if not in accordance with the position of either the Company Stockholder Representative or ListCo, will not be in excess of the higher, nor less than the lower, of the amounts advocated by the Company Stockholder Representative or ListCo with respect thereto. The Accounting Referee’s final written determination will be conclusive and binding upon the parties to this Agreement with respect to the Unresolved Matters and the Final Merger Consideration Payable shall be modified to comport with such determination and shall be allocated amongst the Company Stockholders as set forth in Section 2.07(d) (ii). The Parties shall split the costs of the Accounting Referee.

 

(e) Each share of common stock of Merger Sub that is issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non-assessable common stock of the Surviving Entity.

 

Section 2.08 Withholding Rights. Each of the Parties and each of their respective Affiliates and any other Person making a payment under this Agreement shall be entitled to deduct and withhold (or cause to be deducted and withheld) from the consideration otherwise payable pursuant to this Agreement such amounts as are required to be deducted and withheld under applicable Tax Law. ListCo, the Company, the Surviving Entity, Merger Sub or their respective Affiliates or Representatives, as applicable, shall use commercially reasonable efforts to cooperate with such Person to reduce or eliminate any such requirement to deduct or withhold to the extent permitted by Law. To the extent that amounts are so withheld and timely remitted to the applicable Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

 

 

Section 2.09 Company’s Dissenting Shares.

 

(a) Notwithstanding any provision of this Agreement to the contrary, any holder of shares of Company Common Stock for which the holder thereof has demanded the appraisal of such shares in accordance with, and has complied in all respects with, Section 262 of the DGCL (such holder, a “Dissenting Stockholder” and, such shares of Company Stock, collectively, the “Dissenting Shares”) shall not be converted into the right to receive the portion of Merger Consideration applicable to such Dissenting Shares unless and until such Dissenting Stockholder effectively withdraws its appraisal rights under the DGCL. Notwithstanding anything to the contrary contained in this Agreement, for all purposes of this Agreement, the Merger Consideration shall be reduced by the portion of the Merger Consideration that would otherwise be due to any Dissenting Stockholders. From and after the Effective Time, (x) all Dissenting Shares shall be cancelled and cease to exist, and (y) Dissenting Stockholders shall be entitled only to such rights as may be granted to them under Section 262 of the DGCL and shall not be entitled to exercise any of the voting rights or other rights of a stockholder of the Surviving Entity. Notwithstanding the foregoing, if any Dissenting Stockholder effectively withdraws or loses such appraisal rights (through failure to perfect such appraisal rights or otherwise), then that Dissenting Stockholder’s shares (i) shall no longer be deemed to be Dissenting Shares, and (ii) shall be treated as if they had been converted automatically at the Effective Time into the portion of Merger Consideration applicable to such Dissenting Shares in accordance with the Allocation Schedule upon delivery of a duly completed and validly executed Letter of Transmittal and the surrender of any Certificates in accordance with Section 2.10(a). Each Dissenting Stockholder who becomes entitled to payment for his, her or its Dissenting Shares pursuant to the DGCL shall receive payment thereof from the Exchange Agent in accordance with the DGCL. For the avoidance of doubt, for purposes of determining the Allocation Schedule and the other related definitions and terms that are affected by the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time, any and all Dissenting Shares shall be included in all such determinations as if such Dissenting Shares were participating in the Merger and were entitled to receive the applicable payments under this Agreement. The Company shall give ListCo prompt notice of any written demands for appraisal of any shares of Company Common Stock, attempted withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company relating to stockholders’ rights of appraisal in accordance with the provisions of Section 262 of the DGCL, and the ListCo shall have the opportunity to participate in all negotiations and proceedings with respect to all such demands. The Company shall not, except with the prior written consent of ListCo (prior to the Closing), make any payment with respect to, settle or offer or agree to settle any such demands. Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.10(d) to pay for Dissenting Shares shall be returned to ListCo upon demand.

 

Section 2.10 Payment of Merger Consideration. The total aggregate merger consideration payable hereunder shall be $53,200,000, less the Payoff Amount and the Transaction Expenses as described below, plus Cash (which shall increase the Cash Consideration), plus or minus the Net Working Capital Adjustment (in each case as set forth in the Estimated Closing Statement and subject to the Final Closing Statement adjustment). The Merger Consideration shall be payable in Cash Consideration and Share Consideration as set forth in this Section 2.10. The “Cash Consideration” means $20,000,000 less the Payoff Amount and the Transaction Expenses and shall be payable as set forth in Section 2.10(a). The Share Consideration shall consist of the number of shares of ListCo Class A Common Stock, and/or the Pre-Funded Warrants in lieu thereof that equal to the quotient of $33,200,000 divided by ListCo 5-Day VWAP (the “Share Consideration”, together with the Cash Consideration, as adjusted, the “Merger Consideration”).

 

(a) Satisfaction of Corporate Debt and Transaction Expenses; Cash Consideration. Immediately prior to the Effective Time, the ListCo shall pay, by means of a wire transfer of immediately available funds, the following amounts to the following Persons:

 

(i) To the Company Lender in an amount equal to the payoff amount (the “Payoff Amount”) reflected in the payoff letter from the Company Lender and as set forth in the Allocation Schedule; and

 

(ii) To those Persons to whom Transaction Expenses are payable, in accordance with the invoices therefore, as set forth on the Estimated Closing Schedule.

 

(iii) after giving effect to Section 2.10(a)(i) - Section 2.10(a)(ii), to the extent any Cash Consideration remains, the remaining Cash Consideration shall be payable to the Company Stockholders in accordance with the Company’s Organizational Documents and Management Employees in accordance with the Management Carveout Plan (though the Parties do not anticipate any Cash Consideration being available to be paid to the Management Employees) in each case as set forth in the Allocation Schedule.

 

 

(b) Payment of Share Consideration. The Share Consideration shall be delivered and issued to the Management Employees and Company Stockholders on the Closing Date as follows:

 

(i) To the extent that, after giving effect to the payment of the Cash Consideration to the Persons listed on the Allocation Schedule in accordance with Section 2.10(a)(iv), the Cash Consideration payable to the Management Employees pursuant to Section 2.10(b)(iv) does not satisfy the Company’s obligations to the Management Employees under the Management Carve Out Plan (the unsatisfied amount referred to as the “Management Employee Payment Amount”), then the Management Employees shall receive, and ListCo shall issue and deliver to the Management Employees at Closing, shares of ListCo Class A Common Stock in an amount equal to the Management Employee Payment Amount divided by the ListCo 5-Day VWAP (“Management Employee Share Amount”) but less (1) the number of shares of ListCo Class A Common Stock that is the product of the Holdback Percentage multiplied by the Management Employee Share Amount and (2) 35% (or a higher percentage as necessary to cover taxes required by the applicable Laws, as determined by ListCo) of the Management Employee Payment Amount which shall be retained by ListCo to satisfy any and all withholding tax obligations pertaining to the payment of the Management Employee Payment Amount which shall be the sole responsibility of ListCo. All shares of ListCo Class A Common Stock to be issued to each Management Employee pursuant to this Section 2.10(b)(i) shall be (1) in the amount as set forth in the Allocation Schedule, (2) issued in accordance with this Section 2.10(b), and be subject to vesting as follows: (1) all such shares to be issued to Management Employees at Closing shall fully vest on the date that the Resale Registration Statement is declared Effective by the Commission and at no time before, and (2) all such shares held in escrow as part of the Indemnification Holdback Amount in accordance with Section 2.12 shall fully vest on the date that such shares are released and disbursed to the Management Employees in accordance with the Share Consideration Escrow Agreement and at no time before; and

 

(ii) The total Share Consideration to be issued and delivered to the Company Stockholders on the Closing Date shall be the Share Consideration (subject to any applicable adjustments under Section 2.07(d) and Section 2.10(a)), less the Management Employee Share Amount, less the Indemnification Holdback Amount (which shall be issued and delivered in accordance with Section 2.12), which shall be issued and delivered to the Company Stockholders (along with the Pre-Funded Warrants) in accordance with the Organizational Documents and as set forth in the Allocation Schedule, and in accordance with Section 2.10(d).

 

(c) Deposit of Share Consideration with Exchange Agent. Immediately prior to the Effective Time, ListCo shall deposit with its Transfer Agent, who will act as an exchange agent (the “Exchange Agent”) for the Merger, (i) the total number of the shares of ListCo Class A Common Stock and Pre-Funded Warrants issuable in respect of the Merger Consideration as set forth in the Allocation Schedule, and (ii) such additional shares of ListCo Class A Common Stock issuable pursuant to Section 2.07(d).

 

(d) Letter of Transmittal. Prior to the Closing Date, the Company shall deliver to each Company Stockholder a Letter of Transmittal, together with a request to have such Company Stockholder deliver an executed Letter of Transmittal to the Company and the Exchange Agent no less than five (5) Business Days prior to the Closing. At the Effective Time, each Company Stockholder of an outstanding certificate or certificates for Company Stock (collectively, the “Certificates”) who has surrendered such Certificates to the Company and the Exchange Agent (together with a properly completed Letter of Transmittal) in accordance with the above timelines prior to the Closing shall be entitled to receive the Merger Consideration in accordance with the Allocation Schedule on the Closing Date following the Effective Time.

 

(e) No Further Transfers. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of any Company Stock that were outstanding immediately prior to the Effective Time. If, after the First Effective Time, any Company Stock is presented to the Surviving Entity for any reason, they shall be cancelled and exchanged as provided in this Section 2.10.

 

Section 2.11 Exchange Agent. Promptly following the date that is one (1) year after the Effective Time, ListCo shall instruct the Exchange Agent to deliver to ListCo all cash, certificates and other documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent’s duties shall terminate. Thereafter, each Company Stockholder who has not delivered a Letter of Transmittal may surrender such Certificate or deliver such Letter of Transmittal to ListCo and (subject to applicable abandoned property, escheat and similar Laws) receive in consideration therefor, and ListCo shall promptly pay, the portion of the Merger Consideration deliverable in respect thereof as determined in accordance with this Article 2 without any interest thereon. None of ListCo, the Merger Sub, the Company, the Surviving Entity or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration delivered to a public official pursuant to and in accordance with any applicable abandoned property, escheat or similar Laws. If any Certificate shall not have been surrendered immediately prior to such date on which any amounts payable pursuant to this Article 2 would otherwise escheat to or become the property of any Governmental Entity, any such amounts shall, to the extent permitted by applicable Law, become the property of the Surviving Entity, as applicable, free and clear of all claims or interest of any Person previously entitled thereto.

 

 

Section 2.12 Holdback Amount Section 2.13 Section 2.14 Section 2.15 t. The ListCo shall withhold from the Share Consideration (including the Management Employee Share Amount), and hold in accordance with this Agreement, a number of shares of ListCo Class A Common Stock equal to the quotient of $2,000,000 divided by the ListCo 5-Day VWAP, as adjusted pursuant to Section 2.07(c) and Section 2.07(d) (the “Indemnification Holdback Amount”), as security for the obligations of Company Stockholders pursuant to Section 7.03(a). The Indemnification Holdback Amount shall be held for a period of twelve (12) months following the Closing Date (the “Indemnification Holdback Period”) and shall be released to the Company Stockholders and Management Employees (in accordance with the Allocation Schedule) within ten (10) business days of the expiration of the Indemnification Holdback Period, such released aggregate amount to be equal to (a) the Indemnification Holdback Amount, as allocated to the Company Stockholders and Management Employees in accordance with the Allocation Schedule, less (b) any amounts set off against the Indemnification Holdback Amount pursuant to this Agreement. The Indemnification Holdback amount shall be held by the Transfer Agent for the benefit of the Company Stockholders and Management Employees and shall be released to the Company Stockholders and Management Employees pursuant to the terms of the Share Consideration Escrow Agreement, the form of which is attached hereto as Exhibit D.

 

Article III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to ListCo and Merger Sub as follows:

 

Section 3.01 Corporate Organization of the Company. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware. The Company has the corporate power and authority to own, operate and lease its properties, rights and assets and to conduct its business as it is now being conducted, except to the extent any such failure would not have a Material Adverse Effect. The Company has made available to ListCo true and correct copies of the Organizational Documents of the Company and its Subsidiaries as in effect as of the date hereof. The Company is duly licensed or qualified and in good standing (where such concept is applicable) as a foreign entity in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 3.02 Subsidiaries. The Subsidiaries of the Company have been duly formed or organized, are validly existing under the Laws of their jurisdiction of incorporation or organization and have the corporate power and authority to own, operate and lease their respective properties, rights and assets and to conduct their business as it is now being conducted. Each Subsidiary of the Company is duly licensed or qualified as a foreign entity in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not have a Material Adverse Effect.

 

Section 3.03 Due Authorization. The Company has the requisite corporate power and authority to execute and deliver this Agreement and each other Ancillary Document to which it is or will be a party and (subject to the consents, approvals, authorizations and other requirements described in Section 3.04 or Section 3.05) to perform all obligations to be performed by it hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement and such other Ancillary Documents and the consummation of the Transactions have been duly authorized by the Company Board and the Company Stockholders, and other than the consents, approvals, authorizations and other requirements described in Section 3.04 or Section 3.05, no other corporate proceeding on the part of the Company is necessary to authorize this Agreement or any other Ancillary Documents or the Company’s performance hereunder or thereunder. This Agreement has been, and each other Ancillary Document has been or will be (when executed and delivered by the Company) duly and validly executed and delivered by the Company, and, assuming due and valid authorization, execution and delivery by each other party hereto and thereto, this Agreement constitutes, and each such other Ancillary Document constitutes or will constitute, a valid and binding obligation of the Company, enforceable against the Company, in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting or relating to creditors’ rights generally and subject, as to enforceability, to general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law (the “Enforceability Exceptions”).

 

 

Section 3.04 No Conflict. Subject to the receipt of the consents, approvals, authorizations, and other requirements set forth in Section 3.04 of the Company Disclosure Schedules and Section 3.05, the execution, delivery and performance by the Company of this Agreement and the other Ancillary Documents to which it is or will be a party and the consummation by the Company of the Transactions do not and will not, (a) contravene or conflict with, or trigger security holders’ right that have not been duly waived under, the Organizational Documents of the Company or any of its Subsidiaries, (b) contravene or conflict with or constitute a violation of any provision of any Law, Business Permit or Governmental Order binding upon or applicable to the Company or any of its Subsidiaries or any of their respective assets or properties, (c) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default under, or result in the termination or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required by, any of the terms, conditions or provisions of any Specified Contract, except as set forth in Section 3.04(c) of the Company Disclosure Schedule, or (d) result in the creation or imposition of any Lien on any asset, property or Equity Security of the Company or any of its Subsidiaries (other than any Permitted Liens), except in the case of clauses (b), (c) or (d) above as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 3.05 Governmental Authorities Consents. Assuming the truth and completeness of the representations and warranties of each of the ListCo and Merger Sub contained in this Agreement and the other Ancillary Documents to which it is or will be a party, no notice to, action by, consent, approval, permit or authorization of, or designation, declaration or filing with, any Governmental Authority (collectively, the “Authorizations”) is required on the part of the Company with respect to its execution, delivery and performance of this Agreement and the other Ancillary Documents to which it is or will be a party and the consummation by the Company of the Transactions, except for (i) any Authorization the absence of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) the filing of any documents or information required pursuant to applicable requirements, if any, of applicable Securities Laws, (iii) compliance with and filings or notifications required to be filed with the state securities regulators pursuant to “blue sky” Laws and state takeover Laws as may be required in connection with this Agreement, the other Ancillary Documents or the Transactions, (iv) the filing of the Certificate of Merger to the Secretary of State of the State of Delaware; (v) the Company Stockholder Approval; and (vi) approval of Company Board.

 

Section 3.06 Capitalization.

 

(a) As of the date of this Agreement, the total outstanding Equity Securities of the Company are described in the Company Disclosure Schedule. The issued and outstanding Company Stock (i) have been duly authorized and validly issued and are fully paid and non-assessable; (ii) have been offered, sold and issued in compliance in all material respects with applicable Law and all requirements set forth in (1) the Organizational Documents of the Company, and (2) any other applicable Contracts governing the issuance of such Equity Securities; (iii) except as set forth in Section 3.06(a) of the Company Disclosure Schedule, are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Organizational Documents of the Company or any Contract to which the Company is a party or otherwise bound; and (iv) to the Knowledge of the Company are free and clear of any Liens (other than those Liens arising under applicable Laws, the Company’s Organizational Documents and the Ancillary Documents).

 

(b) Except as disclosed in Section 3.06(b)) of the Company Disclosure Schedule, there are no outstanding options, restricted stock, restricted stock units, equity appreciation, phantom stock, profit participation, equity or equity-based rights or similar rights with respect to the Equity Securities of, or other equity or voting interest in, the Company. Except as disclosed in Section 3.06(b) of the Company Disclosure Schedule, (i) no Person is entitled to any preemptive or similar rights to subscribe for Equity Securities of the Company, and (ii) there are no warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contract that could require the Company to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities of the Company, and (iii) there are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the Company Stockholders may vote.

 

 

(c) (i) There are no declared but unpaid dividends or distributions in respect of any Equity Securities of the Company and (ii) since December 31, 2023 through the date of this Agreement, the Company has not made, declared, set aside, established a record date for or paid any dividends or distributions.

 

Section 3.07 Capitalization of Subsidiaries..

 

(a) All of the issued and outstanding Equity Securities of each Subsidiary of the Company are beneficially, directly or indirectly, owned by the Company. The Equity Securities of each of the Company’s Subsidiaries (i) have been duly authorized and validly issued, and are, to the extent applicable, fully paid and non-assessable in accordance with their Organizational Documents; (ii) have been offered, sold and issued in compliance in all material respects with applicable Law, and all requirements set forth in (1) the Organizational Documents of each such Subsidiary, and (2) any other applicable Contracts governing the issuance of such Equity Securities; (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Organizational Documents of each such Subsidiary or any Contract to which each such Subsidiary is a party or otherwise bound; and (iv) to the Knowledge of the Company are free and clear of any Liens (other than Liens arising under applicable Laws, the Company’s Organizational Documents, and the Ancillary Documents), and, subject to the Laws of the applicable jurisdiction of incorporation or organization with respect to each Subsidiary of the Company, free of any restriction which prevents the payment of dividends to the Company or any of its Subsidiaries.

 

(b) There are no (i) outstanding options, restricted stock, restricted stock units, equity appreciation, phantom stock, profit participation, equity or equity-based rights or similar rights with respect to the Equity Securities of, or other equity or voting interest, issued by any Subsidiary of the Company; (ii) Persons entitled to any pre-emptive or similar rights to subscribe for Equity Securities of any Subsidiary of the Company; (iii) warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contract that could require any Subsidiary of the Company to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities of any Subsidiary of the Company; and (iv) outstanding bonds, debentures, notes or other indebtedness of any Subsidiary of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which the equity-holders of the Company’s Subsidiaries may vote.

 

(c) As of the date of this Agreement, neither the Company nor any of its Subsidiaries owns any Equity Securities in any Person other than the Group Companies.

 

Section 3.08 Sufficiency of Assets. The assets, properties and rights of the Company and its Subsidiaries on the Closing Date constitute all of the material assets (real, personal, tangible, intangible or otherwise) used or held for use in the Business as it is currently operated.

 

Section 3.09 Financial Statements; Absence of Changes.

 

(a) The Company has made available to ListCo copies of the audited consolidated balance sheet as of December 31, 2023 and 2022, and the audited consolidated statements of operations, of changes in stockholders’ equity and of cash flows for the years ended December 31, 2023 and 2022 (the “Financial Statements”).

 

(b) The Financial Statements present fairly, in all material respects, the financial position of the Company and its Subsidiaries as of the date and for the period indicated in such Financial Statements, and the results of their operations and cash flows for the periods indicated in such Financial Statements.

 

 

(c) The Company and its Subsidiaries have established and maintained systems of internal accounting controls. Such systems are designed to provide, in all material respects, reasonable assurance that (i) all material transactions are executed in accordance with management’s authorization, and (ii) all material transactions are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with GAAP and to maintain accountability for the Company’s and its Subsidiaries’ assets. None of the Company or its Subsidiaries nor an independent auditor of the Company or its Subsidiaries has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its Subsidiaries, (ii) any fraud, whether or not material, that involves the Company or its Subsidiaries’ management or other employees who have a significant role in the preparation of financial statements or the internal accounting controls utilized by the Company or its Subsidiaries, or (iii) any claim or allegation regarding any of the foregoing.

 

(d) Since December 31, 2024, through and including the date of this Agreement, no Material Adverse Effect has occurred.

 

Section 3.10 Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has any liability, debt, or obligation, whether accrued, contingent, absolute, determined, determinable or otherwise, except for liabilities, debts, or obligations (a) reflected or reserved for in the Financial Statements or disclosed in any notes thereto, (b) that have arisen since December 31, 2023 in the ordinary course of business of the Company and its Subsidiaries, (c) incurred or arising under or in connection with the Transactions, including expenses related thereto, (d) that are executory obligations under Contracts (excluding any liabilities arising from a breach of Contracts), or (e) that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or its Subsidiaries.

 

Section 3.11 Litigation and Proceedings. There are no, and since December 31, 2022, there have been no pending or, to the Knowledge of the Company, threatened Actions by or against the Company or any of its Subsidiaries that, if adversely decided or resolved, had, or would reasonably be expected to result in liabilities to or obligations of the Company or any of its Subsidiaries in an amount in excess of US$2,000,000 individually or US$4,000,000 in the aggregate. There is no Governmental Order imposed upon the Company or any of its Subsidiaries that would reasonably be expected to result in liabilities to or obligations of the Company or any of its Subsidiaries in an amount in excess of US$2,000,000 individually or US$4,000,000 in the aggregate. Neither the Company nor any of its Subsidiaries is party to a settlement or similar agreement regarding any of the matters set forth in the two preceding sentences that contains any ongoing obligations, restrictions or liabilities (of any nature) that would reasonably be expected to result in liabilities to or obligations of the Company or any of its Subsidiaries in an amount in excess of US$2,000,000 individually or US$4,000,000 in the aggregate.

 

Section 3.12 Compliance with Laws.

 

(a) Except where the failure to be, or to have been, in compliance with such Laws has not or would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, or as disclosed in Section 3.12 of the Company Disclosure Schedule, since December 31, 2022, the Company has been in compliance with all applicable Laws in all material respects. Neither the Company nor any of its Subsidiaries have received any written notice from any Governmental Authority of a violation of any applicable Law at any time since December 31, 2022 with respect to the Business, except for any such violation which, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries hold all material licenses, approvals, consents, registrations, franchises and permits necessary for the lawful conduct of the Business (the “Business Permits”), except for any failure to hold any Business Permits which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. The Business is in compliance with and not in default under such Business Permits, in each case except for such noncompliance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b) Neither the Company nor any of its Subsidiaries, nor to the Knowledge of the Company, any Representative acting on behalf of the Company or any of its Subsidiaries, is or has been (i) identified on any sanctions-related list of restricted or blocked persons, including the list of Specially Designated Nationals and Blocked Persons maintained by the OFAC, the Consolidated List of Financial Sanctions Targets maintained by His Majesty’s Treasury of the United Kingdom, and the Consolidated List of Persons, Groups, and Entities Subject to EU Sanctions; (ii) organized, resident, or located in any country that is itself the subject of U.S. or applicable non-U.S. economic sanctions; or (iii) owned or controlled by any persons described in clause (i) or (ii).

 

 

(c) The Company and its Subsidiaries and, to the Knowledge of the Company, the Representatives acting on behalf of the Company and its Subsidiaries, are and since December 31, 2022 have been in material compliance with applicable Laws relating to economic or financial sanctions (including those administered by OFAC, His Majesty’s Treasury of the United Kingdom, the European Union, or any EU member state).

 

Section 3.13 Contracts; No Defaults.

 

(a) For purposes of this Agreement, “Specified Contracts” shall mean all Contracts described in this Section 3.13(a) that remain in effect as of the date of this Agreement and to which, as of the date of this Agreement, the Company or any of its Subsidiaries is a party: each Contract that is (i) material and related to the conduct and operations of the Business; (ii) material and involve any Related Party; or (iii) involving the establishment, contribution to, or operation of a partnership, joint venture or involving a sharing of profits or losses, or any investment in, loan to or acquisition or sale of the securities, equity interests or assets of any Person. For purposes of this Section 3.13(a), “material” shall mean any agreement, contract, indebtedness, liability, arrangement or other obligation either having an aggregate value, cost or amount in excess of US$2,000,000 within any 12-month period.

 

(b) Except for any Contract that has terminated, or will terminate, upon the expiration of the stated term thereof prior to the Closing Date and except as would not be reasonably expected to be material to the Business, taken as a whole, each Specified Contract (i) is in full force and effect and (ii) represents the legal, valid and binding obligations of the Company or one or more of its Subsidiaries party thereto and, to the Knowledge of the Company, represents the legal, valid and binding obligations of the other parties thereto, in each case, subject to the Enforceability Exceptions. Except as would not be reasonably expected to have a Material Adverse Effect, taken as a whole, the Company and its Subsidiaries have performed in all respects all respective obligations required to be performed by them to date under the Specified Contracts and (x) to the Knowledge of the Company, neither the Company, the Company’s Subsidiaries, nor, any other party thereto is in breach of or default under any Specified Contract, (y) during the last twelve (12) months, neither the Company nor any of its Subsidiaries has received any written claim or written notice of termination or breach of or default under any Specified Contract, and (z) no event has occurred which individually or together with other events, would reasonably be expected to result in a material breach of or a default under any Specified Contract by the Company or its Subsidiaries or, to the Company’s Knowledge, any other party thereto (in each case, with or without notice or lapse of time or both).

 

(c) Other than in the ordinary course of business, none of the top five largest customers of the Company, taken as a whole, based on the annual revenue for the fiscal year ended December 31, 2024 (collectively, the “Top Customers”), has terminated, or to the Knowledge of the Company, given notice that it intends to terminate any of its business relationship with the Company. There has been no material dispute or controversy or, to the Knowledge of the Company, threatened material dispute or controversy between the Company, on the one hand, and any Top Customer, on the other hand.

 

Section 3.14 Labor Matters.

 

(a) The Business is and has been since December 31, 2022 in compliance in all material respects with all applicable Laws respecting labor, employment, immigration, fair employment practices, terms and conditions of employment, workers’ compensation, occupational safety, plant closings, mass layoffs, worker classification, exempt and non-exempt status, compensation and benefits, Social Security Benefits, and wages and hours, except for any such noncompliance which, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.

 

(b) Neither the Company nor any of its Subsidiaries is party to or bound by (i) any collective bargaining agreement or other Contract with any labor union, labor organization or works council or any arrangement with an employer organization, or (ii) arrangements with a labor union, works council or labor organization. There is no, and since December 31, 2023, there has been no, organized labor dispute, labor grievance or strike, lockout, picketing, hand billing, slowdown, concerted refusal to work overtime, work stoppage, or other material labor dispute against or affecting the Business, in each case, pending or, to the Knowledge of the Company, threatened.

 

 

(c) Each benefit or similar plan relating to Company Employees or other service providers of the Company or any of its Subsidiaries (collectively the “Company Benefit Plans”) has been established, maintained, funded and administered in compliance in all material respects with applicable Laws. Except as set forth in Section 3.14(c) of the Company Disclosure Schedules, neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated hereunder (including the Merger) could (whether alone or in connection with any subsequent event(s)) (A) result in the acceleration, funding or vesting of any material compensation or benefits to any current or former director, officer, employee, consultant or other service provider of the Company or its Subsidiaries under any Company Benefit Plan, or (B) result in the payment by the Company or any of its Subsidiaries to any current or former employee, officer, director, consultant or other service provider of the Company or its Subsidiaries of any severance pay or any increase in severance pay (including the extension of a prior notice period or any golden parachute) upon any termination of employment or service or the cancellation of any material benefit or payment to any Company Employee.

 

Section 3.15 Tax Matters.

 

(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:

 

(i) all Tax Returns required to be filed by the Company or its Subsidiaries have been filed (taking into account extensions) and all such Tax Returns are true, correct and complete in all material respects;

 

(ii) all Taxes (whether or not shown as due on Tax Returns) required to be paid by the Company and its Subsidiaries have been paid or accrued;

 

(iii) there is no material Action with respect to Taxes of the Company or any of its Subsidiaries that is pending or otherwise in progress or has been threatened in writing by any Governmental Authority within the last three years;

 

(iv) the Company and each of its Subsidiaries has complied in all material respects with all applicable Laws relating to the collection, withholding, reporting and remittance of Taxes in the jurisdictions in which the Company or any of its Subsidiaries operate;

 

(v) if the Company or any of its Subsidiaries is required to be registered for any value-added tax (“VAT”) in any jurisdiction, then it is so registered in each applicable jurisdiction and the Company or the applicable Subsidiary has complied with all Laws and Governmental Orders in respect of any VAT, maintains full and accurate records with respect thereto and has not been subject to any interest, forfeiture, surcharge or penalty or been a member of an affiliated, consolidated or similar group with any other company for purposes of VAT; and

 

(b) Neither the Company nor any of its Subsidiaries has taken any action (nor permitted any action to be taken) that would reasonably be expected to prevent, impair, or impede the Intended Tax Treatment.

 

Section 3.16 Real Property.

 

(a) Neither the Company nor any of its Subsidiaries owns any real property.

 

(b) The Company has a valid leasehold interest in all real property leased by the Company (“Leased Company Real Property”). All material leases for the Leased Company Real Property under which the Company or any of its Subsidiaries is a lessee (collectively, the “Leases”) are in full force and effect and are enforceable in accordance with their respective terms, subject to the Enforceability Exceptions. None of the Company or any of its Subsidiaries has received any written notice of any, and, to the Knowledge of the Company, there is no, material default under any such Lease.

 

(c) The Company or its applicable Subsidiary has good and marketable title to, or a valid and binding leasehold or other interest in, all material tangible personal property necessary for the conduct of the Business, taken as a whole, as currently conducted, free and clear of all Liens, other than Permitted Liens.

 

 

Section 3.17 Intellectual Property, Privacy and Data Security.

 

(a) The Company and its Subsidiaries (i) exclusively own all Company Owned Intellectual Property, and (ii) have valid and enforceable rights to all other Intellectual Property that is material to the conduct of the Business as currently conducted, except in each case where such failure would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) To the Knowledge of the Company, since December 31, 2022, neither the Company nor any of the Subsidiaries nor the conduct of the Business has infringed upon, misappropriated or otherwise violated any Intellectual Property rights of any third party in a manner that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To the Knowledge of the Company, no third party is infringing upon, misappropriating or otherwise violating any Company Owned Intellectual Property in any manner that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(c) Since December 31, 2022, the Company and its Subsidiaries have in place commercially reasonable measures designed to protect and maintain the confidentiality of all trade secrets and other material confidential information included in the Company’s Owned Intellectual Property, except where the failure, individually or in the aggregate, could not reasonably expected to have a Material Adverse Effect. To the Knowledge of the Company, since December 31, 2022, there has been no unauthorized access, use or disclosure, in each case that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, of any source code, trade secrets or other material confidential information of the Company.

 

(d) In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation, any customers, prospective customers, employees and/or other third parties (collectively “Personal Information”), the Company and its Subsidiaries are and since December 31, 2022 have been, to the Knowledge of the Company, in compliance in all material respects with all applicable Laws in the jurisdictions that the Company is qualified to operate, except where such noncompliance could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. The Company and its Subsidiaries have commercially reasonable physical, technical, organizational and administrative security measures and policies in place which are designed to protect all Personal Information collected by them or on their behalf from and against unauthorized access, use and/or disclosure and to comply with Data Security Requirements, except where the failure to do so could not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect.

 

(e) The Company and its Subsidiaries have in place commercially reasonable measures designed to protect the confidentiality, integrity and security of the IT Systems, and commercially reasonable back-up and disaster recovery procedures designed for the continued operation of the Businesses in the event of a failure of the IT Systems. To the Knowledge of the Company, since December 31, 2022 there has been no material Security Incident, including that has resulted in the unauthorized access, use, disclosure, modification, encryption, loss, or destruction or other Processing of any information or data contained or stored therein or transmitted thereby, nor any failures of, the IT Systems that have caused any material disruption or interruption in the conduct of the Business, in each case with respect to such failures or continued substandard performance that has not been remedied or remediated without material expense or liability, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(f) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and its Subsidiaries are in compliance, and since December 31, 2022 have been in compliance, in all material respects with all Data Security Requirements. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, taken as a whole, to the Knowledge of the Company, there is no current Action pending against the Company or any of its Subsidiaries, including by any Governmental Authority, with respect to their collection, retention, storage, security, disclosure, transfer, disposal, use, or other Processing of any Personal Information. There has not been any Action since December 31, 2022 and there is no Action pending, or, to the Knowledge of the Company, threatened in writing, and neither the Company nor any of its Subsidiaries has received any written notice since December 31, 2022, relating to any Security Incident or any non-compliance with any Data Security Requirements, except Actions that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as would not, individually or in the aggregate, reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Transactions do not and will not result in any violation or breach by the Company or its Subsidiaries of any Data Security Requirements.

 

 

Section 3.18 Brokers’ Fees. Except as disclosed in Section 3.18 of the Company Disclosure Schedule, no broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other similar fee, commission or other similar payment in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.

 

Section 3.19 Related Party Transactions. Except as set forth in Section 3.19 of the Company Disclosure Schedule, and except for arm’s length transactions entered into in the ordinary course of business, no Related Party of the Company is presently a party to any material transaction with the Company (other than for services as Company Employees), including any material Contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring material payments to or from, any Related Party or, to the Knowledge of the Company, any other Person in which any Related Party has a substantial or material interest in or of which any Related Party is an officer, director, trustee or partner.

 

Section 3.20 Information Supplied. None of the information supplied or to be supplied by the Company or any of its Subsidiaries specifically in writing for inclusion in (i) the Form 8-K will, at its filing date, and (ii) LAS Form will, at the date it is first submitted to the Nasdaq, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by or on behalf of ListCo, Merger Sub, or any of their respective Affiliates.

 

Section 3.21 Insurance. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect , each Group Company has purchased insurance policies that are mandatorily required to be obtained by such Group Company pursuant to applicable Law.

 

Section 3.22 U.S. Business. No Group Company is a “U.S. business” within the meaning of Section 721 of the Defense Production Act of 1950, as amended, or any of its implementing regulations (together, the “DPA”). No Group Company engages in (a) the design, fabrication, development, testing, production or manufacture of one or more “critical technologies” within the meaning of the DPA, (b) the ownership, operation, maintenance, supply, manufacture, or servicing of “covered investment critical infrastructure” within the meaning of the DPA (where such activities are covered by column 2 of Appendix A to 31 C.F.R. Part 800); or (c) the maintenance or collection, directly or indirectly, of “sensitive personal data” of U.S. citizens within the meaning of the DPA.

 

Section 3.23 No Other Representations. Except as provided in this Article III, none of the Company, or the Company Stockholders, or any other Person has made, or is making, any representation or warranty whatsoever in respect of the Business, the Company, or the Company’s Subsidiaries including any representation or warranty as to the accuracy or completeness of any information, documents or material regarding the Business and furnished or made available to ListCo and its representatives in any form (including any information, documents, or material made available to ListCo in the Company virtual data room), or as to the future revenue, profitability, or success of the Business, or any representation or warranty arising from statute or otherwise in Law.

 

Article IV

REPRESENTATIONS AND WARRANTIES OF LISTCO AND MERGER SUB

 

Except as set forth in the ListCo Disclosure Schedules to this Agreement delivered by the ListCo and Merger Sub to Company and dated as of the date of this Agreement, each Warrantor represents and warrants to the Company as follows:

 

Section 4.01 Corporate Organization.

 

(a) Each of ListCo and its Subsidiaries is duly incorporated, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization and has the corporate power and authority to own, operate and lease its properties, rights and assets and to conduct its business as it is now being conducted. ListCo has made available to the Company true and correct copies of each of the ListCo Organizational Documents and the Organizational Documents of each Subsidiary of ListCo as in effect as of the date hereof. Each of ListCo and each Subsidiary of ListCo is duly licensed or qualified and in good standing (where such concept is applicable) as a foreign entity in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified, except where failure to be so licensed or qualified would not, individually or in the aggregate, reasonably be expected to prevent or delay or impair the ability of ListCo to consummate the Transactions or otherwise have a Material Adverse Effect.

 

 

(b) Merger Sub has been formed for the sole purpose of engaging in the Transactions, and, from the date of its incorporation, has not issued Equity Securities to any Person other than ListCo, has not conducted any business and has no assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and any other Ancillary Document to which it is a party, as applicable.

 

Section 4.02 Due Authorization.

 

(a) Each of ListCo and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and each other Ancillary Document to which it is or will be a party (subject to the consents, approvals, authorizations and other requirements described in Section 4.03 or Section 4.05) and to perform all obligations to be performed by it hereunder and thereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement and such other Ancillary Documents and the consummation of the Transactions have been duly and validly authorized and approved by the ListCo Board, by ListCo as the sole stockholder of Merger Sub, the board of directors of Merger Sub, and no other corporate or equivalent proceeding on the part of ListCo or Merger Sub is necessary to authorize this Agreement or the Ancillary Documents or ListCo’s or Merger Sub’s performance hereunder or thereunder. This Agreement has been, and each Ancillary Document has been or will be (when executed and delivered by ListCo and Merger Sub) duly and validly executed and delivered by ListCo and Merger Sub, as applicable, and, assuming due authorization and execution by each other party hereto and thereto, this Agreement constitutes, and each Ancillary Document constitutes or will constitute when signed a legal, valid and binding obligation of ListCo and Merger Sub, enforceable against ListCo and Merger Sub in accordance with its terms.

 

(b) At a meeting duly called and held, the ListCo Board has duly, validly and unanimously: (i) approved and declared advisable this Agreement and the other Ancillary Documents and the Transactions, (ii) determined that this Agreement and the Transactions are in the best interest of ListCo and the ListCo Stockholders, (iii) directed that the issuance of the ListCo Class A Common Stock underlying the Pre-Funded Warrants, as contemplated by this Agreement and as required to comply with Nasdaq listing rules, be submitted to a vote of the ListCo Stockholders for adoption at a meeting of ListCo Stockholders, and (iv) resolved to recommend that the ListCo Stockholders vote in favor of approval of such proposals.

 

(c) At a meeting duly called and held, the sole director of the of Merger Sub has duly, validly and unanimously: (i) approved and declared advisable this Agreement and the other Ancillary Documents and the Transactions, (ii) determined that this Agreement and the Transactions are in the best interest of Merger Sub and its sole stockholder, and (iii) resolved to recommend the adoption of this Agreement by the sole stockholder of Merger Sub.

 

(d) The sole stockholder of Merger Sub has approved this Agreement, the other Ancillary Documents and the Transactions.

 

Section 4.03 No Conflict. Subject to the receipt of the consents, approvals, authorizations and other requirements set forth in Section 4.05, the execution, delivery and performance of this Agreement and any other Ancillary Document to which ListCo or Merger Sub is a party, and the consummation of the Transactions do not and will not (a) contravene or conflict with or violate any provision of, or result in the breach of, or trigger security holders’ right that have not been duly waived under, the ListCo Organizational Documents or the Organizational Documents of any of its Subsidiaries including Merger Sub, (b) contravene or conflict with or constitute a violation of any provision of any Law, the Nasdaq Rules or Governmental Order binding upon or applicable to ListCo or any of its Subsidiaries, (c) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default under, or result in the termination or acceleration of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required by, any of the terms, conditions or provisions of any Contract to which Merger Sub, ListCo, or any of their Affiliates or Subsidiaries is a party, or (d) result in the creation or imposition of any Lien upon any of the properties, assets of Merger Sub, ListCo or any of their Subsidiaries, except in the case of each of clauses (b) through (d) as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 

Section 4.04 Litigation and Proceedings. There are no, and since December 31, 2022 there have been no, pending or to the Knowledge of ListCo threatened Actions by or against ListCo or any of its Subsidiaries that, if adversely decided or resolved, had, or would reasonably be expected to result in liability to or obligations of ListCo, Merger Sub or any of ListCo’s other Subsidiaries in an amount in excess of US$250,000 individually or US$500,000 in the aggregate. There is no Governmental Order currently imposed upon ListCo or any of its Subsidiaries that would reasonably be expected to result in a Material Adverse Effect. Neither ListCo nor any of its Subsidiaries is a party to any settlement or similar agreement regarding any of the matters set forth in the two preceding sentences that contains any ongoing obligations, restrictions or liabilities (of any nature) that would reasonably be expected to result in a Material Adverse Effect. To the Knowledge of ListCo, except for as set forth in the SEC Reports, there are no SEC inquiries or investigations, other governmental inquiries or investigations, or internal investigations pending or, to the Knowledge of ListCo, threatened, in each case regarding ListCo or any of its Subsidiaries or any malfeasance by any officer or director of ListCo.

 

Section 4.05 Governmental Authorities; Consents. Except as set forth in the ListCo Disclosure Schedules, assuming the truth and completeness of the representations and warranties of the Company contained in this Agreement and the Ancillary Documents to which it is or will be a party, no Authorization is required on the part of ListCo or Merger Sub with respect to the execution, delivery and performance of this Agreement and the Ancillary Documents by each of ListCo and Merger Sub to which it is or will be a party and the consummation of the Transactions, except for (i) the filing of the Form D with the SEC, and (C) such reports under Section 13(a) or 15(d) of the Exchange Act as may be required in connection with this Agreement, the Ancillary Documents or the Transactions, (ii) compliance with and filings or notifications required to be filed with the state securities regulators pursuant to “blue sky” Laws and state takeover Laws as may be required in connection with this Agreement, the Ancillary Documents or the Transactions (iii) the filing of the Certificate of Merger with the Secretary of the State of Delaware, and (iv) the completion of review of listing of additional shares form by Nasdaq.

 

Section 4.06 Brokers’ Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee, underwriting fee, deferred underwriting fee, commission or other similar payment in connection with the Transactions based upon arrangements made by or on behalf of ListCo or any of its Affiliates.

 

Section 4.07 SEC Reports; Financial Statements; Sarbanes-Oxley Act; Undisclosed Liabilities.

 

(a) Except as set forth in Section 4.07(a) of the ListCo Disclosure Schedules, ListCo has timely filed or furnished all statements, prospectuses, registration statements, forms, reports and documents required to be filed or furnished by it prior to the date of this Agreement with the SEC pursuant to the applicable requirements of the Exchange Act, the Securities Act and the other U.S. federal securities laws and the rules and regulations of the SEC promulgated thereunder or otherwise (collectively, the “Federal Securities Laws”) since its incorporation (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended since the time of filing, the “SEC Reports”), and, as of the Closing, will have filed or furnished all other statements, prospectuses, registration statements, forms, reports and other documents required to be filed or furnished by it subsequent to the date of this Agreement with the SEC pursuant to Federal Securities Laws through the Closing (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended since the time of filing, the “Additional SEC Reports”). Each of the SEC Reports, as of their respective dates of filing, and as of the date of any amendment or filing that superseded the initial filing, complied, and each of the Additional SEC Reports, as of their respective dates of filing, and as of the date of any amendment or filing that superseded the initial filing, will comply, in all material respects with the applicable requirements of the Federal Securities Laws (including the Sarbanes-Oxley Act and any rules and regulations promulgated thereunder) applicable to the SEC Reports or the Additional SEC Reports. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the SEC Reports. To the Knowledge of ListCo, none of the SEC Reports filed on or prior to the date of this Agreement is subject to any ongoing SEC investigation or review. The SEC Reports did not at the time they were filed with the SEC, or if amended, as of the date of such amendment with respect to those disclosures that were amended (except to the extent that information contained in any SEC Report has been superseded by a subsequently filed SEC Report) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each director and executive officer of ListCo has filed with the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. As of the date hereof, neither ListCo nor any Merger Sub is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of a Person subject to registration or regulation as an “investment company”, in each case, within the meaning of the Investment Company Act.

 

 

(b) The SEC Reports contain true and complete copies of the applicable financial statements of ListCo, and they do not contain any statement which are misleading. The audited financial statements (including the notes and schedules thereto) and unaudited interim financial statements included in the SEC Reports complied in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present (subject, in the case of the unaudited interim financial statements included therein, to normal year-end adjustments and the absence of complete footnotes) in all material respects the financial position of ListCo as of the respective dates thereof and the results of their operations and cash flows for the respective periods then ended. ListCo does not have any material off-balance sheet arrangements that are not disclosed in the SEC Reports.

 

(c) ListCo has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that all material information relating to ListCo and all material information required to be disclosed by ListCo in the reports and all documents that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to ListCo’s principal executive officer and principal financial officer. Such disclosure controls and procedures are effective in timely alerting ListCo’s principal executive officer and principal financial officer to material information required to be included in ListCo’s financial statements included in ListCo’s periodic reports required under the Exchange Act.

 

(d) ListCo and each of its officers are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act. In particular, ListCo has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act. There are no outstanding loans or other extensions of credit made by ListCo or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of ListCo.

 

(e) Neither ListCo nor any of its Subsidiaries has any liabilities, debts or obligations, whether accrued, contingent, absolute, determined, determinable or otherwise, except for liabilities, debts or obligations (i) reflected or reserved for in the latest audited or unaudited financial statements or disclosed in any notes thereto, in each case as is published publicly or provided to the Company prior to the date hereof; (ii) that have arisen since September 30, 2024 in the ordinary course of business of ListCo and its Subsidiaries; (iii) incurred or arising under or in connection with the Transactions, including expenses related thereto; (iv) that are executory obligations under Contracts (excluding any liabilities arising from a breach of Contracts); (v) incurred in connection with or incident or related to ListCo’s incorporation or continuing corporate existence; or (vi) would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect..

 

(f) Except as discussed in the SEC Reports of the ListCo, the ListCo and its Subsidiaries have established and maintained systems of internal accounting controls. Such systems are designed to provide, in all material respects, reasonable assurance that (i) all material transactions are executed in accordance with management’s authorization and (ii) all material transactions are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with the applicable accounting standard and to maintain accountability for the ListCo’s and its Subsidiaries’ assets. Except as set forth in ListCo’s SEC Reports or to the Knowledge of the ListCo, none of the ListCo or its Subsidiaries nor an independent auditor of the ListCo or its Subsidiaries has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the ListCo and its Subsidiaries, (ii) any fraud, whether or not material, that involves the ListCo or its Subsidiaries’ management or other employees who have a significant role in the preparation of financial statements or the internal accounting controls utilized by the ListCo or its Subsidiaries, or (iii) any claim or allegation regarding any of the foregoing.

 

 

(g) ListCo is not a “shell company” within the meaning of Rule 12b-2 of the Exchange Act and, based on the representations of the Company set forth in Article III, will not become one subsequent to the consummation of the Transactions contemplated by this Agreement.

 

Section 4.08 Compliance with Laws.

 

(a) Each of ListCo and its Subsidiaries:

 

(i) is, and since December 31, 2022 has been, in compliance in all material respects with all applicable Laws;

 

(ii) has not received any written notice from any Governmental Authority of a violation of any applicable Law since December 31, 2022, and no Action before any Governmental Authority is pending;

 

(iii) holds, and since December 31, 2022 has held, all material licenses, approvals, consents, registrations, franchises and permits necessary for the lawful conduct of the business of ListCo and its Subsidiaries (the “ListCo Permits”);

 

(iv) is, and since December 31, 2022 has been, in compliance with and not in default in any material respect under such ListCo Permits;

 

in each case except, with respect to any Subsidiaries of ListCo (but not ListCo itself), any non-compliance, notice, default or lack of ListCo Permit that has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) Neither of the ListCo nor any of its Subsidiaries, nor to the Knowledge of the ListCo, any Representative acting on behalf of the ListCo or any of its Subsidiaries, is or has been (i) identified on any sanctions-related list of restricted or blocked persons, including the list of Specially Designated Nationals and Blocked Persons maintained by the OFAC, the Consolidated List of Financial Sanctions Targets maintained by His Majesty’s Treasury of the United Kingdom, and the Consolidated List of Persons, Groups, and Entities Subject to EU Sanctions; (ii) organized, resident, or located in any country that is itself the subject of U.S. or applicable non-U.S. economic sanctions; or (iii) owned or controlled by any persons described in clause (i) or (ii).

 

(c) The ListCo and its Subsidiaries, and, to the Knowledge of the ListCo, the Representatives acting on behalf of the ListCo and its Subsidiaries, are and, since December 31, 2022, have been in compliance with applicable Laws relating to economic or financial sanctions (including those administered by OFAC, His Majesty’s Treasury of the United Kingdom, the European Union, or any EU member state).

 

Section 4.09 Tax Matters.

 

(a) Except as would not, individually or in the aggregate, reasonably be expected to have a ListCo Impairment Effect, the Warrantors represent that:

 

(i) since December 31, 2020, all Tax Returns required to be filed by ListCo or its Subsidiaries have been timely filed (taking into account extensions) and all such Tax Returns are true, correct and complete in all material respects;

 

(ii) since December 31, 2020, all Taxes (whether or not shown as due on Tax Returns) required to be paid by ListCo or its Subsidiaries been paid;

 

 

(iii) there is no Action (i) with respect to Taxes of ListCo or its Subsidiaries that is pending or otherwise in progress, or (ii) that has been threatened in writing by any Governmental Authority within the last three years;

 

(iv) since December 31, 2020, ListCo and each of its Subsidiaries has complied in all material respects with all applicable Laws relating to the collection, withholding, reporting and remittance of Taxes;

 

(v) since December 31, 2020, (A) there have been no assessments, deficiencies, adjustments or other claims with respect to Taxes that have been asserted, assessed or threatened against ListCo or its Subsidiaries that have not been paid or otherwise resolved in full, and (B) neither ListCo nor any of its Subsidiaries has entered into a written agreement or waiver extending any statute of limitations relating to the payment or collection of material Taxes that has not expired;

 

(vi) if ListCo or any of its Subsidiaries is required to be registered for VAT in any jurisdiction, then it so registered in each applicable jurisdiction and ListCo or the applicable Subsidiary has complied with all Laws and Governmental Orders in respect of any VAT, maintains full and accurate records with respect thereto and has not been subject to any interest, forfeiture, surcharge or penalty or been a member of an affiliated, consolidated or similar group with any other company for purposes of VAT;

 

(vii) neither ListCo nor any of its Subsidiaries is subject to material Tax in a country other than the country of its incorporation or formation by virtue of (A) having a permanent establishment or other place of business or (B) having a source of income in that jurisdiction;

 

(viii) since December 31, 2020, no written claim has been made by a Governmental Authority in a jurisdiction where ListCo or any of its Subsidiaries does not file Tax Returns that ListCo or any of its Subsidiaries is or may be subject to taxation by, or required to file any Tax Return in, that jurisdiction, which claim has not been fully resolved; and

 

(ix) neither ListCo nor any of its Subsidiaries will be required to pay any Tax after the Closing Date as a result of any deferral of a payment obligation or advance of a credit with respect to Taxes to the extent relating to any action, election, deferral, filing, or request made or taken by ListCo or any of its Subsidiaries (including the non-payment of a Tax) on or prior to the Closing Date (including (A) the delay of payment of employment Taxes under any COVID-19 Measure or any similar notice or order or law, and (B) the advance refunding or receipt of credits under any COVID-19 Measure).

 

(b) Neither ListCo nor any of its Subsidiaries has taken any action (nor permitted any action to be taken), nor is it aware of any fact or circumstance, that would reasonably be expected to prevent, impair, or impede the Intended Tax Treatment.

 

Section 4.10 Capitalization.

 

(a) The authorized share capital of ListCo is 350,000,000 shares, consisting of 250,000,000 shares of ListCo Class A Common Stock, 25,000,000 shares of ListCo Class B Common Stock, and 75,000,000 shares of ListCo Preferred Stock, par value $0.0001 per share. As of the date of this Agreement, 6,312,303 shares of ListCo Class A Common Stock are issued and outstanding, 2,311,134 shares of ListCo Class B Common Stock are issued and outstanding, and one share of Series FE of ListCo Preferred Stock are issued and outstanding. As of the date of this Agreement there are outstanding options to purchase 32,080 shares of Class A Common Stock pursuant to the ListCo Option Plan. Other than set forth in this Section 4.10(a), no other Equity Securities have been authorized, issued or are outstanding. All of the issued and outstanding ListCo Stock (including the Share Consideration when issued), (i) has been, or will be in the case of the Share Consideration, duly authorized, validly issued and are fully paid and non-assessable, (ii) were issued, or will be issued in case of the Share Consideration, in full compliance with applicable Law, and all requirements set forth in (1) the Organizational Documents of ListCo, and (2) any other applicable Contracts governing the issuance of such Equity Securities (including the Nasdaq Rules, where applicable), (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Organizational Documents of ListCo or any Contract to which ListCo is a party or otherwise bound, and (iv) are free and clear of any Liens (other than restrictions arising under applicable Laws, the ListCo Organizational Documents and the Ancillary Documents).

 

 

(b) All of the issued and outstanding shares of Equity Securities of the Subsidiaries of ListCo, including Merger Sub, (i) have been duly authorized and validly issued and are fully paid and non-assessable, (ii) were issued in full compliance with applicable Law, and all requirements set forth in (1) the Organizational Documents of each such Subsidiary, and (2) any other applicable Contracts governing the issuance of such Equity Securities, (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Organizational Documents of each such subsidiary or any Contract to which each such Subsidiary is a party or otherwise bound, and (iv) to the Knowledge of ListCo, are free and clear of any Liens (other than restrictions arising under applicable Laws, each such Subsidiary’s Organizational Documents and the Ancillary Documents).

 

(c) Except as set forth on Schedule 4.10(c) of the ListCo Disclosure Schedules, there are no outstanding options, warrants, restricted stock, restricted stock units, equity appreciation, phantom stock, profit participation, equity or equity-based rights or similar rights with respect to the Equity Securities of, or other equity or voting interest in ListCo or Merger Sub.² Except as contemplated in this Agreement, or as set forth on Schedule 4.10(c)(i) no Person is entitled to any pre-emptive or similar rights to subscribe for Equity Securities of ListCo or Merger Sub, and (ii) except as set forth on Schedule 4.10(c), there are no warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contract that could require ListCo or Merger Sub to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities of ListCo or Merger Sub. Except as set forth on Schedule 4.10(c), there are no outstanding bonds, debentures, notes or other indebtedness of ListCo, Merger Sub, or any of their Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter for which ListCo Stockholders or Merger Sub stockholders may vote. Except as disclosed in the SEC Reports, ListCo is not a party to any stockholders agreement, voting agreement or registration rights agreement relating to ListCo Common Stock or any other Equity Securities of ListCo.

 

(d) Schedule 4.10(d) of the ListCo Disclosure Schedule contains an organizational structure chart that depicts or otherwise lists each Subsidiary of ListCo and Merger Sub, together with (i) the jurisdiction of organization or formation of each such Subsidiary, and (ii) the percentage of the outstanding issued share capital or registered capital, as the case may be, of each such Subsidiary. Neither ListCo nor any of its Subsidiaries owns any Equity Securities in any other Person or has any right, option, warrant, conversion right, stock appreciation right, redemption right, repurchase right, agreement, arrangement or commitment of any character under which a Person is or may become obligated to issue or sell, or give any right to subscribe for or acquire, or in any way dispose of, any Equity Securities of such Person.

 

(e) The Share Consideration, when issued, or in the case of the Pre-Funded Warrants, exercised, in accordance with the terms hereof and thereof, shall be duly authorized and validly issued, fully paid and non-assessable and issued in compliance with all applicable Securities Laws, the Nasdaq Rules, and not subject to, and not issued in violation of, any Lien, purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, the ListCo Organizational Documents, or any Contract to which ListCo is a party or otherwise bound.

 

(f) All of the issued and outstanding shares of Merger Sub are owned by ListCo, free and clear of any Liens. Merger Sub will be formed solely for the purpose of engaging in the Transactions, including the Merger, and it has not conducted any business prior to the date hereof and has no, and prior to the Effective Time, will have no, assets, liabilities or obligations of any nature other than those incident to its formation and capitalization and pursuant to this Agreement, the Merger and the other Transactions.

 

 

(g) There are no declared but unpaid dividends or distributions in respect of any Equity Securities of the ListCo, and (ii) since December 31, 2022 through the date of this Agreement, the ListCo has not made, declared, set aside, established a record date for or paid any dividends or distributions.

 

Section 4.11 Material Contracts; No Defaults.

 

(a) For purposes of this Agreement, “Material ListCo Contracts” shall mean all Contracts described below in this Section 4.11(a) that remain in effect as of the date of this Agreement and to which, as of the date of this Agreement, the ListCo or any of its Subsidiaries is a party: each Contract that (i) is material and related to the conduct and operations of its business and properties; (ii) involves any of the Related Parties of the ListCo or any of its Subsidiaries; (iii) obligates the ListCo or any of its Subsidiaries to share, license or develop any material product or technology involving a contract value more than US$100,000; (iv) involves the establishment, contribution to, or operation of a partnership, joint venture or involving a sharing of profits or losses, or any investment in, loan to or acquisition or sale of the securities, equity interests or assets of any Person; or (v) would be required to be filed by ListCo pursuant to Item 601(b)(10) of Regulations S-K. For purposes of this Section 4.11(a), “material” shall mean any agreement, contract, indebtedness, liability, arrangement or other obligation either: (x) having an aggregate value, cost or amount in excess of US$100,000 within any 12-month period or (y) not terminable by the ListCo or any of its Subsidiaries upon ninety (90) days’ or less notice without incurring any penalty or obligation. ListCo has filed as an exhibit to the SEC Reports every “material contract” (as such term is defined in Item 601(b)(10) of Regulations S-K of the SEC) (other than confidentiality and non-disclosure agreements and this Agreement) to which, as of the date of this Agreement, ListCo is a party or by which any of its respective assets are bound.

 

(b) Each Contract of a type required to be filed as an exhibit to the SEC Reports, has been filed, and was entered into at arm’s length. Except for any Material ListCo Contract that has terminated or will terminate upon the expiration of the stated term thereof prior to the Closing Date, (i) all Material ListCo Contracts are in full force and effect and represent the legal, valid and binding obligations of ListCo, and, to the Knowledge of ListCo, the other parties thereto, and are enforceable by ListCo to the extent a party thereto in accordance with their terms, subject in all respects to the Enforceability Exceptions, (ii) ListCo and, to the Knowledge of ListCo, the counterparties thereto, are not in material breach of or material default (or would be in material breach, violation or default but for the existence of a cure period) under any Material ListCo Contract, (iii) ListCo has not received any written claim or notice of material breach of or material default under any Material ListCo Contract, (iv) no event has occurred which, individually or together with other events, would reasonably be expected to result in a material breach of or a material default under any Material ListCo Contract by ListCo or any other party thereto (in each case, with or without notice or lapse of time or both) and (v) ListCo has not received written notice from any other party to any Material ListCo Contract that such party intends to terminate or not renew any such Contract, in each case except for any circumstance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 4.12 Related Party Transactions. Except for as set forth in Schedule 4.12 of ListCo’s Disclosure Schedules or any arm’s length transactions entered into in the ordinary course of business, no Related Party of the ListCo is presently a party to any material transaction with the ListCo (other than for services as ListCo Employees).

 

Section 4.13 ListCo Benefit Plans.

 

(a) Each employee benefit plan, and each stock ownership, stock purchase, stock option, phantom stock, equity or other equity-based, severance, employment (other than offer letters that do not provide severance or change in control benefits), termination, individual consulting, retention, change-in-control, transaction, fringe benefit, pension bonus, incentive, deferred compensation, employee loan and all other benefit or compensation plans, polices, agreements or other arrangements, including, without limitation, the ListCo Option Plan (any such plan, policy, agreement or other arrangement of ListCo or any of its Subsidiaries, a “ListCo Benefit Plan”) which are, in each case, contributed to, required to be contributed to, sponsored by or maintained by ListCo or any of its Subsidiaries for the benefit of any current or former employee, officer, director, contractor, consultant or other service provider of ListCo or any of its Subsidiaries (collectively, the “ListCo Employees”) or under or with respect to which ListCo or any of its Subsidiaries has any material liability, contingent or otherwise, have been in compliance with applicable law in material aspects.

 

 

(b) Neither the execution and delivery of this Agreement by ListCo nor the consummation of the Transactions contemplated by this Agreement or the Ancillary Documents could (whether alone or in connection with any subsequent event(s)) (A) result in the acceleration, funding or vesting of any compensation or benefits to any current or former director, officer, employee, consultant or other service provider of ListCo or any of its Subsidiaries under any ListCo Benefit Plan, or (B) result in the payment by ListCo or any of its Subsidiaries to any current or former employee, officer, director, consultant or other service provider of ListCo or any of its Subsidiaries of any severance pay or any increase in severance pay (including the extension of a prior notice period or any golden parachute) upon any termination of employment or service or the cancellation of any material benefit or payment to any ListCo Employee.

 

Section 4.14 Labor Matters.

 

(a) No ListCo Group Company is party to or bound by any collective bargaining agreement or other arrangements with a labor union, employer organization, works council or labor organization. There is no and there has been no, material organized labor dispute, labor grievance or strike, lockout, picketing, hand billing, slowdown, concerted refusal to work overtime, work stoppage, or other material labor dispute against or affecting any ListCo Group Company, in each case, pending or, threatened.

 

(b) Each ListCo Group Company is and has been in compliance in all material respects with all applicable Laws respecting labor, employment, immigration, fair employment practices, terms and conditions of employment, workers’ compensation, occupational safety, plant closings, mass layoffs, worker classification, exempt and non-exempt status, compensation and benefits, Social Security Benefits, and wages and hours.

 

Section 4.15 Investment Company Act. Neither of ListCo nor any of its Subsidiaries is, or immediately following the Closing will be, an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case, within the meaning of the Investment Company Act of 1940, as amended.

 

Section 4.16 Business Activities; Absence of Changes.

 

(a) Since December 31, 2022, except as expressly contemplated by this Agreement, each ListCo Group Company has conducted business in all material respects in the ordinary course, and without limiting the generality of the foregoing, there has not been (a) any event or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or (b) any declaration, setting aside or payment of any dividend or other distribution in cash, stock, property or otherwise in respect of any ListCo Group Company’s Equity Securities, except for any dividend or distribution by a ListCo Group Company to another ListCo Group Company. Except as set forth in Section 4.16(a) of the Disclosure Schedule, there is no agreement, Contract, commitment, or Governmental Order binding upon ListCo or to which ListCo is a party which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of ListCo or any acquisition of property by ListCo or any of its Subsidiaries or the conduct of business by ListCo or any of its Subsidiaries as currently conducted or as contemplated to be conducted, in each case, following the Closing in any material respects.

 

(b) Except for as set forth in Schedule 4.16 of ListCo Disclosure Schedules, ListCo does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity. Except for this Agreement, the Ancillary Documents, and the Transactions, neither ListCo nor any of its Subsidiaries has any interests, rights, obligations or liabilities with respect to, or is party to, bound by or has its assets or property subject to, in each case whether directly or indirectly, any Contract or transaction which is, or could reasonably be interpreted as constituting, a transaction similar in nature to the Merger.

 

Section 4.17 Nasdaq Listing. As of the date hereof and on the Closing Date, the shares of ListCo Class A Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq under the symbol “BNZI.” Except as disclosed in the SEC Reports, ListCo has complied with the Nasdaq Rules and all applicable listing requirements of the Nasdaq. Except as disclosed in the SEC Reports, ListCo has not received any notice from the Nasdaq or the SEC regarding the revocation of such listing or otherwise regarding the delisting of ListCo Class A Common Stock from the Nasdaq or the SEC, and there is no Action pending or, to the Knowledge of ListCo, threatened against ListCo by the Nasdaq or the SEC with respect to any intention by such entity to deregister ListCo Class A Common Stock or terminate the listing of ListCo Class A Common Stock on the Nasdaq. None of ListCo or its Affiliates has taken any action in an attempt to terminate the registration of ListCo Class A Common Stock under the Exchange Act except as contemplated by this Agreement.

 

 

Section 4.18 Information Supplied. The Form 8-K will, as of its filing date, and LAS Form will, at the date it is first submitted to the Nasdaq, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, ListCo makes no representation, warranty or covenant with respect to any information supplied by or on behalf of the Company or its Affiliates in such documents.

 

Section 4.19 Real Property.

 

(a) ListCo Group Company does not own any real property.

 

(b) ListCo or its applicable Subsidiary, as applicable, has a valid leasehold interest in all real property leased by it (“Leased ListCo Real Property”). All material leases for the Leased ListCo Real Property under which ListCo or its applicable Subsidiary is a lessee (collectively, the “ListCo Leases”) are in full force and effect and are enforceable in accordance with their respective terms, subject to the Enforceability Exceptions. None of the ListCo Group Companies has received any written notice of any, and to the Knowledge of ListCo there is no, material default under any such ListCo Lease.

 

(c) Each of ListCo and its Subsidiaries has good and marketable title to, or a valid and binding leasehold or other interest in, all material tangible personal property necessary for the conduct of the business of ListCo and its Subsidiaries, taken as a whole, as currently conducted, free and clear of all Liens, other than Permitted Liens.

 

Section 4.20 Intellectual Property, Privacy and Data Security.

 

(a) To the Knowledge of ListCo, neither of ListCo nor any of its Subsidiaries nor the conduct of the business of ListCo or any of its Subsidiaries is infringing upon, misappropriating or otherwise violating any Intellectual Property rights of any third party, or has infringed upon, misappropriated or otherwise violated any Intellectual Property rights of any third party since December 31, 2022, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To the Knowledge of ListCo, no third party is infringing upon, misappropriating or otherwise violating any Owned Intellectual Property in any manner that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) ListCo and its Subsidiaries have in place commercially reasonable measures designed to protect and maintain the confidentiality of all trade secrets and other material confidential information included in the Owned Intellectual Property. To the Knowledge of ListCo, there has been no unauthorized access, use or disclosure, in each case that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, of any source code, trade secrets or other material confidential information of ListCo.

 

(c) In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any Personal Information, ListCo and its Subsidiaries have (i) commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by them or on their behalf from and against unauthorized access, use and/or disclosure, and (ii) have complied with all Data Security Requirements.

 

(d) ListCo and its Subsidiaries have in place commercially reasonable measures designed to protect the confidentiality, integrity and security of the IT Systems, and commercially reasonable back-up and disaster recovery procedures designed for the continued operation of their businesses in the event of a failure of the IT Systems. To the Knowledge of the ListCo and each of its Subsidiaries, since December 31, 2022 there has been no material Security Incident, including that has resulted in the unauthorized access, use, disclosure, modification, encryption, loss, or destruction or other Processing of any information or data contained or stored therein or transmitted thereby, nor any failures that have caused any material disruption or interruption in the use of the IT Systems or the conduct of the business of the ListCo or its Subsidiaries, in each case with respect to such failures that has not been remedied or remediated without material expense or liability, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

(e) At all times, ListCo and its Subsidiaries have (i) made all disclosures to users or customers about its activities involving processing Personal Information as required by applicable Laws, and none of such disclosures made or contained in any privacy and/or data security policies of ListCo or any of its Subsidiaries has been inaccurate, misleading, deceptive, or in violation of any Data Security Requirements (including by containing any material omission); and (ii) obtained all necessary consents required under applicable Laws to Process Personal Information.

 

(f) The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby, do not and will not: (i) conflict with or result in a violation or breach of any Data Security Requirements or the privacy and/or data security policies of ListCo or any of its Subsidiaries.

 

Section 4.21 Sufficiency of Funds; Solvency.

 

(a) ListCo is Solvent. For purposes of this Section 4.21, “Solvent” means that: (i) the amount of the fair value of the assets of ListCo and its Subsidiaries, on a consolidated basis as of such date, exceeds, on a consolidated basis, the amount of all liabilities of ListCo and its Subsidiaries on a consolidated basis, contingent or otherwise; (ii) the present fair saleable value of the property (on a going-concern basis) of ListCo and its Subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability, on a consolidated basis, of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured in the ordinary course of business; (iii) ListCo and its Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities, subordinated, contingent or otherwise, as such liabilities become absolute and matured in the ordinary course of business; and (iv) ListCo and its Subsidiaries, on a consolidated basis, are not engaged in, and are not about to engage in, any business or transaction contemplated as of the date hereof for which they have unreasonably small capital.

 

(b) ListCo has, and as of immediately prior to the Closing, ListCo will have, sufficient unrestricted cash on hand to consummate the Transaction, make the payments for the Payoff Amount, Transaction Expenses and the Cash Consideration, and pay in cash all fees, expenses and other amounts required to be paid by ListCo in cash in connection with the Transaction.

 

(c) Except for any proceedings in connection thereto, there are no proceedings in relation to any winding up, bankruptcy or other insolvency proceedings concerning any ListCo Group Company and, no events have occurred which, under applicable Laws, would justify such proceedings.

 

(d) To the Knowledge of ListCo, no steps have been taken to enforce any security over any material assets of any ListCo Group Company and no event has occurred to give the right to enforce such security.

 

Section 4.22 Insurance. Schedule 4.22 lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by ListCo relating to ListCo or any ListCo Group Company, or its or their business, properties, assets, directors, officers and employees, copies of which have been provided to the Company. All premiums due and payable under all such insurance policies have been timely paid and ListCo is otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and to the Knowledge of ListCo, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by ListCo. ListCo has each reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to have a Material Adverse Effect

 

Section 4.23 New Subsidiaries. Merger Sub has been formed solely for the purpose of the Transactions. Merger Sub has had no operations or activities prior to the date hereof, other than those activities which are customary organizational and formation activities. Merger Sub has no and has never had any assets, liabilities or employees and is not a party to any Contract except for the Contract under which ListCo acquired the shares of Merger Sub.

 

 

Section 4.24 No Other Representations. Except as provided in this Article IV, none of ListCo, Merger Sub nor any other Person has made, or is making any representation or warranty whatsoever in respect of ListCo or Merger Sub.

 

Section 4.25 SEPA Financing. ListCo is a party to that certain Standby Equity Purchase Agreement dated as of December 14, 2023 (“SEPA”) by and among ListCo, YA II PN LTD., a Cayman Islands exempt limited partnership (“ListCo Investor”) and 7GC & Co. Holdings Inc., a company incorporated under the laws of the state of Delaware, pursuant to which and subject to the terms and conditions of the SEPA, ListCo has the option, but not the obligation, to sell to ListCo Investor, and ListCo Investor shall subscribe for, an aggregate amount of up to $100,000,000 of ListCo Series A Common Stock (“SEPA Financing”). As of the date of this Agreement and as of the Closing, (a) ListCo is and has been in compliance with the terms and conditions of the SEPA, has not received any notice of its non-compliance with such terms and conditions and is not aware of any event or occurrence that could reasonably give rise to a claim that ListCo is not in compliance with such terms and conditions or which could result in the SEPA Financing not being available, (b) there are no conditions precedent, or contingencies related to the funding of the SEPA Financing other than as expressly set forth in the SEPA, (c) ListCo has and does satisfy all conditions precedent to its rights to submit an Advance Notice (as defined in the SEPA) for and receive funding pursuant to the SEPA Financing, including, without limitation, as set forth on Annexes II and III to the SEPA, (d) the aggregate amount of SEPA Financing available to ListCo is greater than the amount required to be paid by or on behalf of ListCo pursuant to this Agreement, including the Cash Consideration (as may be adjusted pursuant to Section 2.07(b) and Section 2.10(b)), (e) there are no events, conditions, contracts, arrangements, understandings or side letters that could reasonably (i) impair the enforceability of the SEPA, (ii) reduce the aggregate amount of any portion of the SEPA Financing such that the aggregate amount of the SEPA Financing could be below the amount required to be paid by or on behalf of ListCo pursuant to this Agreement, including the Cash Consideration, or (iii) reasonably be expected to prevent, impede or delay the consummation of the Closing. During the Interim Period, ListCo will notify Company within one (1) business day if it becomes aware of any breach or inaccuracy of the foregoing representations and warranties. For the avoidance of doubt, this Section 4.25 does not limit ListCo’s ability to exercise the SEPA and conduct a SEPA Financing in accordance with the terms thereof and in no event shall any such SEPA Financing be deemed a default of this Section 4.25.

 

Section 4.26 Non-Reliance. ListCo has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise), or assets of the Company, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company for such purpose. ListCo acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, ListCo has relied solely upon its own investigation and the express representations and warranties of Company set forth in Article III of this Agreement (including the related portions of the Schedules); and (b) neither the Company nor any other Person has made any representation or warranty as to the Company or this Agreement, except as expressly set forth in Article III of this Agreement (including the related portions of the Schedules).

 

Article V

COVENANTS OF THE COMPANY

 

Section 5.01 Conduct of Business. From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms (the “Interim Period”), the Company shall, and shall cause its Subsidiaries to, except as expressly contemplated by this Agreement or any other Ancillary Document, as consented to in writing by ListCo (which consent shall not be unreasonably conditioned, withheld or delayed) or as required by applicable Law, conduct and operate its business in the ordinary course of business in all material respects. Without limiting the generality of the foregoing, during the Interim Period, except as contemplated by this Agreement or any other Ancillary Document or as disclosed in the Company Disclosure Schedule, as consented to by ListCo in writing (such consent not to be unreasonably conditioned, withheld or delayed), or as required by applicable Law, the Company shall not, and the Company shall cause its Subsidiaries not to:

 

(a) amend Company Charter or Company Bylaws or other Organizational Documents, except (A) in the case of any of the Company’s Subsidiaries only (excluding the Company itself), any such amendment which is not material to the business of the Company and its Subsidiaries, taken as a whole, or (B) as contemplated by the Agreement and the Ancillary Documents;

 

 

(b) liquidate, dissolve, reorganize or otherwise wind-up its business and operations, or propose or adopt a plan of complete or partial liquidation or dissolution, restructuring, recapitalization, reclassification or similar change in capitalization or other reorganization, except as contemplated by the Agreement and the Ancillary Documents, or any liquidation or dissolution of any dormant Subsidiary;

 

(c) (i) issue, deliver, sell, transfer, pledge or dispose of, or place any Lien (other than a Permitted Lien) on, any Equity Securities of the Company or any of its Subsidiaries or (ii) issue or grant any options, warrants or other rights to purchase or obtain any Equity Securities of the Company or any of its Subsidiaries, except for issuances of Company stock options to Company employees in the ordinary course;

 

(d) sell, assign, transfer, convey, lease, license, grant other rights under, abandon, allow to lapse or expire, fail to maintain, subject to or grant any Lien (other than Permitted Liens) on, or otherwise dispose of, any material assets, rights or properties (including material Intellectual Property), in each case in an amount exceeding US$3,000,000 and other than (i) the sale or license of goods and services to customers in the ordinary course of business, (ii) the sale or other disposition of inventory, tangible assets or equipment deemed by the Company in its reasonable business judgment to be obsolete or otherwise warranted in the ordinary course of business, (iii) grants of licenses of Intellectual Property in the ordinary course of business, (iv) as already contracted by the Company or any of its Subsidiaries, (v) disclosure of any confidential information of the Company and its Subsidiaries to any Person pursuant to valid and enforceable agreements to protect confidentiality, or (vi) transactions among the Company and its Subsidiaries or among its Subsidiaries;

 

(e) except for entries, modifications, amendments, waivers or terminations in the ordinary course of business, enter into, materially modify, materially amend, waive any material right under or terminate, any Specified Contract other than the restructuring of the lease for Company’s location in Portland, Oregon pursuant to terms provided to ListCo;

 

(f) directly or indirectly, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by purchasing all of or a substantial equity interest in, or by any other manner, any business or any corporation, partnership, limited liability company, joint venture, association or other entity or Person or division thereof, in each case in an amount exceeding US$3,000,000;

 

(g) settle any Action if such settlement would require payment by the Company in an amount greater than US$5,000,000;

 

(h) other than in the ordinary course of business, (i) incur, create or assume any Indebtedness in an amount exceeding US$3,000,000, other than (x) ordinary course trade payables, (y) between the Company and any of its wholly owned Subsidiaries or between any of such wholly owned Subsidiaries or (z) in connection with borrowings, extensions of credit and other financial accommodations under the Company’s and its Subsidiaries’ existing credit facilities, notes and other existing Indebtedness as of the date of this Agreement and, in each case, any refinancings thereof, (ii) modify, in any material respect, the terms of any Indebtedness in an amount exceeding US$3,000,000, or (iii) guarantee the obligations of any Person for indebtedness for borrowed money in an amount exceeding US$3,000,000;

 

(i) make any loans or advance any money to any Person in an amount exceeding US$3,000,000, except for (i) advances in the ordinary course of business to employees, officers or directors of the Company or any of its Subsidiaries for expenses, (ii) prepayments and deposits paid to suppliers, consultants and contractors of the Company or any of its Subsidiaries in the ordinary course of business, (iii) trade credit extended to customers of the Company or any of its Subsidiaries in the ordinary course of business and (iv) advances or other payments among the Company and its Subsidiaries;

 

 

(j) make any capital expenditures that in the aggregate exceed US$3,000,000, other than any capital expenditure (or series of related capital expenditures) in the ordinary course of business;

 

(k) (i) split, combine, subdivide, reclassify or amend any terms of its Equity Securities, except for any such transaction by a wholly-owned Subsidiary of the Company that remains a wholly-owned Subsidiary of the Company after consummation of such transaction, (ii) declare, set aside, establish a record date for, make or pay any dividend or other distribution, payable in cash, shares, property or otherwise, with respect to any of its share capital;

 

(l) make any material change in accounting principles or methods of financial accounting materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, other than as may be required by applicable accounting standards or applicable Law;

 

(m) make, change or revoke any material Tax election in a manner inconsistent with past practice; change or revoke any material accounting method with respect to Taxes resulting in a material amount of additional Tax or filing of any amended Tax Return; file any material Tax Return in a manner inconsistent with past practice, except as required by applicable Law; settle or compromise any material Tax claim or Tax liability; enter into any material closing agreement with respect to any Tax; defer any material Taxes as a result of a COVID-19 Measure; or surrender any right to claim a material refund of Taxes; or knowingly take any action or knowingly fail to take any action, which action or failure to act would reasonably be expected to prevent, impair, or impede the Merger from qualifying for the Intended Tax Treatment, in each case except in the ordinary course of business consistent with its past practice; or

 

(n) enter into any Contract to do any action prohibited under this Section 5.01 above.

 

(o) Notwithstanding anything to the contrary contained herein (including this Section 5.01), nothing in this Section 5.01 is intended to give ListCo or any of its Affiliates, directly or indirectly, the right to control or direct the business or operations of the Company or its Subsidiaries prior to the Closing, and prior to the Closing, the Company and its Subsidiaries shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over their respective businesses and operations.

 

Section 5.02 Inspection. Subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to the Company or any of its Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession from time to time, and except for any information which (a) relates to the negotiation of this Agreement or the Transactions, (b) is prohibited from being disclosed by applicable Law or (c) on the advice of legal counsel of the Company would result in the loss of attorney-client privilege or other privilege from disclosure (provided that the Company will use commercially reasonable efforts to provide any information described in the foregoing clause (b) or (c) in a manner that would not be so prohibited or would not jeopardize privilege), during the Interim Period, the Company shall, and shall cause its Subsidiaries to, (x) upon reasonable advance notice from ListCo, afford to ListCo and its Representatives reasonable access to the properties, books, records and appropriate officers of the Company and its Subsidiaries during normal business hours in such manner as to not interfere with the normal operations of the Company and its Subsidiaries, and (y) use commercially reasonable efforts to furnish ListCo and such Representatives with financial and operating data and other information concerning the affairs of the Company and its Subsidiaries that are in the possession of the Company or its Subsidiaries, in each case of (x) and (y), as ListCo and its Representatives may reasonably request in writing solely for purposes of consummating the Transactions and so long as reasonably feasible or permissible under applicable Law and subject to appropriate COVID-19 Measures; provided that such access shall not include any invasive or intrusive investigations or testing, sampling or analysis of any properties, facilities or equipment of the Company or its Subsidiaries. All information obtained by ListCo and its Representatives under this Agreement shall be subject to Section 7.07 (Confidentiality; Publicity).

 

Section 5.03 No Trading. The Company acknowledges and agrees that it is aware, and that its Affiliates have been made aware of the restrictions imposed by U.S. federal securities laws and the rules and regulations of the SEC promulgated thereunder or otherwise and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company hereby agrees that it shall not purchase or sell any securities of ListCo in violation of such Laws, or knowingly cause or encourage any Person to purchase or sell any securities of ListCo in violation of such Laws.

 

 

Section 5.04 Taxes Relating to the Company Securities. The Company acknowledges and agrees that ListCo is not responsible for any Taxes that are imposed by applicable Laws on Company Stockholders or Management Employees in connection with the Merger Consideration received by such Company Stockholders or Management Employees.

 

Section 5.05 Termination of the Company Stockholder Agreements. On or prior to the Closing Date, the Company shall use commercially reasonable efforts to cause each of the parties to each of the Company Stockholder Agreements to execute and deliver a written agreement pursuant to which each such Company Stockholder Agreement is terminated, and each party thereto unconditionally and irrevocably waives and releases any claims (including in respect of any actual or asserted breach or non-compliance with any such Company Stockholder Agreements) and agrees that each such Company Stockholder Agreement is terminated and of no further force or effect, effective as of the Closing.

 

Article VI

COVENANTS OF LISTCO

 

Section 6.01 Conduct of Business.

 

(a) During the Interim Period, Merger Sub shall, ListCo shall, and each Merger Sub and ListCo shall cause their Subsidiaries to, except as expressly required by this Agreement or any other Ancillary Document, as consented to by the Company in writing (which consent shall not be unreasonably withheld, delayed or qualified) or as required by applicable Law, conduct and operate its business in the ordinary course of business in all material respects, consistent with past practice and in compliance with all applicable Laws, and take all commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice. Without limiting the generality of the foregoing, during the Interim Period, except as expressly required by this Agreement, any other Ancillary Document, pursuant to the SEPA, the SEPA Financing, or any transaction or a series of transactions that satisfy the sole purpose of raising funds for the ListCo’s full payment of the Cash Consideration, Payoff Amount and the Transaction Expenses, as disclosed in the Schedules, or as consented to by the Company in writing (which consent shall not to be unreasonably conditioned, withheld or delayed), or as required by applicable Law, ListCo shall not, and shall cause its Subsidiaries not to:

 

(i) Change, waive or amend its Organizational Documents;

 

(ii) (A) declare, set aside, establish a record date for, make or pay any dividend or other distribution, payable in cash, shares, property or otherwise in respect of any outstanding Equity Securities; (B) issue, sell, grant, or offer to issue, sell, grant any Equity Securities; (C) repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any Equity Securities; or (D) split, combine, recapitalize or reclassify any of its shares or other Equity Securities;

 

(iii) (A) fail to maintain its corporate existence or merge, consolidate, combine or amalgamate with any Person, (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any Equity Security in or a substantial portion of the assets of, or by any other manner) any business or any corporation, partnership, limited liability company, joint venture, association or other entity or Person or division thereof, or (C) effect or commence any liquidation, dissolution, scheme of arrangement, merger, consolidation, amalgamation, restructuring, recapitalization, reorganization, public offering or similar transaction (other than the Transactions);

 

(iv) sell, assign, transfer, convey, lease, license, grant other rights under, abandon, allow to lapse or expire, fail to maintain, subject to or grant any Lien (other than Permitted Liens) on, or otherwise dispose of, any material assets, rights or properties (including material Intellectual Property) in each case in an amount exceeding US$250,000, and other than (i) the sale or license of goods and services to customers in the ordinary course of business, (ii) the sale or other disposition of inventory, tangible assets or equipment deemed by the ListCo in its reasonable business judgment to be obsolete or otherwise warranted in the ordinary course of business, (iii) grants of licenses of Intellectual Property in the ordinary course of business, (iv) as already contracted by any ListCo Group Company and disclosed to Company prior to the date of this Agreement, (v) disclosure of any confidential information of any ListCo Group Company to any Person pursuant to valid and enforceable agreements to protect confidentiality;

 

 

(v) enter into, renew or amend, in any material aspect, the terms of any transaction or Contract with a Related Party of the ListCo without the Company’s prior written consent;

 

(vi) incur, assume, guarantee or otherwise become liable for (whether directly, contingently or otherwise) or modify the terms of any Indebtedness with an amount exceeding US$250,000, other than (x) ordinary course trade payables, (y) between the ListCo and any of its wholly owned Subsidiaries or between any of such wholly owned Subsidiaries or (z) in connection with borrowings, extensions of credit and other financial accommodations under the ListCo’s and its Subsidiaries’ existing credit facilities, notes and other existing Indebtedness as of the date of this Agreement and, in each case, any refinancings thereof;

 

(vii) issue, offer, deliver, grant, sell, transfer, pledge or dispose of, or place any Lien on, or authorize or propose to issue, offer, deliver, grant, sell, transfer, pledge or dispose of, or place any Lien on, any Equity Securities or any options, warrants or other rights to purchase or obtain any Equity Securities, in each case other than the creation of any Lien on the ListCo’s Equity Securities by any third party that is not a ListCo Group Company;

 

(viii) enter into any Contract, to do any action prohibited under this Section 6.01(a).

 

(ix) terminate, amend, waive or assign any material right under any Material ListCo Contract;

 

(x) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(xi) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;

 

(xii) revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting the Purchaser’s outside auditors;

 

(xiii) waive, release, assign, settle or compromise any Action (including relating to this Agreement, the Ancillary Documents or the Transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the ListCo or its Subsidiary) not in excess of $250,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions, or obligations, unless such amount has been reserved in ListCo financial statements;

 

(xiv) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business, provided that Company acknowledges that ListCo is in the process of closing its acquisition of Vidello Limited (“Vidello Acquisition”) and hereby consents to such acquisition;

 

(xv) make any capital expenditures in excess of $250,000 individually or $500,000 in the aggregate;

 

(xvi) adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization (other than with respect to the Merger and the Vidello Acquisition);

 

 

(xvii) voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $250,000 individually or $500,000 in the aggregate (excluding the incurrence of any Expenses) other than pursuant to the terms of a Contract in existence as of the date of this Agreement or entered into in the ordinary course of business or in accordance with the terms of this Section during the Interim Period;

 

(xviii) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights unless that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on ListCo;

 

(xix) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement; or

 

(xx) make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP.

 

(b) During the Interim Period, ListCo shall, and shall cause its Subsidiaries to, (i) keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with the Nasdaq Rules and all applicable Securities Laws, and (ii) comply with, and continue performing under, as applicable, its Organizational Documents, the Agreement and the Ancillary Documents (to the extent in effect during the Interim Period) and all other agreements or Contracts to which it is party.

 

Section 6.02 Inspection. ListCo shall, and shall cause its Subsidiaries to, afford to the Company, its Affiliates and their respective Representatives reasonable access during the Interim Period, and with reasonable advance notice, to the books, Tax Returns, records, properties and appropriate officers and employees of ListCo Group Companies, and use its commercially reasonable efforts to furnish the Company, its Affiliates and their respective Representatives with all financial and operating data and other information concerning the affairs of ListCo Group Companies, in each case as the Company or any of its Affiliates or Representatives may reasonably request for purposes of the Transactions, and except for any information which (x) relates to the negotiation of this Agreement or the Transactions, (y) is prohibited from being disclosed by applicable Law or (z) on the advice of legal counsel of ListCo would result in the loss of attorney client privilege or other privilege from disclosure (provided that ListCo will use commercially reasonable efforts to provide any information described in the foregoing clauses (y) or (z) in a manner that would not be so prohibited or would not jeopardize privilege).

 

Section 6.03 Section 6.04 Reserved. ListCo Listing. During the Interim Period, ListCo shall use its best efforts to ensure that ListCo Class A Common Stock continue to be listed on the Nasdaq.

 

Section 6.05 SEPA Financing. During the Interim Period, ListCo (a) will comply with the terms and conditions of the SEPA, (b) will comply with and fulfill all conditions precedent and contingencies related to its submission of an Advance Notice and its receipt of funding pursuant to the SEPA Financing, including, without limitation, as set forth on Annexes II and III to the SEPA, and (c) will not take any action or agree to any conditions, contracts, arrangements, understandings or side letters that could reasonably (i) impair the enforceability of the SEPA, (ii) reduce the aggregate amount of any portion of the SEPA Financing such that the aggregate amount of the SEPA Financing could be below the amount required to be paid by or on behalf of ListCo pursuant to this Agreement, including the Cash Consideration, or (iii) reasonably be expected to prevent, impede or delay the consummation of the Closing.

 

 

Section 6.06 D&O Insurance. The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of each Person who served as a director, officer, member, trustee or fiduciary of Company (the “D&O Indemnified Persons”) as provided in their respective Organizational Documents or under any indemnification, employment or other similar agreements between any D&O Indemnified Person and the Company, in each case as in effect on the date of this Agreement, shall survive the Closing and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Effective Time, ListCo shall cause the Organizational Documents of the Surviving Entity to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to D&O Indemnified Persons in effect as of immediately prior to the date of this Agreement in the Organizational Documents of the Company. The provisions of this Section 6.06 shall survive the consummation of the Merger and are intended to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Persons and their respective heirs and representatives. For the benefit of the D&O Indemnified Persons, ListCo shall obtain and fully pay the premium for a “tail” insurance policy that provides coverage for up to a six-year period from and after the Effective Time for events occurring prior to the Effective Time (the “D&O Tail Insurance”) that is substantially equivalent to and in any event not less favorable in the aggregate than Company’s existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage. ListCo shall maintain the D&O Tail Insurance in full force and effect, and continue to honor the obligations thereunder, and shall timely pay or caused to be paid all premiums with respect to the D&O Tail Insurance.

 

Section 6.07 Notification of Certain Matters. During the Interim Period, ListCo shall give the Company a written notice within five (5) business days once it becomes aware of such following events, if ListCo or any of its Affiliates: (a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates hereunder in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging (i) that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, or (ii) any non-compliance with any Law by such Party or its Affiliates; (c) receives any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes aware of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would reasonably be expected to cause or result in any of the conditions to the Closing not being satisfied or the satisfaction of those conditions being materially delayed; (e) discovers any fact or circumstance that, or becomes aware of the occurrence of non-occurrence of any event which, if existing or known on the date hereof, would cause the representations and warranties of ListCo or its Affiliates made pursuant to this Agreement not to be true and correct in any material respect; or (f) becomes aware of the commencement or threat, in writing, of any Action against such Party or any of its Affiliates, or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party or of its Affiliates with respect to the Transactions contemplated by this Agreement.

 

Article VII

JOINT COVENANTS

 

Section 7.01 Efforts to Consummate.

 

(a) With respect to any requests, inquiries, Actions or other proceedings by or from Governmental Authorities, each of the Company, ListCo and Merger Sub shall (i) diligently and expeditiously defend and use commercially reasonable efforts to obtain any necessary clearance, approval, consent under any applicable Laws prescribed or enforceable by any Governmental Authority for the Transactions and to resolve any objections as may be asserted by any Governmental Authority with respect to the Transactions; and (ii) cooperate fully with each other in the defense of such matters. To the extent not prohibited by Law, the Company shall promptly furnish to ListCo, and ListCo and Merger Sub shall promptly furnish to the Company, copies of any notices or communications received by such Party or any of its Affiliates from any Governmental Authority with respect to the Transactions, and each such Party shall permit counsel to the other parties an opportunity to review in advance, and each such Party shall consider in good faith the views of such counsel in connection with, any proposed written communications by such Party or its Affiliates to any Governmental Authority concerning the Transactions. To the extent not prohibited by Law, the Company agrees to provide ListCo and its counsel, and ListCo agrees to provide to the Company and its counsel, the opportunity, to the extent practical, on reasonable advance notice, to participate in any material substantive meetings or discussions, either in person or by telephone, between such Party or any of its Affiliates or Representatives, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the Transactions.

 

 

(b) During the Interim Period, ListCo, on the one hand, and the Company, on the other hand, shall each notify the other in writing promptly after learning of any stockholder demands or other stockholder proceedings (including derivative claims) relating to this Agreement, Ancillary Documents or any matters relating thereto (collectively, the “Transaction Litigation”) commenced against, in the case of ListCo, any Subsidiary of ListCo or any of their respective Representatives (in their capacity as a representative of ListCo or any Subsidiary of ListCo) or, in the case of the Company, any Subsidiary of the Company or any of their respective Representatives (in their capacity as a representative of the Company or any Subsidiary of the Company). ListCo and the Company shall each (i) keep the other Party timely informed regarding any Transaction Litigation, (ii) give the other the opportunity to, at such other Party’s own cost and expense, participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise of any such Transaction Litigation, and (iii) consider in good faith the other’s advice with respect to any such Transaction Litigation. Notwithstanding the foregoing, in no event shall ListCo (or any of its Representatives) on the one hand, or the Company (or any of its Representatives), on the other hand, settle or compromise any Transaction Litigation brought without the prior written consent of the other Party (not to be unreasonably withheld, conditioned or delayed).

 

(c) Each Party shall otherwise use its reasonable best efforts to cooperate with the other Parties to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws or otherwise to satisfy the conditions to closing set forth in Article IIIV and to consummate and make effective the Transactions.

 

Section 7.02 Resale Registration Statement, Form 8-K, LAS Form.

 

(a) As promptly as practicable (any in any case within five (5) Business Days) after Closing, the ListCo, with the cooperation and assistance of the Company, shall prepare and file a registration statement on applicable form under the Securities Act to register the resale of the Share Consideration (the “Resale Registration Statement”) at ListCo’s cost and expense. ListCo shall (i) cause the Resale Registration Statement to comply with the applicable rules and regulations promulgated by the SEC, (ii) cause the Resale Registration Statement to become effective as promptly as practicable, and (iii) respond promptly to any comments or requests of the SEC or its staff relating to the Resale Registration Statement. ListCo shall take all or any action required under any applicable federal, state, securities and other Laws in connection with the issuance of the Share Consideration. ListCo shall use its best efforts to keep the Resale Registration Statement continuously effective under the Securities Act until the date that all Share Consideration has been sold thereunder or pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”), (the “Effectiveness Period”). The Company and Company Stockholders shall use their reasonable best efforts to furnish to ListCo and its Representatives all information concerning the Company, its officers, directors, managers, shareholders, and other equity-holders and information regarding such other matters as may be reasonably necessary or as may be reasonably requested in connection with the Resale Registration Statement, and will assist ListCo in drafting the portions of the Resale Registration Statement relating to the Company’s business and operations.

 

(b) As promptly as practicable (any in any case within four (4) Business Days) after execution of this Agreement, ListCo shall prepare and file a Current Report on Form 8-K (the “Form 8-K”) pursuant to the Exchange Act to report the execution of this Agreement. The ListCo, with the cooperation and assistance of the Company, shall prepare and cause to be submitted with the Nasdaq a listing of additional shares form in connection with the Transactions (such form, together with any attachment, amendments or supplements thereto, the “LAS Form”). Each of the ListCo and Merger Sub shall use its reasonable best efforts so that the Resale Registration Statement, Form 8-K, the LAS Form will comply in all material respects with the applicable Laws. Each of the Company and ListCo shall use its reasonable best efforts to respond promptly to any comments of the Nasdaq (as the case may be) with respect to the LAS Form. Upon its receipt of any comments from the Nasdaq or its staff or any request from the Nasdaq (as the case may be) or its staff for amendments or supplements to the LAS Form, the ListCo shall promptly (and in any event within one (1) Business Day) notify the Company and shall provide the Company with copies of all correspondence between the ListCo and its representatives, on the one hand, and the Nasdaq and its staff, on the other hand. Prior to submitting the LAS Form to the Nasdaq (or any amendment or supplement thereto) or responding to any comments of the Nasdaq with respect thereto, the ListCo (i) shall provide the Company with a reasonable period of time to review and comment on such document or response and (ii) shall consider in good faith all additions, deletions or changes reasonably proposed by the Company in good faith.

 

 

(c) Each of ListCo, Merger Sub and the Company agrees, as to itself and its respective Affiliates or Representatives, that none of the information supplied or to be supplied by ListCo, Merger Sub or the Company, as applicable, expressly for inclusion or incorporation by reference in the Resale Registration Statement, Form 8-K, the LAS Form or any other documents submitted or to be submitted to the SEC or the Nasdaq (as the case may be) in connection with the Transactions, will contain any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that (x) no representation, warranty, covenant or agreement is made by the Company with respect to information supplied by any Warrantor or its Representatives for inclusion or incorporation by reference in the Resale Registration Statement, Form 8-K, the LAS Form, or any other documents submitted or to be submitted to the SEC or the Nasdaq (as the case may be), and (y) no representation, warranty, covenant or agreement is made by the ListCo or Merger Sub with respect to information supplied by the Company or its Representatives for inclusion or incorporation by reference in such documents.

 

(d) If, at any time prior to the Effective Time, any event or circumstance relating to the Company, ListCo, Merger Sub or their respective officers or directors, should be discovered by ListCo or the Company, as applicable, which should be set forth in an amendment or a supplement to the Resale Registration Statement, Form 8-K and the LAS Form so that such document would not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, such Party shall promptly inform the other Parties. Thereafter, ListCo, the Company and Merger Sub shall promptly cooperate in the preparation and filing of an appropriate amendment or supplement to the Resale Registration Statement, the Form 8-K, the LAS Form, or such other materials describing or correcting such information such that the Resale Registration Statement, the Form 8-K, the LAS Form, or such other materials (as the case may be) no longer contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading, and, to the extent required by Law, disseminate such amendment or supplement; provided, that no information received by ListCo or the Company, as applicable, pursuant to this Section 7.02 shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the party who disclosed such information, and no such information shall be deemed to change, supplement or amend the Schedules.

 

(e) The Company shall use its commercially reasonable efforts to assist and cooperate with ListCo in ListCo’s LAS Form with the Nasdaq, including furnishing to ListCo and its Representatives all information concerning itself, its Subsidiaries, officers, directors, managers, stockholders, and other equity-holders and information regarding such other matters as may be reasonably necessary or as may be reasonably requested in connection with such LAS Form, and assisting ListCo in drafting the portions of such LAS Form relating to the Company’s business and operations.

 

(f) ListCo shall (i) prepare and file with the SEC such amendments, including post-effective amendments, to the Resale Registration Statement and related prospectus used in connection therewith as may be necessary to keep the Resale Registration Statement continuously effective as to the Share Consideration for the Effectiveness Period and prepare and file with the SEC such additional registration statements as may be necessary in order to register the resale of all of the Share Consideration under the Securities Act, (ii) cause the related prospectus to be amended or supplemented by any required prospectus supplement, and, as so supplemented or amended, to be filed pursuant to Rule 424 promulgated under the Securities Act, (iii) respond as promptly as reasonably possible to any comments received from the SEC with respect to the Resale Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the holders of Share Consideration true and complete copies of all correspondence from and to the SEC relating to the Resale Registration Statement (provided that, ListCo shall excise any information contained therein which would constitute material non-public information regarding ListCo or any of its subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Share Consideration covered by the Resale Registration Statement during the Effectiveness Period in accordance with the intended methods of disposition by the holders thereof set forth in the Resale Registration Statement as so amended or in such prospectus as so supplemented.

 

 

(g) ListCo shall notify the Company Stockholder Representative (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the prospectus related to the Resale Registration Statement until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) trading day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) trading day following the day (i)(A) when a prospectus or any prospectus supplement or post-effective amendment to the Resale Registration Statement is proposed to be filed, (B) when the SEC notifies ListCo whether there will be a “review” of such Resale Registration Statement and whenever the SEC comments in writing on such Resale Registration Statement, and (C) with respect to the Resale Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to the Resale Registration Statement or related prospectus or for additional information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Resale Registration Statement covering any or all of the Share Consideration or the initiation of any Actions for that purpose, (iv) of the receipt by ListCo of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Merger Consideration for sale in any jurisdiction, or the initiation or threatening of any Action for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in the Resale Registration Statement ineligible for inclusion therein or any statement made in the Resale Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Resale Registration Statement, related prospectus or other documents so that, in the case of the Resale Registration Statement or related prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any 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, and (vi) of the occurrence or existence of any pending corporate development with respect to ListCo that ListCo believes may be material and that, in the determination of ListCo, makes it not in the best interest of LisCo to allow continued availability of the Resale Registration Statement or related prospectus, provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding ListCo or any of its Subsidiaries.

 

(h) Until such time as no Share Consideration is held by the recipients of such Share Consideration, ListCo shall use best efforts to avoid the delisting or suspension of the ListCo Class A Common Stock on Nasdaq.

 

Section 7.03 Indemnification.

 

(a) Indemnification by Company Stockholders. Subject to the other terms and conditions of this Section 7.03, for a period of twelve (12) months from the Closing (and, for clarity, all representations and warranties of the Company shall expire on the date that is 12 months from the Closing), each Company Stockholder, severally but not jointly, shall indemnify and defend the ListCo, the Merger Sub and their respective directors and officers (collectively, the “ListCo Indemnitees”), against, and shall hold the ListCo Indemnitees harmless from and against, and shall pay and reimburse each of them for, any and all losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers (the “Losses”), incurred or sustained by, or imposed upon, the ListCo Indemnitees based upon, arising out of, with respect to or by reason of:

 

(i) any inaccuracy in or breach of any of the representations or warranties of the Company contained in this Agreement, as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); or

 

(ii) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Company pursuant to this Agreement.

 

(b) Indemnification by ListCo. Subject to the other terms and conditions of this Section 7.03, ListCo shall indemnify and defend the Company and each of the Company Stockholders, their Affiliates and their respective Representatives (collectively, the “Company Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Company based upon, arising out of, with respect to or by reason of:

 

(i) any inaccuracy in or breach of any of the representations or warranties of ListCo or Merger Sub contained in this Agreement or in any certificate or instrument delivered by or on behalf of ListCo or Merger Sub pursuant to this Agreement, as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); or

 

 

(ii) any breach or non-fulfilment of any covenant, agreement or obligation to be performed by ListCo or Merger Sub pursuant to this Agreement.

 

(c) Certain Limitations. The indemnification provided for Section 7.03(a) and Section 7.03(b)(i) shall be subject to the following limitations:

 

(i) for avoidance of doubt and subject to Section 7.03(c)(ii), each Company Stockholder’s obligation to indemnify ListCo Indemnities shall be limited to each Company Stockholder’s pro rata share of the Merger Consideration that such Company Stockholder actually receives at Closing;

 

(ii) Except with respect to Company Stockholder Fraud, the Company Stockholders shall not be liable to ListCo Indemnitees until the aggregate amount of all Losses in respect of indemnification under Section 7.03(a) exceeds $250,000 (“Company Deductible”), in which event the Company Stockholders shall be required to pay or be liable for all such Losses from and over the Company Deductible, and in no event shall the Company Stockholders be liable for any Losses in an aggregate amount of more than the Indemnification Holdback Amount (it being agreed that, notwithstanding anything to contrary set forth herein and except for the immediately following provision, the ListCo Class A Common Stock held in escrow pursuant to the Share Consideration Escrow Agreement shall be the sole and exclusive recourse of the ListCo Indemnities with respect to all Losses hereunder); provided that, with respect to Losses arising from Company Stockholder Fraud, (1) the Company Deductible shall not apply and (2) solely the Company Stockholder that has committed such Company Stockholder Fraud shall be liable for such Losses; and provided further, that (as set forth in clause (i) above) in no event shall any single Company Stockholder be liable for Losses hereunder in excess of such Company Stockholder’s pro rata share of the Merger Consideration that such Company Stockholder actually receives at Closing (inclusive of any Indemnification Holdback Amounts pertaining to such Holder);

 

(iii) Except with respect to the ListCo Specified Representations or Fraud, ListCo shall not be liable to the Company Indemnitees for indemnification under Section 7.03(b)(i) until the aggregate amount of all Losses in respect of indemnification under Section 7.03(b)(i) exceeds $100,000 (“ListCo Deductible”) in which event ListCo shall be required to pay or be liable for all such Losses from and over the ListCo Deductible; and

 

(iv) Except with respect to the ListCo Specified Representations or Fraud, ListCo shall not be liable to the Company Indemnitees for indemnification under Section 7.03(b)(i) if the aggregate amount of all Losses in respect of indemnification under Section 7.03(b)(i) exceeds the Merger Consideration.

 

(d) Indemnification Procedures

 

(i) Any Party or other Person that has an indemnification obligation under this Section7.03 is referred to herein as an “Indemnifying Party” and any Party or Person that is entitled to indemnification under this Section 7.03 is referred to herein as an “Indemnified Party”.

 

(ii) In order to make a claim for indemnification hereunder, the Indemnified Party must provide written notice (a “Claim Notice”) of such claim to the Indemnifying Party, which Claim Notice shall include (A) a reasonable description of the facts and circumstances which relate to the subject matter of such indemnification claim to the extent then known, and (B) the amount of Losses suffered by the Indemnified Party in connection with the claim to the extent known or reasonably estimable.  Should any Claim by or involving a third party (including any Governmental Authority) that is not a party to this Agreement (or an Affiliate thereof) for which an Indemnifying Party has an indemnification obligation under the terms of this Agreement (a “Third-Party Claim”), the Indemnified Party shall notify the Indemnifying Party in writing (a “Third-Party Claim Notice”) within a reasonable time after such Third-Party Claim arises and is known to the Indemnified Party, including all of the details required to be included in a Claim Notice. No delay on the part of the Indemnified Party to provide the Indemnifying Party a Claim Notice or Third-Party Claim Notice shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is actually prejudiced as a result thereof.

 

 

(iii) Upon the receipt of a Third Party Claim Notice, the Indemnifying Party shall assume the defense at its expense, and with counsel selected by the Indemnifying Party; provided that, the Indemnified Party is entitled to select and employ separate counsel and to participate in the defense of such claim, at the Indemnified Party’s expense. If the Indemnifying Party shall have failed to assume the defense of such claim within a reasonable time after receipt of the Third Party Claim Notice, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any Losses resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent, not to be unreasonably withheld.

 

(iv) If the matter specified in the Claim Notice relates to any Action or Loss that is not a Third Party Claim, the Indemnifying Party shall have 30 days after its receipt of such Claim Notice to respond in writing to such claim. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

(v) The Losses for which indemnification is provided under this Section 7.03 shall be calculated net of any insurance proceeds actually received by the Indemnified Party on account thereof; provided, that the obligation of the Indemnifying Party shall include all costs or expenses incurred by the Indemnified Party in connection with such matter or claim including, without limitation, collection costs, enforcement costs, Taxes, or deductibles incurred in connection therewith.

 

(e) Payment of Losses. Any Losses payable to a ListCo Indemnitee shall, subject to the Deductible and the cap as applicable, be satisfied: (i) first, from the Indemnification Holdback Amount, pursuant to Section 2.12 (and subject to the terms of the Share Consideration Escrow Agreement), with such shares of ListCo Class A Common Stock valued at the ListCo 5-Day VWAP; and (ii) second, solely in the event of Company Stockholder Fraud, to the extent such Losses exceed the then available Indemnification Holdback Amount, by the Company Stockholder that committed such Company Stockholder Fraud, separately but not jointly (if applicable). Any Losses payable to a Company Indemnitee shall be paid by wire transfer of available funds to the Company Indemnitee.

 

(f) For the purposes of this Section 7.03, any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.

 

(g) Except for equitable remedies, from and after the Effective Time, the indemnification provided in this Section 7.03 shall constitute the sole and exclusive remedy of the ListCo Indemnitees and the Company Indemnitees for monetary damages with respect to any Losses. For clarity, the survival periods and liability limits set forth in this Section 7.03 shall control notwithstanding any statutory or common law provisions or principles to the contrary.

 

Section 7.04 Corporate Approval

 

(a) The Company shall procure and submit to the ListCo, prior to the submission or filing of the Form 8-K and any other corporate authorizations of the Company (including applicable board and/or stockholders resolutions) necessary or advisable for the execution and performance of all the Agreement and Ancillary Documents and their obligations thereunder.

 

 

Section 7.05 Exclusivity.

 

(a) During the Interim Period, the Company shall not, and shall cause its Representatives and Subsidiaries not to, directly or indirectly, (i) initiate, solicit or encourage (including by way of providing confidential or non-public information) any inquiries, proposals or offers that constitute or would lead to any merger, business combination or other similar transaction involving the Company or its Subsidiaries that precludes the consummation of the Transactions (an “Alternative Transaction Proposal”), (ii) engage or participate in any discussions, negotiations or transactions with any third party regarding any Alternative Transaction Proposal or that would lead to any such Alternative Transaction Proposal, or (iii) enter into any agreement or deliver any agreement or instrument (including a confidentiality agreement, letter of intent, term sheet, indication of interest, indicative proposal or other agreement or instrument) reflecting any Alternative Transaction Proposal; provided that the execution, delivery and performance of this Agreement and the other Ancillary Documents and the consummation of the Transactions shall not be deemed a violation of this Section 7.05(a). The Company agrees to promptly notify ListCo if the Company or any of its Representatives or Subsidiaries receives any offer or communication in respect of an Alternative Transaction Proposal, and will promptly communicate to ListCo in reasonable detail the terms and substance thereof, and the Company shall, and shall cause its Representatives and Subsidiaries to, cease any and all existing negotiations or discussions with any person or group of persons (other than ListCo and its Representatives) regarding an Alternative Transaction Proposal.

 

(b) During the Interim Period, ListCo shall not, and shall cause its Representatives and Subsidiaries not to, directly or indirectly, (i) initiate, solicit or encourage (including by way of providing confidential or non-public information) any inquiries, proposals or offers that constitute or would lead to any merger, business combination or other similar transaction involving any ListCo Group Company that precludes or is mutually exclusive with the Transactions (an “Alternative ListCo Transaction Proposal”), (ii) engage or participate in any discussions, negotiations or transactions with any third party regarding any Alternative ListCo Transaction Proposal or that would lead to any such Alternative ListCo Transaction Proposal, or (iii) enter into any agreement or deliver any agreement or instrument (including a confidentiality agreement, letter of intent, term sheet, indication of interest, indicative proposal or other agreement or instrument) related to any Alternative ListCo Transaction Proposal; provided that the execution, delivery and performance of this Agreement and the other Ancillary Documents and the consummation of the Transactions shall not be deemed a violation of this Section 7.05(b). ListCo agrees to promptly notify the Company if ListCo or any of its Representatives, or Subsidiaries receives any offer or communication in respect of an Alternative ListCo Transaction Proposal, and will promptly communicate to the Company in reasonable detail the terms and substance thereof, and ListCo shall, and shall cause its Representatives and Subsidiaries to, cease any and all existing negotiations or discussions with any person or group of persons (other than the Company and its Representatives) regarding an Alternative ListCo Transaction Proposal.

 

Section 7.06 Tax Matters.

 

(a) Each of ListCo, the Company and Merger Sub shall (i) use its respective commercially reasonable efforts to cause the Merger to qualify, and agree not to, and not to permit or cause any of their Affiliates or Subsidiaries to, take any action which to its knowledge could reasonably be expected to prevent or impede the Transactions from qualifying, for the Intended Tax Treatment. Each of ListCo, the Company and Merger Sub shall report the Merger (including preparing and filing all Tax Returns) consistently with the Intended Tax Treatment and the immediately preceding sentence unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code. Each of the Parties agrees to promptly notify all other Parties of any challenge to the Intended Tax Treatment by any Governmental Authority. The Parties shall cooperate with each other and their respective tax counsel to document and support the Tax treatment of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code.

 

(b) All transfer, stamp, documentary, sales, use, registration, value-added and other similar Taxes incurred in connection with this Agreement and the Transactions will be borne by the party responsible therefor under applicable Law.

 

(c) Each of the Parties shall (and shall cause their respective Affiliates to) cooperate fully, as and to the extent reasonably requested by another Party, in connection with the filing of relevant Tax Returns, and any audit or tax proceeding. Such cooperation shall include the retention and (upon the other Party’s request) the provision (with the right to make copies) of records and information reasonably relevant to any tax proceeding or audit, making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

 

 

Section 7.07 Confidentiality; Publicity.

 

(a) Each Party agrees that during the Interim Period and for a period of three (3) years after the expiry of the Interim Period, they shall, and shall cause their respective Representatives to: (i) treat and hold in strict confidence any Confidential Information of any other Party that is disclosed to such Party or its Representatives, and, without the disclosing Party’s prior written consent, will not use such Confidential Information for any purpose, except in connection with the evaluation, negotiation and consummation of the transactions contemplated by this Agreement or any other Ancillary Document, performing their obligations hereunder or thereunder or enforcing their rights hereunder or thereunder (collectively, the “Permitted Purposes”), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any Confidential Information, except that each Party may disclose any Confidential Information (i) to its Affiliates, and its and its Affiliates’ respective directors, officers, employees, partners, professional advisors, investors and permitted transferees, in each case on a need-to-know basis only for any of the Permitted Purposes and where such Persons are under appropriate nondisclosure obligations; or (ii) to the extent required by applicable Laws. In the event that a Party or any of its Representatives, during the Interim Period and for a period of three (3) years after the expiry of the Interim Period, becomes legally required to disclose any Confidential Information of any other Party, such Party shall provide the disclosing Party to the extent legally permitted with prompt written notice of such requirement so that the disclosing Party or a Representative thereof may seek, at the disclosing Party’s cost, a protective order or other remedy, and in any event, it shall furnish only that portion of the Confidential Information which is legally required to be provided and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Confidential Information. Notwithstanding the foregoing, each Party and its Representatives shall be permitted to disclose any and all Confidential Information to the extent required by the Federal Securities Laws, the staff of the SEC or the rules of the Nasdaq and nothing contained herein shall prevent any Company Stockholder from reporting to its prior, current and future limited partners and other equity owners (to the extent such parties are bound by obligations of confidentiality in favor of the Company Stockholder) general financial information regarding their investment in the ListCo, the results thereof, the Company, the Merger Agreement, other Ancillary Documents and the transactions contemplated therein.

 

(b) None of the Parties or any of their respective Affiliates shall make any public announcement or issue any public communication regarding this Agreement or the Transactions, or any matter related to the foregoing, without first obtaining the prior consent of:

 

(i) (in the case where ListCo or any of their respective Affiliates proposes to make such public announcement or communication) the Company; or

 

(ii) (in the case where the Company or any of its Affiliates proposes to make such public announcement or communication) ListCo, (which consent shall not be unreasonably withheld, conditioned or delayed), except if such announcement or other communication is required by applicable Law, in which case ListCo or the Company, as applicable, shall use their reasonable best efforts to coordinate such announcement or communication with the other Party, prior to announcement or issuance; provided that each Party and its Affiliates may make disclosure regarding the status and terms (including price terms) of this Agreement and the Transactions to their respective Affiliates, Representatives and limited partners or investors in the ordinary course of their respective businesses, in each case, so long as such recipients are obligated to keep such information strictly confidential; and provided that the foregoing shall not prohibit any Party from communicating with third parties to the extent necessary for the purpose of seeking any third party consent or with any Governmental Authorities under Section 7.01.

 

(c) Promptly after the execution of this Agreement, ListCo and the Company shall issue a mutually agreed joint press release announcing the execution of this Agreement. Prior to Closing, the Company shall prepare a press release announcing the consummation of the Transactions, the form and substance of which shall be approved in advance by ListCo, which approval shall not be unreasonably withheld, conditioned or delayed (“Closing Press Release”). Upon the Closing, the Company shall issue the Closing Press Release.

 

 

Section 7.08 Accredited Investor Status.

 

(a) Each Company Stockholder (except for Dissenting Stockholder and Management Employees) is an “accredited investor” as defined in Regulation D under the Securities Act. Each Company Stockholder is acquiring ListCo Class A Common Stock and/or Pre-Funded Warrants pursuant to this Agreement for its own account and has been advised by ListCo that the Pre-Funded Warrants have not been registered under the Securities Act and, therefore, cannot be resold unless they are registered under the Securities Act or unless an exemption from registration is available.

 

Section 7.09 Subscription Booklets. Each Company Stockholder (except for Dissenting Stockholder) has executed a subscription booklet, substantially in the form attached hereto as Exhibit C (Each, a “Subscription Booklet”, collectively, “Subscription Booklets”).

 

Article VIII

CONDITIONS TO OBLIGATIONS

 

Section 8.01 Conditions to Obligations of All Parties. The obligations of the Parties to consummate, or cause to be consummated, the Merger are subject to the satisfaction at the Closing of the following conditions, any one or more of which may be waived (if legally permitted) in writing by all of the Parties:

 

(a) Company Stockholder Approval. The Company Stockholder Approval shall have been obtained for the Agreement and the Ancillary Documents and the transactions contemplated therein, and shall remain in full force and effect.

 

(b) Nasdaq Listing. (i) ListCo shall have remained continuously listed on the Nasdaq and (ii) the review of the LAS Form shall have been completed by the Nasdaq and Nasdaq shall not have objected to the Class A Common Stock issuable hereunder and pursuant to the Pre-Funded Warrants for listing, subject to notice of issuance.

 

(c) Company’s Indebtedness Payoff. The ListCo shall, on behalf of the Company, have paid or caused to have paid to the applicable Payoff Amount to the Company Lender.

 

(d) No Legal Prohibition. No Governmental Authority of competent jurisdiction shall have (i) enacted, issued or promulgated any Law that is in effect and has the effect of making the Transactions illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Transactions, or (ii) issued or granted any order that has the effect of making the Transactions illegal or which has the effect of prohibiting or otherwise preventing the consummation of the Transactions.

 

Section 8.02 Additional Conditions to Obligations of ListCo and Merger Sub. The obligations of ListCo and Merger Sub to consummate, or cause to be consummated, the Merger are subject to the satisfaction as of the Closing of each of the following additional conditions, any one or more of which may be waived (to the extent permitted by applicable Law) in writing by ListCo:

 

(a) Representations and Warranties.

 

(i) Each of the representations and warranties of the Company contained in Section 3.01 (Corporate Organization of the Company), Section 3.02 (Subsidiaries), Section 3.03 (Due Authorization), Section 3.04 (No Conflict), Section 3.06 (Capitalization), Section 3.07 (Capitalization of Subsidiaries), Section 3.18 (Brokers’ Fees) and (collectively, the “Company Specified Representations”) shall be true and correct in all respects as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date).

 

(ii) Each of the representations and warranties of the Company contained in Article III (other than the Company Specified Representations), shall be true and correct as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, in each case, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Material Adverse Effect.

 

 

(b) Agreements and Covenants. The covenants and agreements of the Company in this Agreement to be performed as of or prior to the Closing shall have been performed.

 

(c) Officer’s Certificate. The Company shall have delivered to ListCo a certificate, dated the Closing Date, to the effect that the conditions specified in Section 8.02(a) and Section 8.02(b) have been fulfilled.

 

(d) No Material Adverse Effect. Since the date of this Agreement, no Material Adverse Effect shall have occurred which is continuing and uncured.

 

(e) Good Standing. The Company shall have delivered to ListCo and Merger Sub good standing certificates (or similar documents applicable for such jurisdictions) for the Company and each of its Subsidiaries certified as of a date no later than three Business Days prior to the Closing Date from the proper Governmental Authority of the Company’s and each of its Subsidiary’s respective jurisdiction of organization and from each other jurisdiction in which the Company and its Subsidiary is qualified to conduct business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.

 

(f) Offer Letters to Company Key Employees. Each of the Company Key Employees shall have signed an offer letter issued by the ListCo, which shall contain standard non-competition, non-solicitation and non-disparagement clauses, in each case effective as of the Closing, in form and substance satisfactory to the ListCo.

 

(g) Subscription Booklets. Each of the Company Stockholders (excluding Dissenting Stockholders) shall have delivered a fully executed Subscription Booklet to the Company.

 

(h) Director Resignations. ListCo shall have received written resignations, effective as of the Closing, of each of the directors and officers of the Company as requested effective as of Closing.

 

(i) Company Stockholder Agreements. ListCo shall have received written agreements, pursuant to which each Company Stockholder Agreement is terminated, and each party thereto unconditionally and irrevocably waives and releases any claims (including in respect of any actual or asserted breach or non-compliance with any such Company Stockholder Agreements) and agrees that each such Company Stockholder Agreement is terminated and of no further force or effect, effective as of Closing.

 

Section 8.03 Additional Conditions to the Obligations of the Company. The obligation of the Company to consummate or cause to be consummated the Merger are subject to the satisfaction as of the Closing of each of the following additional conditions, any one or more of which may be waived (to the extent permitted by applicable Law) in writing by the Company:

 

(a) Representations and Warranties.

 

(i) Each of the representations and warranties contained in Section 4.01 (Corporate Organization), Section 4.02 (Due Authorization), Section 4.03 (No Conflict), Section 4.05 (Governmental Consent), Section 4.06 (Brokers Fees), Section 4.07 (SEC Reports; Financial Statements ;Sarbanes Oxley; Undisclosed Liabilities), Section 4.10 (Capitalization), and Section 4.21 (Sufficiency of Funds; Solvency); (collectively, the “ListCo Specified Representations”), shall be true and correct in all respects as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date).

 

(ii) Each of the representations and warranties contained in Article IV (other than the ListCo Specified Representations) shall be true and correct in all material respects (without giving any effect to any limitation as to “materiality” or Material Adverse Effect or any similar limitation set forth therein) as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date),.

 

 

(b) Agreements and Covenants. The covenants and agreements of the ListCo and Merger Sub in this Agreement to be performed as of or prior to the Closing shall have been performed in all material respects.

 

(c) Officer’s Certificate. ListCo shall have delivered to the Company a certificate signed by an officer of ListCo, dated the Closing Date, certifying that the conditions specified in Section 8.03(a) to Section 8.03(f) have been fulfilled.

 

(d) No ListCo Impairment Effect. Since the date of this Agreement, no ListCo Impairment Effect shall have occurred.

 

(e) No Material Adverse Effect. Since the date of this Agreement, no Material Adverse Effect shall have occurred.

 

(f) Good Standing Certificates. ListCo shall have delivered to the Company good standing certificates (or similar documents applicable for such jurisdictions) of ListCo and each of its Subsidiaries as of a date no later than five (5) days prior to the Closing Date from the proper Governmental Authority of ListCo and each of its Subsidiaries’ respective jurisdiction of organization and from each other jurisdiction in which ListCo and each of its Subsidiaries is qualified to conduct business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.

 

(g) Subscription Booklets. The ListCo shall have delivered fully executed Subscription Booklets to each of the Company Stockholders (excluding Dissenting Stockholders).

 

(h) Registration Rights Agreement. Each of the Management Employees and the Company Stockholder (excluding Dissenting Stockholders) shall have delivered a fully executed Registration Rights Agreement to the ListCo.

 

(i) Allocation Schedule. The Requisite Preferred (as defined in the Company Charter), a majority of the holders of the Company Series E Preferred Stock and Company Board shall have approved the final Allocation Schedule to be delivered pursuant to Section 2.07(d)(2), provided that, each of such approvals shall not be unreasonably withheld.

 

Article IX

TERMINATION

 

Section 9.01 Termination. This Agreement may be validly terminated and the Transactions may be abandoned at any time prior to the Closing only as follows (it being understood and agreed that this Agreement may not be terminated for any other reason or on any other basis):

 

(a) by mutual written agreement of ListCo and the Company;

 

(b) by written notice from the Company on the one hand or from ListCo on the other, if there shall be in effect any (i) Law or (ii) Governmental Order, that (x) in the case of each of clauses (i) and (ii), permanently restrains, enjoins, makes illegal or otherwise prohibits the consummation of the Merger, and (y) in the case of clause (ii) such Governmental Order shall have become final and non-appealable; provided that, as applicable, neither Company nor ListCo shall be entitled to terminate this Agreement pursuant to this Section 9.01(b) if it has failed to comply with its obligations under this Agreement with respect to any such legal restraint;

 

(c) by written notice from ListCo to the Company, if the Company has breached or failed to perform any of its representations, warranties, or covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in the failure of a condition set forth in Section 8.01 or Section 8.02 to be satisfied and (ii) is not capable of being cured by the Termination Date or, if capable of being cured by the Termination Date, is not cured by the Company before the 30th day following receipt of written notice from ListCo of such breach or failure to perform, provided that ListCo shall not have the right to terminate this Agreement pursuant to this Section 9.01(c) if it is then in material breach of any of its representations, warranties, covenants or other agreements contained in this Agreement;

 

 

(d) by written notice from the Company, if ListCo or Merger Sub has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in the failure of a condition set forth in Section 8.01 or Section 8.03 to be satisfied and (ii) is not capable of being cured by the Termination Date or, if capable of being cured by the Termination Date, is not cured by ListCo or Merger Sub before the 30th day following receipt of written notice from the Company of such breach or failure to perform; provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.01(d) if it is then in material breach of any of its representations, warranties, covenants or other agreements contained in this Agreement;

 

(e) by written notice from the Company, if ListCo has not, to the sole satisfaction of Company, received and does not maintain in its possession and control an amount of cash that exceeds the Cash Consideration (inclusive of Cash pursuant to Section 2.10) (“Required Cash Amount”) as of the date that is twenty-one (21) days after the date of this Agreement (“Required Financing Date”), such satisfaction of the Company to include, without limitation, (1) documented evidence of such receipt, possession and control of such Required Cash Amount, and (2) a certificate in a form provided by Company and signed by the Chief Executive Officer of ListCo, dated as of the Required Financing Date, certifying that the Company possesses such Required Cash Amount, that such Required Cash Amount is not restricted or encumbered in any manner, and that such Restricted Cash Amount is freely available to pay the Cash Consideration (inclusive of Cash pursuant to Section 2.10); provided that the foregoing shall not apply if the Closing Date occurs prior to the Required Financing Date; provided, further, that in the event that Company exercises its termination right under this Section 9.01(e), ListCo will pay to Company within five (5) calendar days the Transaction Expenses up to an amount of $500,000, measured as of the effective date of termination (as evidenced in documentation provided by Company), the Parties agreeing that the payment of such Transaction Expenses is fair and reasonable and is not a penalty but is liquidated damages in an amount that compensates Company for its costs and expenses under this Agreement as of such termination date;

 

(f) by written notice from ListCo to the Company, if the Company fails to obtain the Company Stockholder Approval;

 

(g) by written notice from ListCo or the Company to the other Party, if the Closing shall not have been consummated on or prior to the Termination Date; for purposes of this Agreement, “Termination Date” means the date falling ninety (90) days after the date hereof; provided that, if, as of 11:59 p.m. (New York time) on the Termination Date, all conditions set forth in Section 8.01, Section 8.02, and Section 8.03 (other than those conditions that by their terms or nature are to be satisfied at the Closing) have been satisfied or waived, other than the conditions set forth in Section 8.01(f), then the Termination Date shall be automatically extended without the need for any action by any person, to the date falling one hundred and twenty (120) days after the date hereof; provided, further, that the Termination Date may be extended beyond the date falling one hundred and twenty (120) days after the date hereof if expressly so agreed in writing by ListCo and the Company; and provided, further, that (A) ListCo shall not have the right to terminate this Agreement pursuant to Section 9.01(e) if ListCo or Merger Sub has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would result in the failure of a condition set forth in Section 8.01 or Section 8.03 to be satisfied, and (B) the Company shall not have the right to terminate this Agreement pursuant to Section 9.01(f) if the Company has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would result in the failure of a condition set forth in Section 8.01(a) or Section 8.02 to be satisfied.

 

Section 9.02 Effect of Termination. Except as otherwise set forth in this Article IX, in the event of the termination of this Agreement pursuant to Section 9.01, this Agreement shall forthwith become void and have no effect, without any liability on the part of any Party or its Affiliates, or its Affiliates’ Representatives, or of any Party for any Fraud or any intentional and willful breach of this Agreement by such Party occurring prior to such termination. The provisions of Section 7.07 (Confidentiality; Publicity), this Section 9.02 (Effect of Termination), and Article X and any other Section or Article of this Agreement referenced in the foregoing provisions which are required to survive in order to give appropriate effect to the foregoing provisions, shall in each case survive any termination of this Agreement.

 

 

Article X

MISCELLANEOUS

 

Section 10.01 Waiver. At any time and from time to time prior to the Effective Time, ListCo may, to the extent legally allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the Company; (b) waive any inaccuracies in the representations and warranties of the Company contained herein or in any document delivered pursuant hereto; and (c) subject to the requirements of applicable Law, waive compliance by the Company with any of the agreements or conditions contained herein applicable to such Party. At any time and from time to time prior to the Effective Time, the Company may, to the extent legally allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of any Warrantor; (b) waive any inaccuracies in the representations and warranties of any Warrantor contained herein or in any document delivered pursuant hereto; and (c) subject to the requirements of applicable Law, waive compliance by any Warrantor with any of the agreements or conditions contained herein applicable to such Party. Any agreement on the part of a Party to any such extension or waiver will be valid only if set forth in an instrument in writing signed by such Party. Any delay in exercising any right pursuant to this Agreement will not constitute a waiver of such right.

 

Section 10.02 Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other internationally recognized overnight delivery service or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

(a) If to ListCo and Merger Sub, to:

 

435 Ericksen Ave, Suite 250

Bainbridge Island, Washington 98110

 

Attn: Joseph Davy

E-mail: [***]

with a copy (which shall not constitute notice) to:

 

Hunter Taubman Fischer & Li LLC

950 3^rd Avenue

19^th Floor

New York, NY 10022

Attn: Louis Taubman, Esq.

Email: [***]

Phone: [***]

 

(b) If to the Company, to:

 

Prior to Closing:

Act-On Software, Inc.

121 SW Morrison St.

Suite 1600

Attn: Roger Rowe

Email: [***]

 

with a copy (which shall not constitute notice) to:

Macro Law Group

500 SW 116^th, Suite 116

Portland, OR 97225

Attn: Bill Pierznik

[***]

 

And after Closing to Company Stockholder Representative with a copy to Macro Law Group at the Macro Law Group address above.

 

 

or to such other address or addresses as the Parties may from time to time designate in writing, provided however that any notices sent pursuant to (i) to (iii) shall be accompanied by an electronic mail notice. Without limiting the foregoing, any Party may give any notice, request, instruction, demand, document or other communication hereunder using any other means (including personal delivery, expedited courier, messenger service, ordinary mail or electronic mail), but no such notice, request, instruction, demand, document or other communication shall be deemed to have been duly given unless and until it actually is received by the Party for whom it is intended.

 

Section 10.03 Assignment. No Party shall assign this Agreement or any part hereof without the prior written consent of the other Parties. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Any attempted assignment in violation of the terms of this Section 10.03 shall be null and void, ab initio.

 

Section 10.04 Rights of Third Parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any right or remedies under or by reason of this Agreement; provided that notwithstanding the foregoing, (a) in the event the Closing occurs, [D&O Indemnified Parties] are intended third-party beneficiaries of, and may enforce, Section 7.03, and (b) the Non-Recourse Parties are intended third-party beneficiaries of, and may enforce, Section 10.15 and Section 10.16.

 

Section 10.05 Expenses. Except as set forth in Section 9.3, each Party hereto shall bear its own expenses incurred in connection with this Agreement and the other Ancillary Documents and the transactions herein and therein contemplated, including all fees of its legal counsel, financial advisers and accountants (such Party’s “Expenses”).

 

Section 10.06 Governing Law. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware.

 

Section 10.07 Captions; Counterparts. The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by email to counsel for the other Parties of a counterpart executed by a Party shall be deemed to meet the requirements of the previous sentence.

 

Section 10.08 Schedules and Exhibits. The Schedules and Exhibits referenced herein are a part of this Agreement as if fully set forth herein. All references herein to Schedules and Exhibits shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by a Party in the Schedules with reference to any section or schedule of this Agreement shall be deemed to be a disclosure with respect to all other sections or schedules to which such disclosure may apply solely to the extent the relevance of such disclosure is reasonably apparent on the face of the disclosure in such Schedule. Certain information set forth in the Schedules is included solely for informational purposes. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.

 

Section 10.09 Entire Agreement. This Agreement (together with the Schedules and Exhibits to this Agreement) and the other Ancillary Documents, constitute the entire agreement among the Parties relating to the Transactions and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Subsidiaries relating to the Transactions.

 

Section 10.10 Amendments. This Agreement may not be amended except by an instrument in writing signed by an authorized representative of each of the Parties.

 

 

Section 10.11 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law.

 

Section 10.12 Consent to Jurisdiction. The Parties hereto agree that any claim, action, suit, Order, hearing, request for information by a Governmental Authority, litigation, directive, inquiry or investigation by, before or otherwise involving any Governmental Authority, or any legal, administrative or arbitration Proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement, the Ancillary Documents or the Transactions contemplated hereby shall be brought in any federal or state court located in the State of Delaware, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such Proceeding in any such court or that any such Proceeding brought in any such court has been brought in an inconvenient forum. Process in any such Proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 9.2 shall be deemed effective service of process on such party.

 

Section 10.13 WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO ANY AGREEMENT OR ANCILLARY DOCUMENT OR THE TRANSACTIONS.

 

Section 10.14 Equitable Remedies. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that a Party does not perform its obligations under the provisions of this Agreement or any other Ancillary Document in accordance with its specified terms or otherwise breach such provisions. The Parties acknowledge and agree that (i) a Party shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement or any other Ancillary Document and to enforce specifically the terms and provisions hereof, without proof of damages, prior to the valid termination of this Agreement in accordance with Article IX this being in addition to any other remedy to which such Party is entitled under this Agreement or any other Ancillary Document, and (ii) the right of specific enforcement is an integral part of this Agreement and the Transactions and without that right, such Party would have entered into this Agreement. Each Party agrees that it will not allege, and each Party hereby waives the defense, that the other Party has an adequate remedy at Law or that an award of specific performance is not an appropriate remedy for any reason at Law or equity. The Parties acknowledge and agree that any Party seeking an injunction to prevent breaches of this and to enforce specifically the terms and provisions of this Agreement or any other Ancillary Document in accordance with this Section 10.14 shall not be required to provide any bond or other security in connection with any such injunction.

 

Section 10.15 Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the Transactions may only be brought against, the entities that are expressly named as Parties and then only with respect to the obligations set forth herein with respect to such Party. Except to the extent a Party (and then only to the extent of the obligations undertaken by such Party in this Agreement), (a) no past, present or future director, officer, employee, sponsor, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any Party and (b) no past, present or future director, officer, employee, sponsor, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company, ListCo and Merger Sub under this Agreement of or for any claim based on, arising out of, or related to this Agreement or the Transactions (each of the Persons identified in clauses (a) or (b), a “Non-Recourse Party”, and collectively, the “Non-Recourse Parties”).

 

Section 10.16 Non-Survival. Reserved.

 

 

Section 10.17 Acknowledgements. Without prejudice to the terms otherwise agreed in writing by the applicable parties, each of the Parties acknowledges and agrees (on its own behalf and on behalf of its respective Affiliates and its and their respective Representatives) that: (a) the representations and warranties in Article III and the representations and warranties contained in any Ancillary Document constitute the sole and exclusive representations and warranties in respect of the Company and its Subsidiaries; (b) the representations and warranties in Article IV and the representations and warranties contained in any Ancillary Document constitute the sole and exclusive representations and warranties in respect of ListCo and Merger Sub; (c) except for the representations and warranties referred to in the foregoing clauses (a) to (b), none of the Parties or any other Person (including any of the Non-Recourse Parties) makes, or has made, any other express or implied representation or warranty with respect to any Party (or any Party’s Subsidiaries), including any implied warranty or representation as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the such Party or its Subsidiaries or the Transactions and all other representations and warranties of any kind or nature expressed or implied (including (i) regarding the completeness or accuracy of, or any omission to state or to disclose, any information, including in the estimates, projections or forecasts or any other information, document or material provided to or made available to any Party or their respective Affiliates or Representatives in certain “data rooms,” management presentations or in any other form in expectation of the Transactions, including meetings, calls or correspondence with management of any Party (or any Party’s Subsidiaries), or (ii) relating to the future business orprospects, are specifically disclaimed by all Parties and their respective Subsidiaries and all other Persons (including the Representatives and Affiliates of any Party or its Subsidiaries); and (d) neither Party nor any of its Affiliates is relying on any representations and warranties in connection with the Transactions except the representations and warranties in Article III by the Company and the representations and warranties in Article IV by the ListCo and Merger Sub, and those representations and warranties made in any of the Ancillary Agreements. The foregoing does not limit any rights of any Party (or any other Person party to any other Ancillary Documents) pursuant to any other Ancillary Document against any other Party (or any other Person party to any other Ancillary Documents) pursuant to such Ancillary Document to which it is a party or an express third party beneficiary thereof. Nothing in this Section 10.17 shall relieve any Party of liability in the case of Fraud committed by such Party.

 

[Signature pages follow.]

 

 

IN WITNESS WHEREOF, the Parties have hereunto caused this Agreement to be duly executed as of the date hereof.

 

	BANZAI INTERNATIONAL, INC.
	By:	/s/ Joseph Davy
	Name:	Joseph Davy
	Title:	Chief Executive Officer, Chairman and Director

 

MERGER SUB
By:	/s/ Joseph Davy
Name:	Joseph Davy
Title:	Chief Executive Officer

 

 

IN WITNESS WHEREOF, the Parties have hereunto caused this Agreement to be duly executed as of the date hereof.

 

ACT-ON SOFTWARE, INC.
By:	/s/ Katherine Johnson
Name:	Katherine Johnson
Title:	Chief Executive Officer

 

 

EXHIBIT A

Form of Pre-Funded Warrants

 

 

EXHIBIT B

Form of Subscription Booklets

 

 

Exhibit C

Form of Letter of Transmittal

 

 

Exhibit D

Share Consideration Escrow Agreement

 

 

Exhibit E

Registration Rights Agreement

 

 

 

Exhibit 10.1

 

Banzai International, Inc.

 

Subscription Booklet

  

Offering Total: $[32,000,000]

 

 

The securities offered hereby are speculative and involve a high degree of risk.

 

 

Accredited Investors Only

 

January 2025

 

Legal Disclaimer: Banzai International, Inc. is currently undertaking a private placement of the securities described in the accompanying transaction documents in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”) and Rule 506(b) of Regulation D promulgated thereunder.

 

 

INSTRUCTIONS FOR COMPLETION OF SUBSCRIPTION BOOKLET

 

Prospective investors should read the transaction documents for this proposed investment by the individual or entity that is a signatory below (“Investor”) in Banzai International, Inc. (the “Company”), including the Agreement and Plan of Merger (the “Merger Agreement”) and this Subscription Booklet (the “Subscription Booklet”) prior to purchasing any shares in this Offering (as such terms are defined below). In particular, Investor should not construe the contents of the Ancillary Documents (as defined in the Merger Agreement) as investment or legal advice. Investor should consult its bankers, counsel, accountants, tax experts and other advisors as to legal, tax, business, financial and related aspects of an investment in the shares. No representation or warranty is made as to whether, or the extent to which, the Shares constitute legal investments for investors whose investment authority is subject to legal restrictions. Such investors should consult their legal advisors regarding such matters.

 

The Company is offering [ ] shares of Class A common stock (the “Share”), par value $0.0001 each of the Company (the “Common Stock”), and/or pre-funded warrants to purchase Common Stock in lieu of (the “Pre-Funded Warrants”, together with the Shares, the “Securities”) pursuant to the Merger Agreement and the Purchase Agreement (the “Purchase Agreement”) included in this Subscription Booklet as Exhibit C (the “Offering”), at a price of $[ ] per Share (and/or Pre-Funded Warrant in lieu of) (the “Per Share Purchase Price”).

 

Execution of this Subscription Booklet shall constitute execution of the Purchase Agreement. If you wish to invest in the Company, this Subscription Booklet and the signature pages included herewith must be executed and returned to:

 

Joe Davy at Banzai International, Inc. via email at [***].

 

Investing in the Shares involves certain investment risks, including the possible loss of all Investor’s investment. All subscription documents must be completed correctly and thoroughly, or they will not be accepted. If Investor wishes to invest, please complete, sign, and return this Subscription Booklet and the relevant signature page contained herein.

 

☐

Section I - Important Notices and Certifications

 

☐

Exhibit A – Individual/Joint Investor Form(s)

 

☐

Exhibit B - Entity Investor Form(s)

 

☐

Exhibit C - Purchase Agreement

 

The purchase price for the Shares is exclusive of any costs incurred by an investor for legal, tax accounting or financial advice, including fees paid to his, her or its purchaser representative, if any.

 

 

Company Address:

 

Banzai International, Inc. 

435 Ericksen Ave, Suite 250, Bainbridge Island, WA, 98110  

Phone: 206-414-1777  

Attn: Joe Davy

 

 

SECTION I 

IMPORTANT NOTICES AND CERTIFICATIONS

 

NOTICES

 

	·	Investor’s Subscription Booklet is comprised of Exhibits A, B, and C hereto and a signature page thereto is included in this Subscription Booklet as Exhibit A for individual/joint investors or Exhibit B for entities.
	·	Investor is being asked to complete this Subscription Booklet so a determination can be made as to whether or not you (it) are qualified to purchase securities under applicable federal and state securities laws.
	·	Investor’s answers to the questions contained herein must be true and correct in all respects, and a false representation by Investor may give rise to a violation of law for which a claim for damages may be made against you.
	·	Investor’s answers will be kept strictly confidential; however, by signing this Subscription Booklet, Investor will be authorizing the Company to present a completed copy of this Subscription Booklet (and any completed questionnaires and related information submitted by you in connection therewith) on a confidential basis to its counsel and such other advisors to the Company as they may deem appropriate in order to make certain that the offer and sale of the Securities will not result in a violation of the Securities Act or of the securities laws of any state or of any other jurisdiction.
	·	All questions must be answered. If the appropriate answer is “None” or “Not Applicable,” please state so. Please print or type your answers to all questions and attach additional sheets, if necessary, to complete your answers to any item. Please initial any correction.
	·	Investor hereby agrees that the execution of the Signature Pages set forth herein constitute agreement to be bound by the terms and conditions hereof and all of the other documents constituting the Ancillary Documents, including but not limited to the Purchase Agreement attached hereto as Exhibit C, without requiring the Investor’s separate signature on any of such Ancillary Documents.

 

Individual Subscribers:

 

·

If the Securities subscribed for are to be owned by more than one person, you and the other co-subscriber must each complete a separate Subscription Booklet (except if the co-subscriber is your spouse) and sign the signature page to the Purchase Agreement included with this Subscription Booklet. If your spouse is a co-subscriber, you must indicate his or her name and social security number.

 

CERTIFICATIONS

 

·

Investor understands that investment in the Securities is an illiquid investment. In particular, Investor recognizes that: Investor must bear the economic risk of investment in the Securities for an indefinite period of time, since the Securities have not currently been registered under the Securities Act and therefore cannot be sold unless either they are subsequently registered under the Securities Act or an exemption from such registration is available and, if requested by the Company, an opinion of counsel or other evidence reasonably satisfactory to the Company to that effect is provided. Investor consents to the affixing by the Company of such legends on certificates representing the Securities (or any part thereof) as any applicable federal or state securities law or any securities law of any other applicable jurisdiction may require from time to time; provided, further that the Company will use its best efforts to register such Securities under the Securities Act as required under the Merger Agreement,. _____ Initial

 

·

The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of the Investor’s investment in the Securities and is able to bear such risks, and has obtained, in the Investor’s judgment, sufficient information from the Company to evaluate the merits and risks of such investment. The Investor has evaluated the risks of investing in the Securities, understands there are substantial risks of loss incidental to the purchase of the Securities and has determined that the purchase of Securities is a suitable investment for the Investor and that the Investor can sustain a complete loss of the Investor’s investment in the Company. _____ Initial

 

 

·

Investor represents and warrants to the Company that: (i) the financial information provided in this Subscription Booklet relating to Investor is complete, true and correct in all material respects; (ii) Investor and its investment managers, if any, have carefully reviewed and understand the risks of, and other considerations relating to, a purchase of Securities; (iii) Investor and its investment managers, if any, have been afforded the opportunity to obtain any information necessary to verify the accuracy of any representations or information presented by the Company and have had all inquiries to the Company answered, and have been furnished all requested materials, relating to the Company and the offering and sale of the Securities and anything set forth in the Ancillary Documents; (iv) neither Investor nor its investment managers, if any, have been furnished any offering literature by the Company or any of its affiliates, associates or agents other than the Ancillary Documents, and the agreements referenced therein; and (v) Investor is acquiring the Securities for which Investor is subscribing for its own account, as principal, for investment and not with a view to the resale or distribution of all or any part of the Securities in violation of federal, state or other applicable securities laws. _____ Initial

  

·

Investor hereby agrees that the Company may deliver all notices, financial statements, and any and all other documents, information and communications concerning the affairs of the Company, including, without limitation, information about Investor’s investment, required or permitted to be provided to Investor hereunder by means e-mail. By signing this Subscription Booklet, Investor hereby consent to receive electronically all documents, communications, notices, contracts, and agreements arising from or relating in any way to my rights, obligations, or services under the Ancillary Documents or as an investor in the Company. In connection with the U.S. Securities & Exchange Commission’s electronic delivery of information requirements, Investor further agrees to receive electronic mail for the purpose of recertifying this Certification through negative consent and agrees to notify the Company in writing if Investor no longer agree to receive such communications by electronic means. _____ Initial

  

·

Investor represents that Investor’s investment objective is speculative in that Investor seeks the maximum total return through an investment in a broad spectrum of securities, which involves a higher degree of risk than other investment styles and therefore Investor’s risk exposure is also speculative. _____ Initial

  

·

The Securities offered hereby are highly speculative and involve a high degree of risk and I should only purchase these securities if I can afford to lose their entire investment. _____ Initial

 

·

I understand that the Per Share Purchase Price is exclusive of any costs incurred by Investor for legal, tax, accounting, or financial advice, including fees paid to Investor’s purchaser representative, if any. _____ Initial

 

·

The undersigned, if a corporation, partnership, trust or other form of business entity, (i) is authorized and otherwise duly qualified to purchase and hold the Securities, (ii) has obtained such additional tax and other advice that it has deemed necessary, (iii) has its principal place of business at its residence address set forth in this Subscription Booklet, and (iv) has not been formed for the specific purpose of acquiring the Securities (although this may not necessarily disqualify the subscriber as a purchaser). The persons executing the Subscription Booklet, as well as all other Ancillary Documents related to the Offering, represent that they are duly authorized to execute all such Ancillary Documents on behalf of the Investor. (If the undersigned is one of the aforementioned entities, it agrees to supply any additional written information that may be reasonably required under applicable law.) _____ Initial

  

 

·

All of the information which Investor has furnished to the Company, and which is set forth in the Subscription Booklet is correct and complete in all material respects as of the date of the Subscription Booklet. If any material change in this information should occur prior to Investor’s subscription being accepted, Investor will promptly furnish the revised or corrected information. Investor further agrees to be bound by all of the terms and conditions of the Offering and the Ancillary Documents as they may apply to Investor. This subscription is not transferable or assignable by Investor without the written consent of the Company (provided, however, that for the avoidance of doubt, any securities acquired in the Offering and pursuant to this subscription are transferrable without the consent of the Company, subject to any restrictions on transfer specified in the other Ancillary Documents). If more than one person has signed this Subscription Booklet on behalf of Investor, the obligations of each such signatory to this Subscription Booklet shall be joint and several and the representations and warranties contained in this Subscription Booklet shall be deemed to be made by, and be binding upon, each of these persons and his or her heirs, executors, administrators, successors and assigns (but, for the avoidance of doubt, such obligations of the persons signing this Subscription Booklet are several, and not joint, with any other investor in the Offering and is subject to the liability limitations in the Merger Agreement). This subscription, upon acceptance by the Company, shall be binding upon my heirs, executors, administrators, successors, and assigns. This Subscription Booklet shall be construed in accordance with and governed in all respects by the internal laws of the State of Delaware. _____ Initial

 

·

Investor certifies that (1) its taxpayer identification number shown in this Subscription Booklet is correct and (2) Investor is not subject to backup withholding because (a) Investor has not been notified that Investor is subject to backup withholding as a result of a failure to report all interest and dividends or (b) the Internal Revenue Service has notified Investor that Investor is no longer subject to backup withholding. (If Investor has been notified that Investor is subject to backup withholding and the Internal Revenue Service has not advised Investor that backup withholding has been terminated, strike out item (2) in the sentence directly above.) _____ Initial

 

·

The acceptance of Investor’s subscription together with the appropriate remittance will not breach any applicable money laundering rules and regulations and Investor undertakes to provide verification of Investor’s identity reasonably satisfactory (on a confidential basis) to the Company promptly on request. Investor acknowledges that due to money laundering requirements operating within their respective jurisdictions, the Company may require further identification of me/us before applications can be processed. The Company shall be held harmless and indemnified by Investor against any loss arising from the failure to process this application if such information as has been reasonably required from Investor with reasonable advance notice and as required by applicable law and has not been provided by Investor. _____ Initial

  

·

Investor understands that the Subscription Booklet relating to the Offering will be irrevocable, and unless the subscription is rejected or withdrawn, Investor will become an investor in this Offering. The Company may reject, in whole or in part, this subscription at any time in their absolute discretion, for any reason whatsoever. _____ Initial

  

 

EXHIBIT A

INDIVIDUAL/JOINT INVESTOR FORM(S)

 

ALL INDIVIDUAL/JOINT INVESTORS MUST COMPLETE EXHIBIT A

 

Name of Investor (please print or type)		Social Security Number (Tax I.D. Number)

 

Type of Investor -

 

	☐	Individual
	☐	Joint Tenants (with Rights of Survivorship)

 

Full Mailing Address (Exactly as it should appear on labels):

 

☐ Mr.        ☐ Mrs. ☐        Ms. ☐        Miss ☐        Dr. ☐        Other _______

 

Telephone (     )                                              Cell number (      )

E-mail address                                                 Fax number (      )

 

If different from Full Mailing Address above; please supply a Residence (individual) or Principal Place of Business (entity) address (no P.O. boxes, please):

 

Telephone (     )                                               Cell number (      )

E-mail address                                                 Fax number (      )

 

 

ANTI-MONEY LAUNDERING INFORMATION

 

This Subscription Booklet will not be deemed complete, regardless of whether it has already wired funds, until all of the required documentation is received.

 

Identity Document (all investors must attach)

 

	☐	A government issued form of picture identification (e.g. a passport, driver’s license, other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard).
	☐	Proof of Mailing, Residence or Place of Business Address (e.g., current utility bill).

 

Payment Source Information

 

(a)	Account holder name (if different from Investor, above): ___________________
(b)	“Wiring Bank” from which payment is being wired: ________________________	YES	NO
(c)	Is the Wiring Bank located in the U.S. or another Approved FATF Country*? If yes, please answer question (d) below.	☐	☐
(d)	Is the Investor an account holder at the Wiring Bank?	☐	☐

 

BROKER-DEALER AFFILIATE STATUS

 

Are you an affiliate of a broker-dealer? ____ (yes/no)

 

If yes, do you certify that you bought the Securities in the ordinary course of business, and at the time of purchase, you had no agreements or understandings, directly or indirectly, with any person to distribute the Securities? ____ (yes/no)

 

Note: If your response to the foregoing question is “no,” the SEC’s staff has indicated that you may be required to be identified as an underwriter in a future registration statement relating to the Securities or the securities underlying the Securities.

 

Relationships with the Company

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors, or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:

 

 

*

As of the date hereof, approved countries that are members of the Financial Action Task Force on Money Laundering (each, an “Approved FATF Country”) are: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, Kingdom of the Netherlands, New Zealand, Norway, Portugal, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States.

  

 

ACCREDITED INVESTOR

 

In order to ensure compliance with Rule 506(b) promulgated under Regulation D, the Investor must initial the applicable item below to indicate which method it will use to verify its status as an “accredited investor” as defined in Regulation D, and to make any necessary representations and warranties in connection with the verification of its status as an accredited investor.

 

FOR INDIVIDUAL ACCOUNTS

 

(Please initial ONE of the following, as appropriate)

 

______ Initial   OR	1.	The Investor has an individual net worth in excess of $1,000,000, excluding primary residence, and represents and warrants that such Investor has disclosed all liabilities necessary to make a determination of net worth as detailed below.
______ Initial   OR	2.	The Investor has joint net worth with his or her spouse, in excess of $1,000,000, excluding primary residence, and   (a)          such Investor represents and warrants that such Investor has disclosed all liabilities necessary to make a determination of Investor’s net worth   please initial here: _______________   AND   (b)          such Investor’s spouse represents and warrants that he/she has disclosed all liabilities necessary to make a determination of his/her net worth   spouse please initial here: _______________
______ Initial   OR	3.	Investor had individual income (exclusive of any income attributable to spouse) of more than $200,000 in each of the past two years and represents and warrants that such Investor reasonably expects to reach the same income level in the current year.

 

______ Initial   OR

4.

The Investor had joint income with their spouse of more than $300,000 in each of the past two years and   (a)          such Investor represents and warrants that he/she has a reasonable expectation of reaching the joint income level necessary to qualify as an accredited investor   please initial here: _______________   AND   (b)           such Investor’s spouse represents and warrants that he/she has a reasonable expectation of reaching the joint income level necessary to qualify as an accredited investor   spouse please initial here: _______________

 

______ Initial   OR	5.	Investor represents he/she is a natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act.
______ Initial   OR	6.	Investor represents that he/she is a “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1), of a family office meeting the requirements in paragraph (a)(12) of this section and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (a)(12)(iii).
______ Initial	7.	Investor represents that he/she is a natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the SEC has designated as qualifying an individual for accredited investor status.

  

 

SIGNATURE PAGE

 

INDIVIDUAL/JOINT INVESTOR

 

Individual/Joint Investors must sign this page.

 

By signing below, Investors agree to purchase the number of Shares stated below and to be bound by the terms of this Subscription Booklet, the Purchase Agreement, any certifications contained herein and all other Ancillary Documents.

 

No. of Shares: _________________

 

Per Share Purchase Price: $_________________

 

Total Investor Purchase Price (Per Share Purchase Price x Number of Shares): $_________________

 

IN WITNESS WHEREOF, parties hereto have executed this Agreement as of the dates set forth.

 

Investor name (please print):
Signature:	Date:

 

COMPANY ACCEPTANCE	(Company use only)
	Banzai International, Inc. (a Delaware Corporation)
Acceptance Date: _____________, 2025
	By:
	Name:	Joe Davy
	Title:	CEO

 

  

 

EXHIBIT B

ENTITY INVESTOR FORM(S)

 

ALL ENTITY INVESTORS MUST COMPLETE EXHIBIT B

 

Name of Investor (please print or type)		Social Security Number (Tax I.D. Number)

 

Type of Investor - please check all that apply:

 

☐  Partnership	☐ Registered Investment Company	☐ Foundation
☐ Corporation	☐ Tenants in Common	☐ Endowment
☐ Trust	☐ Individual Retirement Plan	☐ Employee Benefit Plan
☐ Limited Liability Company	☐ Charitable Remainder Trust	☐ Keogh Plan
☐ Fund of Funds*

 

Full Mailing Address (Exactly as it should appear on labels):

 

☐ Mr.        ☐ Mrs. ☐        Ms. ☐        Miss ☐        Dr. ☐        Other _______

 

Telephone (     )                                              Cell number (      )

E-mail address                                                 Fax number (      )

 

If different from Full Mailing Address above; please supply a Residence (individual) or Principal Place of Business (entity) address (no P.O. boxes, please):

 

Telephone (     )                                               Cell number (      )

E-mail address                                                 Fax number (      )

 

*

For purposes of this item, the term “Fund of Funds” means a fund that invests 10 percent or more of its total assets in other pooled investment vehicles, whether or not they are private funds or registered investment companies.

 

 

ANTI-MONEY LAUNDERING INFORMATION

 

This Subscription Booklet will not be deemed complete, regardless of whether it has already wired funds, until all of the required documentation is received.

 

Entity Documentation (Investor representative may email such documentation to Company)

 

☐

Documents showing the existence of the entity, such as certified articles of incorporation, a government-issued business license, a partnership agreement, or a trust instrument.

 

Payment Source Information

 

(a)	Account holder name (if different from Investor, above): ___________________
(b)	“Wiring Bank” from which payment is being wired: ________________________	YES	NO
(c)	Is the Wiring Bank located in the U.S. or another Approved FATF Country*? If yes, please answer question (d) below.	☐	☐
(d)	Is the Investor an account holder at the Wiring Bank?	☐	☐

 

BROKER-DEALER AFFILIATE STATUS

 

Are you an affiliate of a broker-dealer? ____ (yes/no)

 

If yes, do you certify that you bought the Securities in the ordinary course of business, and at the time of purchase, you had no agreements or understandings, directly or indirectly, with any person to distribute the Securities? ____ (yes/no)

 

Note: If your response to the foregoing question is “no,” the SEC’s staff has indicated that you may be required to be identified as an underwriter in a future registration statement relating to the Securities or the securities underlying the Securities.

 

Relationships with the Company

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors, or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:

 

 

 

*

As of the date hereof, approved countries that are members of the Financial Action Task Force on Money Laundering (each, an “Approved FATF Country”) are: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, European Commission, Finland, France, Germany, Greece, Gulf Co-operation Council, Hong Kong, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, Kingdom of the Netherlands, New Zealand, Norway, Portugal, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States.

  

 

ACCREDITED INVESTOR

 

In order to ensure compliance with Rule 506(b) promulgated under Regulation D, the Investor must initial the applicable item below to indicate which method it will use to verify its status as an “accredited investor” as defined in Regulation D, and to make any necessary representations and warranties in connection with the verification of its status as an accredited investor.

 

(A) FOR CORPORATIONS, PARNTERSHIPS, EMPLOYEE BENEFIT PLANS OR IRA

 

1. Has the subscribing entity been formed for the specific purpose of investing in the Securities? 

_____________ (yes/no)

 

If your answer to question 1 is “no,” CHECK whichever of the following statements (a-g) is applicable to the subscribing entity.

 

The undersigned entity certifies that it is an “accredited investor” because it is:

 

(a) _______ an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, provided that the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, and the plan fiduciary is a bank, savings and loan association, insurance company or registered investment adviser;

 

OR

 

(b) _______ an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 that has total assets in excess of $5,000,000; OR

 

(c) _______ each of its shareholders, partners, or beneficiaries meets at least one of the conditions described above under FOR INDIVIDUAL ACCOUNTS. Please also CHECK the appropriate space in that section;

 

OR

 

(d) _______ the plan is a self-directed employee benefit plan, and the investment decision is made solely by a person that meets at least one of the conditions described above under FOR INDIVIDUAL ACCOUNTS. Please also CHECK the appropriate space in that section;
OR

 

(e) _______ a corporation, a partnership, limited liability company, or a Massachusetts or similar business trust with total assets in excess of $5,000,000.

 

OR

 

(f) _______ a “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1):

 

	·	With assets under management in excess of $5,000,000,
	·	That is not formed for the specific purpose of acquiring the securities offered, and
	·	Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment.

 

OR

 

(g) _______ a “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1), of a family office meeting the requirements in paragraph (a)(12) of this section and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (a)(12)(iii).

 

If the answer to Question 1. above is “yes,” please certify the statement (h) below is true and correct:

 

(h) _______ The undersigned entity certifies that it is an accredited investor because each of its shareholder or beneficiaries meets at least one of the conditions described above under FOR INDIVIDUAL ACCOUNTS. Please also CHECK the appropriate space in that section.

 

 

(B) FOR TRUST ACCOUNTS

 

1. Has the subscribing entity been formed for the specific purpose of investing in the Securities? _____________ (yes/no)

 

If your answer is “no,” CHECK whichever of the following statements (a-c) is applicable to the subscribing entity.

 

If your answer “yes,” the subscribing entity must be able to certify to the statement (c) below in order to qualify as an “accredited investor.”

 

The undersigned trustee certifies that the trust is an “accredited investor” because:

 

(a)_______ the trust has total assets in excess of $5,000,000 and the investment decision has been made by a “sophisticated person”;

 

OR

 

(b)_______ the trustee making the investment decision on its behalf is a bank (as defined in Section 3(a)(2) of the Act), a saving and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, acting in its fiduciary capacity;

 

OR

 

(c)_______ the grantor(s) of the trust may revoke the trust at any time and regain title to the trust assets and has (have) retained sole investment control over the assets of the trust and the (each) grantor(s) meets at least one of the ACCREDITED INVESTOR conditions described below for Individual Accounts. Accordingly, please initial ONE of the following, as appropriate:

 

______ Initial   OR	i.	The Investor has an individual net worth in excess of $1,000,000 and represents and warrants that such Investor has disclosed all liabilities necessary to make a determination of net worth as detailed in Exhibit C.
______ Initial   OR	ii.	The Investor has joint net worth with his or her spouse, in excess of $1,000,000 and   (a) such Investor represents and warrants that such Investor has disclosed all liabilities necessary to make a determination of Investor’s net worth;   please initial here: _______________   AND   (b) such Investor’s spouse represents and warrants that he/she has disclosed all liabilities necessary to make a determination of his/her net worth;   spouse please initial here:_______________
______ Initial   OR	iii.	Investor had individual income (exclusive of any income attributable to spouse) of more than $200,000 in each of the past two years and represents and warrants that such Investor reasonably expects to reach the same income level in the current year.
______ Initial	iv.	The Investor had joint income with their spouse of more than $300,000 in each of the past two years and   (a) such Investor represents and warrants that he/she has a reasonable expectation of reaching the joint income level necessary to qualify as an accredited investor; please initial here:_______________   AND   (b) such Investor’s spouse represents and warrants that he/she has a reasonable expectation of reaching the joint income level necessary to qualify as an accredited investor; spouse please initial here:_______________

 

ONLY FILL OUT THE FOLLOWING SECTION IF YOU ARE AN ENTITY

AUTHORIZATION OF REPRESENTATIVE(S)/AGENT(S)

 

Set forth below are the names of persons authorized by the Investor to give and receive instructions between the Company and the Investor, together with their respective signatures. Such persons are the only persons so authorized until further notice to the Company.

 

(Please attach additional pages if needed)

 

Name		Signature

 

Address of Authorized Representative/Agent (no P.O. boxes please):

Telephone (     )                                               Cell number (      )

E-mail address                                                 Fax number (      )

 

Please provide the full legal name for an individual(s) who is deemed to be a beneficial owner and the person who holds voting power of the legal entity.

 

 

 

SIGNATURE PAGE

 

CORPORATIONS, PARTNERSHIPS, TRUSTS, OR OTHER ENTITIES

 

Corporations, Partnerships, Trusts or Other Entity Investors must sign this page.

 

By signing below, Investors agree to purchase the number of Shares listed below and be bound by the terms of this Subscription Booklet, the Purchase Agreement, any certifications contained herein and all other Ancillary Documents.

 

No. of Shares: _________________

 

Per Share Purchase Price: $_________________

 

Total Investor Purchase Price (Per Share Purchase Price x Number of Shares): $_________________

 

IN WITNESS WHEREOF, parties hereto have executed this Agreement as of the dates set forth. 

 

Investor Entity Name (please print):
Signature:	Date:

  

Signatory Name (please print):
Title:

 

COMPANY ACCEPTANCE	(Company use only)
	Banzai International, Inc. (a Delaware Corporation)
Acceptance Date: _____________, 2025
	By:
	Name:	Joe Davy
	Title:	CEO

 

 

Exhibit D

 

Purchase Agreement

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT. INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. THE OFFERING IS BEING MADE SOLELY TO “ACCREDITED INVESTORS,” AS SUCH TERM IS DEFINED IN REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION AND WILL ONLY BE OFFERED AND SOLD IN RELIANCE ON AVAILABLE EXEMPTIONS THEREFROM THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR EQUIVALENT AUTHORITIES OF ANY OTHER JURISDICTION NOR HAVE ANY SUCH AUTHORITIES PASSED UPON, CONFIRMED OR ENDORSED THE MERITS OF THE OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

Banzai International, Inc., a Delaware Corporation (the “Company”) hereby offers (the “Offering”) [ ] shares (the “Shares”) of its Class A common stock, $0.0001 par value per share (the “Common Stock”) and/or pre-funded warrants to purchase Common Stock in lieu of (the “Pre-Funded Warrants”, together with the Shares, the “Securities”) under this Share Purchase Agreement in connection with an agreement and plan of merger (the “Merger Agreement”), dated January 22, 2025, by and between the Company, Banzai Passage Inc., a Delaware corporation wholly owned by the Company and Act-On Software, Inc., a Delaware corporation.

 

 

BANZAI INTERNATIONAL, INC. 

SHARE PURCHASE AGREEMENT

 

This SHARE PURCHASE AGREEMENT (this “Agreement”) is dated as January 22, 2025 by and among Banzai International, Inc., a Delaware corporation (the “Company”), and the undersigned Investor (individually, the “Investor” and collectively with other Investors in the Offering, the “Investors”).

 

W I T N E S E T H:

 

WHEREAS, pursuant to the Merger Agreement, Banzai Passage Inc., a Delaware corporation and a wholly-owned subsidiary of ListCo (“Merger Sub”), shall merge with and into Act-On Software, Inc., a Delaware corporation (“Act-On”), with Act-On remaining the surviving entity of the Merger and being a wholly-owned subsidiary of ListCo;

 

WHEREAS, as contemplated by the Merger Agreement, at the Effective Time, Company has agreed to issue to the Investors an aggregate of $[ ] million worth of shares of Common Stock and/or Pre-Funded Warrants in lieu of, substantially in the form as set forth in Exhibit A to the Merger Agreement.

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and/or Rule 506(b), the Company desires to issue and sell to each Investor, and each Investor, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement, the Merger Agreement, and the Subscription Booklet; and

 

WHEREAS, defined terms used in this Agreement but not otherwise defined herein shall have the meaning set forth in the subscription booklet (the “Subscription Booklet”) or the Merger Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of and subject to the mutual agreements, terms and conditions herein contained the receipt and sufficiency of which are hereby acknowledged, the Company and Investor agree as follows:

 

1.

PURCHASE AND SALE OF SECURITIES

 

1.1 Purchase and Sale of Securities. Subject to the terms and conditions set forth herein, the Company is offering to each Investor the number of Securities set forth on the signature page of this Share Purchase Agreement.

 

1.2 Closing. The closing of the transactions contemplated hereby shall take place simultaneously and at the same location as the closing of the transactions as contemplated in the Merger Agreement (the “Closing”). Upon Closing, subject to the allocations required under Section 2.10(b) and Section 2.12 of the Merger Agreement, the Company shall deliver to each Investor its respective Securities, and the Company and each Investor shall deliver the other items set forth in Section 4.2 deliverable at the Closing.

 

 

2.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to Investors that:

 

2.1 The Company and each subsidiary is a company duly organized, validly existing and in good standing under the laws of their respective country and/or state of incorporation. The Company and each subsidiary are not in violation of any of the provisions of its articles of incorporation, by-laws or other organizational or charter documents, each as may be amended (the “Internal Documents”). The Company is qualified to transact business as a foreign corporation and is in good standing under the laws of each jurisdiction where the location of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not have a material adverse effect on the business, assets, liabilities, results of operations, condition (financial or otherwise), properties or prospects of the Company.

 

2.2 The Company has all power and authority to: (i) conduct its business as presently conducted and as proposed to be conducted; (ii) enter into and perform its obligations under this Agreement, the Subscription Booklet and other Ancillary Documents; and (iii) issue and deliver the Shares. The execution and delivery of each of the Ancillary Documents (as defined in the Merger Agreement) and the issuance and delivery of the Securities has been duly authorized by all necessary corporate action and no other corporate or equivalent proceeding on the part of Company is necessary to authorize this Agreement or the Ancillary Documents or Company’s performance hereunder or thereunder, except as set forth in the Merger Agreement. The Ancillary Documents have been duly executed and when delivered will constitute upon due execution and delivery, will constitute, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers, and except that no representation is made herein regarding the enforceability of the Company’s obligations to provide indemnification and contribution remedies under the securities laws and subject to the limitations imposed by general equitable principles (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

2.3 The Shares, and the Shares issuable upon exercise of the Pre-Funded Warrants, will be duly and validly issued, fully paid and non-assessable, and free from all taxes or liens with respect to the issue thereof and shall not be subject to preemptive rights, rights of first refusal and/or other similar rights of stockholders of the Company and/or any other person.

 

2.4 No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or its property is pending or, to the best knowledge of the Company, threatened that (i) could reasonably be expected to have a material adverse effect on the performance of this Agreement or the other Ancillary Documents by the Company or the consummation of any of the transactions contemplated hereby or thereby, including, without limitation, the issuance of the Shares and the Shares issuable upon exercise of the Pre-Funded Warrants, and/or (ii) could reasonably be expected to have a material adverse effect on the Company’s operations.

 

2.5 The Company is not in (i) violation or default of any provision of its Internal Documents; (ii) default or material violation of the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject; and/or (iii) default or material violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Company of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its properties, as applicable.

 

 

2.6 Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act of the Securities is required for the offer and distribution of the Securities to the Investor in the manner contemplated.

 

2.7 The Company shall file a Form D with respect to the Securities as required under Regulation D. The Company shall legally qualify the Securities for distribution to the Investors in each Closing, as required under applicable securities or “blue sky” laws of the states of the United States (or obtain an exemption from such qualification) and shall pay all fees and expenses of such counsel in connection therewith, including, but not limited to, all state filing fees and such counsel’s legal fees and expenses.

 

2.8 The execution and delivery of this Agreement and the Subscription Booklet and the issuance of the Shares and the Shares issuable upon exercise of the Pre-Funded Warrants does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under any provision of any mortgage, indenture, lease or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or his properties or assets. Neither the execution nor delivery of this Agreement or any other Ancillary Document by the Company, nor the consummation of the transaction contemplated hereby, will result in the imposition of any security interest upon the Securities.

 

2.9 Securities Compliance and Restricted Securities. All Securities sold pursuant to this Agreement are restricted in compliance with Rule 144 of the Securities Act.

 

2.10 Subsequent Closings/No Integration. The Company has not made any prior offering nor sold any securities in any prior offering that would be integrated pursuant to Rule 502(a) with the sale of the Securities and the transactions contemplated by this Agreement in which the Company has not taken reasonable steps to verify that the purchasers of such securities were accredited investors. Further, the Company covenants and agrees it shall take reasonable steps to verify that all investors are accredited investors in connection with (i) the offer, sale, and issuance of the Securities pursuant to this Agreement in all Closings and (ii) pursuant to any other future securities offering that would be integrated with the transactions contemplated by this Agreement.

 

2.11 Certain Fees. No brokers fees, finder’s fees or financial advisory fees or commissions will be payable by the Company with respect to the transactions contemplated by this Agreement and the other Ancillary Documents.

 

3.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Each Investor, severally and not jointly with any other purchasers and subject to the limitations set forth herein and in the Merger Agreement, hereby represents and warrants to the Company as follows:

 

3.1 Organization. Such Investor is either an individual or an entity duly incorporated or formed, validly existing and in good standing (where such concept is applicable) under the laws of the jurisdiction of its incorporated or formed with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Ancillary Documents and otherwise to carry out its obligations hereunder and thereunder.

 

 

3.2 Authority. Each Investor has the requisite power and authority to enter into and perform this Agreement and each of the other Ancillary Documents to which such Investor is a party and to purchase the Securities being sold to it hereunder. The execution, delivery and performance of this Agreement and each of the other Ancillary Documents to which such Investor is a party by such Investor and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate, partnership or limited liability company action, and no further consent or authorization of such Investor or its Board of Directors, stockholders, partners, members, or managers, as the case may be, is required. This Agreement and each of the other Ancillary Documents to which such Investor is a party has been duly authorized, executed and delivered by such Investor and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of such Investor enforceable against such Investor in accordance with the terms hereof except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other laws regarding fraudulent conveyances and preferential transfers.

 

3.3 Purchase Entirely for Own Account. This Agreement is made with Investor in reliance upon Investor’s representation to the Company, which by Investor’s execution of this Agreement, Investor hereby confirms that the Securities to be acquired by Investor will be acquired for investment for Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Investor further represents that Investor does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Securities.

 

3.4 Investor Status. At the time Investor was offered the Securities, it was, and as of the date hereof it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Investor has truthfully and accurately completed the Subscription Booklet, which is hereby incorporated by reference, and will submit to the Company such further assurances of such status as may be reasonably requested by the Company as necessary to comply with applicable law.

 

3.5 Experience of Investor. Investor, either alone or together with its representatives, has such knowledge, sophistication, and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.

 

3.6 Ability to Bear Risk. Investor understands and agrees that purchase of the Securities is a high-risk investment and Investor is able to afford and bear an investment in a speculative venture having the risks and objectives of the Company, including a risk of total loss of such investment. Investor must bear the substantial economic risks of the investment in the Securities indefinitely because none of the Securities may be sold, hypothecated, or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration(s) are available. Investor has read and understands the Risk Factors set forth in Exhibit D to the Subscription Booklet.

 

3.7 Disclosure of Information. Investor has access to the Company’s filings made pursuant to the Securities Act and the Exchange Act for the purpose of obtaining information regarding the Company. In particular, Investor has been given a reasonable opportunity to review such documents as Investor has requested and to ask questions of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Securities and the business and affairs of the Company and to obtain any additional information concerning the Company’s business to the extent reasonably available so as to understand more fully the nature of this investment and to verify the accuracy of the information supplied. The Investor is satisfied that it has received adequate information with respect to all matters which he/she/it considers material to its decision to make this investment.

 

 

3.8 No other documents. In evaluating the suitability of an investment in the Company, the Investor has not relied upon any representation or other information (oral or written) other than as stated in the Ancillary Documents or as contained in documents so furnished to the Investor by the Company in writing or in Company filings made under the Securities Act or Exchange Act.

 

3.9 Restricted Securities. Investor understands that the Securities have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Investor’s representations as expressed herein. Investor understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Investor must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Except as otherwise provided herein or in the Merger Agreement, Investor acknowledges that the Company has no obligation to register or qualify the Securities. Investor further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company that are outside of Investor’s control, and which the Company is under no obligation to fulfill and may not be able to satisfy.

 

3.10 Legends. Investor understands that the Securities may be notated with one or all of the following legends to prevent transfer consistent with applicable federal and state securities laws:

 

(a) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

(b) Any legend required by the securities laws of any state to the extent such laws are applicable to the Securities represented by the stock certificate, instrument, or book entry so legended.

 

3.11 Exculpation Among Investors. Investor acknowledges that it is not relying upon any Person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Investor agrees that Investor is not liable to any other Investor for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the Securities.

 

3.12 Residence. Investor is presently a bona fide resident of the state or country represented on the signature page hereof and has no present intention of becoming a resident of any other state, country, or jurisdiction, and the address and Social Security Number/National Insurance Number (or other applicable number) or Employer Identification Number/Corporate Tax Reference Number (or other applicable number) set forth on the signature page hereof are Investor’s true and correct residential or business address and Social Security Number/National Insurance Number (or other applicable number) or Employer Identification Number/Corporate Tax Reference Number (or other applicable number).

 

 

3.13 U.S. Person If Investor is a “U.S. Person,” Investor: (i) if an individual, is at least 21 years of age; (ii) if an individual, is a citizen or resident of the United States; (iii) has adequate means of providing for Investor’s current needs and personal contingencies; (iv) has no need for liquidity in Investor’s investments; (v) maintains Investor’s principal residence or business at the address shown on the signature page hereof; (vi) warrants that all investments in and commitments to non-liquid investments are, and after Investor’s acquisition of the Securities will be, reasonable in relation to Investor’s net worth and current needs; and (vii) warrants that any financial information that is provided herewith by Investor, or is subsequently submitted by Investor at the request of the Company, does or will accurately reflect Investor’s financial condition with respect to which Investor does not anticipate any material adverse change.

 

3.14 Confidential Information. Each Investor agrees that such Investor and its employees, agents and representatives will keep confidential and will not disclose, divulge or use (other than for purposes of monitoring its investment in the Company) any confidential information which such Investor may obtain from the Company pursuant to financial statements, reports and other materials submitted by the Company to such Investor pursuant to this Agreement, unless such information is (i) known to the public through no fault of such Investor or his or its employees or representatives; (ii) becomes part of the public domain other than by a breach of this Agreement; (iii) becomes known by the action of a third party not in breach of a duty of confidence; or (iv) is required to be disclosed to a third party pursuant to any applicable law, government resolution, or decision of any court or tribunal of competent jurisdiction; provided, however, that a Investor may disclose such information (i) to its attorneys, accountants and other professionals in connection with their representation of such Investor in connection with such Investor’s investment in the Company, (ii) to any prospective permitted transferee of the Securities, or (iii) to any general partner or affiliate of such Investor, so long as the prospective transferee agrees to be bound by the provisions of this Section 3.15. Nothing contained herein shall prevent Investor from reporting to its prior, current and future limited partners and other equity owners (to the extent such parties are bound by obligations of confidentiality in favor of Investor) general financial information regarding their investment in the Company, the results thereof, Act-On, the Merger Agreements, other Ancillary Agreements and the transactions contemplated therein.

 

3.15 General. Such Investor understands that the Securities are being offered and issued in reliance on a transactional exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments, and understandings of such Investor set forth herein in order to determine the applicability of such exemptions and the suitability of such Investor to acquire the Securities.

 

4.

CONDITIONS PRECEDENT TO CLOSING

 

4.1 Conditions to Obligations of Investor. Investor’s obligation to purchase the Securities pursuant to this Agreement is subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the Company under Section 2 of this Agreement shall be true, complete, and correct on and as of the Closing Date, with the same effect as though such representations and warranties had been made on and as of such date, and the Company shall have certified to such effect to Investor in writing.

 

 

(b) No Order Pending. There shall be no order, ruling, judgment or decree in effect, including of any regulatory agency, which would enjoin or prohibit the transactions contemplated hereby.

 

(c) Delivery of Securities. The Company shall have instructed Continental Stock Transfer & Trust Company, a New York based stock transfer and registrar firm registered with the U.S. Securities and Exchange Commission, to record the Securities in Investor’s name in digital book entry form. Transfer agents record changes of ownership, maintain Share holder records, cancel, and issue Share certificates, distribute dividends and facilitate the prompt and accurate clearance and settlement of Share transactions.

 

(d) Agreements, Conditions and Covenants. The Company shall have performed or complied in all respects with all agreements, conditions and covenants required by this Agreement and all other Ancillary Documents to be performed or complied with by it on or before the Closing Date.

 

(e) this Agreement and all Ancillary Documents duly executed by the Company.

 

(f) Simultaneous Closing. The transactions contemplated in the Merger Agreement shall occur simultaneously with the Closing.

 

4.2 Conditions to Obligations of The Company. The Company’s obligation to sell and transfer the Securities pursuant to this Agreement is subject to the satisfaction or waiver at or prior to the Closing Date of the following conditions:

 

(a) This Agreement executed by the Investor.

 

(b) The Company shall have received the Investor’s Purchase Price, subject Section 1(e) at the Company’s discretion, which shall be equal to the Per Share Purchase Price multiplied by the number of Shares the Investor seeks to purchase (the “Total Investor Purchase Price”).

 

(c) Representations and Warranties. The representations and warranties of Investor under Section 3 of this Agreement and in the Subscription Booklet, as well as the other information contained therein, shall be true, complete, and correct on and as of the Closing Date, with the same effect as though such representations and warranties had been made on and as of such date.

 

(d) No Order Pending. There shall be no order, ruling, judgment or decree in effect, including of any regulatory agency, which would enjoin or prohibit the transactions contemplated hereby.

 

(e) Agreements, Conditions and Covenants. Investor shall have performed or complied in all respects with all agreements, conditions and covenants required by this Agreement to be formed or complied with by it on or before the Closing Date, including but not limited to remittance of the Total Investor Purchase Price to the Company.

 

 

(f) Subscription Booklet. The Investor shall have submitted a complete Subscription Booklet to the Company as per the instructions contained therein.

 

(g) Board Approval. The Company’s Board of Directors shall have approved each of the forms of Ancillary Documents and the Offering contemplated hereby.

 

(h) Simultaneous Closing. The transactions contemplated in the Merger Agreement shall occur simultaneously with the Closing.

 

5.

COVENANTS

 

The Company covenants with each of the Investors as follows, which covenants are for the benefit of the Investors and their permitted assignees (as defined herein):

 

5.1 Securities Compliance. The Company shall notify the Commission in accordance with its rules and regulations, of the transactions contemplated by this Agreement and the Ancillary Documents, including filing a Form D with respect to the Securities, as required under Regulation D and applicable “blue sky” laws if such Securities are offered pursuant to Rule 506 of Regulation D (“Regulation D”) and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Investors or subsequent holders.

 

5.2 No Integrated Offerings. The Company shall not make any offers or sales of any security (other than the securities being offered or sold hereunder) under circumstances that would require registration of the securities being offered or sold hereunder under the Securities Act.

 

5.3 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Ancillary Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Ancillary Document. The decision of each Investor to purchase Securities pursuant to the Ancillary Documents has been made by such Investor independently of any other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company which may have been made or given by any other Investor or by any agent or employee of any other Investor, and no Investor and none of its agents or employees shall have any liability to any other Investor (or any other Person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any other Ancillary Document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Ancillary Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Ancillary Documents. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Ancillary Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Investor, solely, and not between the Company and the Investors collectively and not between and among the Investors.

 

5.4 Further Assurances.  The Company shall execute any and all further documents, financing statements, agreements and instruments, and take all further action in order to effectuate the transactions contemplated by this Agreement.

 

 

5.5 Best Efforts. The Company shall exert its best efforts to satisfy the closing conditions set forth in Section 4.1 hereof or cause such closing conditions to be satisfied at or before the Closing.

 

6.

MISCELLANEOUS

 

6.1 Fees and Expenses. Except as expressly set forth in the Ancillary Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery, and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investors.

 

6.2 Representations and Warranties. The representations and warranties of the Company and Investor shall survive the Closing and delivery of the Securities.

 

6.3 [Reserved]

 

6.4 Certain Limitations. Except with respect to Fraud (defined in the Merger Agreement) committed by the Investor (“Investor Fraud”), the Investor shall not be liable for any Losses in an aggregate amount of more than the Investor’s share of the Indemnification Holdback Amount (it being agreed that, notwithstanding anything to contrary set forth herein and except for the immediately following proviso, the Company Class A Common Stock held in escrow pursuant to the Share Consideration Escrow Agreement shall be the sole and exclusive recourse of the Company with respect to all Losses hereunder); provided that, with respect to Losses arising from Investor Fraud, in no event shall Investor be liable for Losses hereunder in excess of such Investor’s pro rata share of the Merger Consideration that such Investor actually receives at Closing (inclusive of any Indemnification Holdback Amounts pertaining to such Investor);

 

6.5 Waiver, Amendment. Neither this Agreement nor any provisions hereof shall be waived, modified, changed, discharged, or terminated except by an instrument in writing signed by the party against whom any waiver, modification, change, discharge, or termination is sought.

 

6.6 Assignability. Neither this Agreement nor any right, remedy, obligation, or liability arising hereunder or by reason hereof shall be assignable by either Company or Investor without the prior written consent of each other party.

 

6.7 Section and Other Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

6.8 Governing Law and Jurisdiction. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the state of Delaware without regard to principles of conflicts of laws thereof. Each of the parties hereto expressly and irrevocably (1) agree that any legal suit, action or proceeding arising out of or relating to this Agreement will be instituted exclusively in either the State and Federal Courts in Delaware, (2) waive any objection they may have now or hereafter to the venue of any such suit, action or proceeding, and (3) consent to the in persona jurisdiction of the State and Federal Courts in Delaware in any such suit, action or proceeding. Each of the parties hereto further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in either the State and Federal Courts in Delaware agree that service of process upon it mailed by certified mail to its address will be deemed in every respect effective service of process upon it, in any such suit, action or proceeding.

 

 

6.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

6.10 Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid or if delivered by facsimile or electronic transmission, on the business day of such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party’s telecopier machine). Company may deliver all notices, financial statements, and any and all other documents, information and communications concerning the affairs of the Company, including, without limitation, information about the Offering, required or permitted to be provided to the Investor hereunder by means e-mail:

 

(a) if to Investor:

 

The postal address or email address included on the Subscription Booklet.

 

(b) if to The Company:

 

Banzai International, Inc. 

435 Ericksen Ave, Suite 250, Bainbridge Island, WA, 98110 

Phone: [***]

Attn: Joe Davy

Email: [***]

 

with a copy to (which shall not constitute notice):

 

Hunter Taubman Fischer & Li LLC 

950 Third Avenue, 19^th Floor 

New York, NY 10022

Fax: [***]

Email: [***]

Attn: Louis Taubman, Esq.

 

6.11 Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, permitted successors and assigns.

 

6.12 Entire Agreement. This Agreement (including the Exhibits hereto), the Subscription Booklet and the Ancillary Documents constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.

 

6.13 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants, and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

 

6.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investor and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in this Agreement and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

6.15 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments thereto.

 

6.16 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

6.17 Waivers. No waiver by any party of any default with respect to any provision, condition or requirement of this Agreement and the other Ancillary Documents shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof and thereof, nor shall any delay or omission of any party to exercise any right hereunder and thereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

6.18 Successors and Assigns. This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Investor, as applicable, provided, however, that, subject to federal and state securities laws and as otherwise provided in the Ancillary Documents, a Investor may assign its rights and delegate its duties hereunder in whole or in part (i) to a third party acquiring its Securities in a private transaction or (ii) to an affiliate, in each case, without the prior written consent of the Company or the other Investors, after notice duly given by such Investor to the Company provided, that no such assignment or obligation shall affect the obligations of such Investor hereunder and that such assignee agrees in writing to be bound, with respect to the transferred securities, by the provisions hereof that apply to the Investors. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Except as otherwise prohibited hereunder, nothing herein restricts Investor’s right and ability to assign and transfer Shares or Preferred Warrants to its limited partners, affiliates and investors.

 

6.19 Signature Page. It is hereby agreed that the execution by a Investor of the Signature Pages set forth in the Subscription Booklet will constitute agreement to be bound by the terms and conditions hereof and all of the other documents constituting the Ancillary Documents without requiring the Investor’s separate signature on any of such Ancillary Documents.

 

 

[PURCHASER SIGNATURE PAGES TO SHARE PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Share Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Investor:

 

_____________________________________________________________________________________________

 

Signature of Authorized Signatory of Investor:

 

_____________________________________________________________________________________________

 

Name of Authorized Signatory:

 

_____________________________________________________________________________________________

 

Title of Authorized Signatory:

 

_____________________________________________________________________________________________

 

Email Address of Authorized Signatory:

 

_____________________________________________________________________________________________

 

Address for Notice to Investor:

 

Subscription Amount: $_________________

 

Shares: _________________

 

EIN Number: ____________________

 

The Investor has executed a Subscription Agreement with the Company which provides, among other things, that by executing the Subscription Agreement, such Investor is deemed to have executed this Share Purchase Agreement in all respects and is bound to purchase the Shares set forth on the Signature Page to the Subscription Agreement.

 

 

 

Exhibit 10.2

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

PRE-FUNDED COMMON STOCK PURCHASE WARRANT

 

Banzai International, Inc.

 

Warrant Shares: [●]

Issue Date: [  ], 2025

 

THIS PRE-FUNDED COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [HOLDER], or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of the receipt of the Stockholder Approval (as defined below, such date, the “Initial Exercise Date”) and until this Warrant is exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase from Banzai International, Inc., a Delaware corporation (the “ListCo”), up to [●] shares (as subject to adjustment hereunder, the “Warrant Shares”) of the ListCo’s Class A common stock, par value $0.0001 per share (“Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Agreement and Plan of Merger (the “Merger Agreement”), dated January 22, 2025, by and between the ListCo, Banzai Passage Inc. and Act-On Software, Inc. (“Act-On”) In addition, for purposes of this Warrant, the following terms shall have the following meanings:

 

“Common Stock Equivalent” means any securities of the Company entitling the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

 

“Stockholder Approval” means the approval of the ListCo’s Stockholder, as contemplated by Rule 5635(a) of the NASDAQ listing rules, of the issuance of shares of Common Stock upon the exercise of Pre-Funded Warrants to the extent that the number of shares of Common Stock so issued, taken together with the number of shares of Common Stock issued pursuant to the Merger Agreement, would exceed the Nasdaq Ownership Limitation.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE American, or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Transfer Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the ListCo, with a mailing address of 1 State St 30th floor, New York, NY 10004, and an email address of administration@continentalstock.com, and any successor transfer agent of the ListCo.

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the ListCo of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank, unless the “cashless exercise” procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required and a digital or e-signature on a emailed copy of the Notice of Exercise is permitted. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the ListCo until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the ListCo for cancellation as soon as reasonably practicable following the date on which the Warrant Shares issuable pursuant to final Notice of Exercise are issued to Holder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The ListCo shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The ListCo shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice and any failure to do so is deemed acceptance of the Notice of Exercise by ListCo. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 

b) Exercise Price. The aggregate exercise price of this Warrant, except for a nominal exercise price of $0.001 per Warrant Share, was pre-funded to the ListCo on or prior to the Initial Exercise Date with due consideration and, consequently, no additional consideration (other than the nominal exercise price of $0.001 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason whatsoever. The remaining unpaid exercise price per share of Common Stock under this Warrant shall be $0.001, subject to adjustment hereunder (the “Exercise Price”).

 

c) Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	(A)	=	as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered during such the “regular trading hours” of such Trading Day or within two (2) hours after the close of “regular trading hours” on such Trading Day) pursuant to Section 2(a) hereof, or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is executed and delivered pursuant to Section 2(a) other than as described in subsections (i) or (ii) above;
	(B)	=	the Exercise Price of this Warrant; and
	(X)	=	the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the principal Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is then listed or quoted on the OTCQB Venture Market (the “OTCQB”) or the OTCQX Best Market (the “OTCQX”), the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market operated by the OTC Markets, Inc. (the “Pink Market”) (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the ListCo, the fees and expenses of which shall be paid by the ListCo.

 

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the principal Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if Common Stock is then listed or quoted on the OTCQB or the OTCQX, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX, as applicable, (c) if the Common Stock is not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Market, the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the ListCo, the fees and expenses of which shall be paid by the ListCo.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that for purposes of Rule 144 under the Securities Act, the Warrant Shares issued in such cashless exercise shall be deemed to have been acquired by the Holder, and the holding period for such Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued. The ListCo agrees not to take any position contrary to this Section 2(c).

 

d) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. ListCo shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust ListCo through its Deposit or Withdrawal at Custodian system (“DWAC”) if ListCo is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations and without current public information pursuant to Rule 144 (assuming cashless exercise of the Warrants), and if ListCo is not a participant in DWAC, then by physical delivery of a certificate, registered in the ListCo’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) one (1) Trading Day after delivery of the aggregate Exercise Price to the ListCo (if applicable), and (ii) the number of Trading Days comprising the Standard Settlement Period, in each case (i) or (ii), after the delivery to the ListCo of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date. If the ListCo fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, without limiting any other remedies that Holder may have, the ListCo shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $100 per Trading Day (increasing to $200 per Trading Day on the third (3^rd) Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The ListCo agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the ListCo’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the ListCo shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the ListCo fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise or pursue other remedies available to Holder under applicable Law.

 

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the ListCo fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the ListCo shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the ListCo was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the ListCo timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the ListCo shall be required to pay the Holder $1,000. The Holder shall provide the ListCo written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the ListCo, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at Law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the ListCo’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the ListCo shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

 

vi. Charges, Taxes and Expenses. Issuance and delivery of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax, transfer agent fee, legal fee or other expense, or any other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the ListCo, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto so long as ListCo provides documented evidence of the requirement to pay such transfer tax. The ListCo shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust ListCo (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii. Closing of Books. The ListCo will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

viii. No Offset. ListCo will not offset, reduce, limit, refuse or delay any issuance of Warrant Shares to Holder due to any dispute or claim involving ListCo, on one hand, and Act-On, Holder, and/or any other ListCo stockholder, warrant holder or option holder, on the other hand, including, without limitation, any dispute or claim arising out of the Merger Agreement but excluding any claim or dispute pertaining to this Warrant.

 

e) Holder’s Exercise Limitations. The ListCo shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the ListCo (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the ListCo is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the ListCo shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the ListCo’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the ListCo or (C) a more recent written notice by the ListCo or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the ListCo shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the ListCo, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the ListCo, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the ListCo. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

Section 3. Certain Adjustments.

 

a) Stock Dividends and Splits. If the ListCo, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the ListCo upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of capital stock any additional shares of Common Stock, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall automatically be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the ListCo grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the reductions due to “cashless exercise” or the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the ListCo shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the reductions due to “cashless exercise” or the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

d) Reserved.

 

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

f) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the ListCo shall promptly (and no later than five (5) business days after the effective date of such adjustment) deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the ListCo shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the ListCo shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the ListCo shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the ListCo shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the ListCo (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the ListCo shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the ListCo, then, in each case, the ListCo shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant Register of the ListCo, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the ListCo or any of the Subsidiaries, the ListCo shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

 

Section 4. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities Laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the ListCo or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer so long as ListCo provides documented evidence of the requirement to pay such transfer tax. (Notwithstanding the foregoing, no surrender of a Warrant shall be required if such Warrant is represented by book-entry registration in the Warrant Register.) Upon any such assignment and, if required, such payment, the ListCo shall promptly (and no later than five (5) business days later) execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the ListCo unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the ListCo within three (3) Trading Days of the date on which the Holder delivers an assignment form to the ListCo assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the ListCo, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the ListCo shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register; Warrant Agent. The ListCo shall register ownership of this Warrant, upon records to be maintained by the ListCo for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The ListCo may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. This Warrant may be, at the option of the Holder, either (x) represented by an original Warrant certificate or (y) issued by book-entry registration in the Warrant Register. For the avoidance of doubt, any Warrant issued by book-entry registration in the Warrant Register shall nonetheless be subject to the terms and conditions of such Warrant certificate to the same extent as if such Warrant were represented by an original Warrant certificate. The ListCo initially shall serve as the warrant agent under this Warrant; provided, that upon thirty (30) days’ notice to the Holder, the ListCo may appoint a new warrant agent. Any such successor warrant agent promptly shall cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

 

d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144 under the Securities Act, the ListCo may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provide an opinion of counsel, reasonably satisfactory to the ListCo, that such transfer may be effected without registration under the Securities Act.

 

e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities Law.

 

Section 5. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the ListCo prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the ListCo be required to net cash settle an exercise of this Warrant.

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The ListCo covenants that upon receipt by the ListCo of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the ListCo will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

 

d) Authorized Shares.

 

The ListCo covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (without regard to any limitations on exercise hereof, including without limitation, the reductions due to “cashless exercise”). The ListCo further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The ListCo will take all such reasonable action as may be necessary to assure that such Warrant Shares are issued as provided herein without violation of any applicable Law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The ListCo covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the ListCo in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the ListCo shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the ListCo will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the ListCo may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the ListCo to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the ListCo shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

 

e) Jurisdiction. This Warrant and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. Each Party hereto (a) agrees that any Action by such Party seeking any relief whatsoever arising out of, or in connection with, this Warrant or the Transactions shall be exclusively in the Delaware Chancery Court, or, if the Delaware Chancery Court does not have subject matter jurisdiction, in the federal courts located in the State of Delaware, and not in any other State or Federal court in the United States of America or any court in any other country; (b) agrees to submit to the exclusive jurisdiction of such courts for purposes of all Actions arising out of, or in connection with, this Warrant or the Transactions; (c) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such Action brought in such a court or any claim that any such Action brought in such a court has been brought in an inconvenient forum; and (d) agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this Warrant, if the ListCo willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the ListCo shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h) Notices. All notices and other communications hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other internationally recognized overnight delivery service or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

If to the ListCo, to:

 

	435 Ericksen Ave, Suite 250
	Bainbridge Island, Washington 98110
	Attn: Joseph Davy
	E-mail: [***]

 

 

with a copy (which shall not constitute notice) to:

 

	Hunter Taubman Fischer & Li LLC
	950 3rd Avenue
	19th Floor
	New York, NY 10022
	Attn: Louis Taubman, Esq.
	Email: [***]
	Phone: [***]

 

If to the Holder, to the address of such Holder as set forth in the Warrant Register.

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the ListCo, whether such liability is asserted by the ListCo or by creditors of the ListCo.

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The ListCo agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to the restrictions on transfer set forth in this Warrant and compliance with applicable securities laws, this Warrant may be assigned by the Holder. This Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the ListCo and the successors and permitted assigns of Holder; provided, that the ListCo shall have no right to assign this Warrant or is obligations hereunder except to a Successor Entity in the event of a Fundamental Transaction. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the ListCo, on the one hand, and the Holder of this Warrant, on the other hand.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

 

IN WITNESS WHEREOF, the ListCo has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	Banzai International, Inc.
	By:	__________________________________________
	Name:	Joe Davy
	Title:	Chief Executive Officer

 

 

NOTICE OF EXERCISE

 

To: Banzai International, Inc.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the ListCo pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[  ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: _________________________________________________

 

Name of Authorized Signatory: ___________________________________________________________________

 

Title of Authorized Signatory: ____________________________________________________________________

 

Date: ________________________________________________________________________________________

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:
	(Please Print)
Address:
	(Please Print)
Phone Number:
Email Address:
Dated: _______________ __, ______

 

Holder’s Signature:
Holder’s Address:

 

 

 

Exhibit 10.3

 

VOTING AND SUPPORT AGREEMENT

 

This VOTING AND SUPPORT AGREEMENT (this “Agreement”) is entered into as of January 22, 2025, by and between Banzai International, Inc., a Delaware corporation (the “ListCo”), and Joseph Davy (the “Stockholder”). ListCo and the Stockholder are sometimes referred to herein as a “Party” and collectively as the “Parties”.

 

W I T N E S S E T H:

 

WHEREAS, as of the date hereof, the Stockholder “beneficially owns” (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) and is entitled to dispose of (or to direct the disposition of) and to vote (or to direct the voting of) the number of shares of Class B common stock, par value $0.0001 per share, of ListCo (the “Class B Common Stock”) set forth opposite the Stockholder’s name on Schedule I hereto (such shares of Class B Common Stock, together with any other shares of Class B Common Stock, the voting power over which is acquired by the Stockholder during the period from the date hereof through the date on which this Agreement terminates in accordance with Section 6.1 hereof (such period, the “Voting Period”), are collectively referred to herein as the “Subject Shares”);

 

WHEREAS, ListCo, Banzai Passage Inc., a Delaware corporation and wholly owned subsidiary of ListCo (“Merger Sub”), Act-On Software, Inc., a Delaware corporation (“Act-On”), and certain stockholders of Act-On identified therein (the “Act-On Stockholders”) propose to enter into an Agreement and Plan of Merger, dated as of January 22, 2025 (as the same may be amended from time to time, the “Merger Agreement”), pursuant to which, upon the terms and subject to the conditions set forth therein, at the Closing, Merger Sub will merge with and into Act-On (the “Surviving Entity”), with the separate corporate existence of Merger Sub ceasing and Act-On surviving the Merger as a direct wholly owned subsidiary of ListCo (the “Merger”; the transactions, including the Merger, contemplated by the Merger Agreement, the “Transactions”);

 

WHEREAS, the Merger Agreement provides that as consideration to the Act-On Stockholders in connection with the Merger (the “Merger Consideration”), ListCo will issue to the Act-On Stockholders, in a transaction exempt from the registration requirements of the Securities Act in reliance upon Section 4(a)(2) of the Securities Act, shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”, together with Class B Common Stock, the “Common Stock”), of ListCo and/or pre-funded warrants to purchase shares of Class A Common Stock (the “Pre-Funded Warrants”); and

 

WHEREAS, for purposes of compliance with Nasdaq Listing Rule 5635(a), and as an inducement to the Act-On Stockholders to enter into the Merger Agreement, the Parties are executing this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual premises, representations, warranties, covenants, and agreements contained herein, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Capitalized Terms. For purposes of this Agreement, capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement.

 

 

ARTICLE II

VOTING AGREEMENT

 

Section 2.1 Agreement to Vote the Subject Shares. The Stockholder hereby unconditionally and irrevocably agrees that, during the Voting Period, at any duly called annual or special meeting of the stockholders of ListCo (or any adjournment or postponement thereof), and in any action by written consent of the stockholders of ListCo requested by ListCo’s board of directors or undertaken as contemplated by the Transactions, the Stockholder shall, if a meeting is held, appear at the meeting, in person or by proxy, or otherwise cause his Subject Shares to be counted as present thereat for purposes of establishing a quorum, and the Stockholder shall vote or consent (or cause to be voted or consented), in person or by proxy, all of his Subject Shares (a) in favor of the issuance of the Class A Common Stock pursuant to the Merger Agreement and/or the issuance of the Class A Common Stock upon exercise of the Pre-Funded Warrants, to the extent that such issuance and delivery of shares of the Class A Common Stock, taken together with the issuance of all shares of Class A Common Stock pursuant to the Merger Agreement, would exceed 19.99% of the issued and outstanding shares of Common Stock immediately prior to the closing of the Merger (the “Nasdaq Ownership Limitation”, and such proposal, the “Nasdaq Compliance Proposal”), and (b) in favor of any proposal to adjourn or postpone such meeting of stockholders of ListCo to a later date if there are not sufficient votes to approve the Nasdaq Compliance Proposal, and (c) in favor of any other proposals set forth in the Proxy Statement, and (d) against any proposal in opposition to approval of the Nasdaq Compliance Proposal or in competition with or materially inconsistent with the Nasdaq Compliance Proposal and (e) against any action, proposal, transaction, or agreement that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the elimination of the Nasdaq Ownership Limitation and/or the fulfillment of ListCo’s obligations under the Merger Agreement with respect to the issuance of Class A Common Stock and/or Pre-Funded Warrants. The Stockholder will take all actions and execute all documents reasonably requested by ListCo. and/or Act-On to accomplish or facilitate the foregoing. The Stockholder agrees not to and shall cause his Affiliates not to enter into any agreement, commitment or arrangement with any Person, the effect of which would be inconsistent with or violative of the provisions and agreements contained in this Article II.

 

Section 2.2 No Obligation as Director or Officer. Nothing in this Agreement shall be construed to impose any obligation or limitation on votes or actions taken by the Stockholder exclusively, in his capacity as a director or officer of ListCo. The Stockholder is executing this Agreement solely in his capacity as a record or beneficial holder of shares of Class B Common Stock.

 

ARTICLE III

COVENANTS

 

Section 3.1 Generally.

 

(a) Except as contemplated by the Merger Agreement or any other agreement, document, or instrument ancillary thereto, the Stockholder agrees that during the Voting Period he shall not, and shall cause his Affiliates not to (i) offer for sale, sell (including short sales), transfer, tender, offer, exchange, gift, pledge, encumber, assign, convey any legal or beneficial ownership in, or otherwise dispose of (including by merger (including by conversion into securities or other consideration)) (collectively, a “Transfer”), or enter into any contract, option, derivative, hedging or other agreement or arrangement or understanding (including any profit-sharing arrangement) with respect to, or consent to, a Transfer of, any or all of the Subject Shares or Stockholder’s voting or economic interest therein, if, as a result thereof, the Subject Shares will be entitled to a number of votes less than the minimum votes required under the ListCo Organizational Documents to approve the Nasdaq Compliance Proposal at any duly called meeting of the stockholders of ListCo (or any adjournment or postponement thereof); (ii) grant any proxies or powers of attorney with respect to any or all of the Subject Shares, if, as a result thereof, the Subject Shares will be entitled to a number of votes less than the minimum votes required under the ListCo Organizational Documents to approve the Nasdaq Compliance Proposal at any duly called meeting of the stockholders of ListCo (or any adjournment or postponement thereof); (iii) permit to exist any Lien of any nature whatsoever with respect to any or all of the Subject Shares; or (iv) take any action that would have the effect of preventing, impeding, interfering with or adversely affecting the Stockholder’s ability to perform his obligations under this Agreement. Notwithstanding the foregoing, the Stockholder may Transfer any such Subject Shares (A) to any member of the Stockholder’s immediate family, or to a trust for the benefit of the Stockholder or any member of the Stockholder’s immediate family, the sole trustees of which are the Stockholder or any member of the Stockholder’s immediate family or (B) by will, other testamentary document or under the laws of intestacy upon the death of the Stockholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to ListCo, to be bound by all of the terms of this Agreement.

 

(b) In the event of a stock dividend or distribution, or any change in the Common Stock by reason of any stock dividend or distribution, split-up, recapitalization, combination, conversion, exchange of shares or the like, the term “Subject Shares” shall be deemed to refer to and include the Subject Shares as well as all such stock dividends and distributions and any securities into which or for which any or all of the Subject Shares may be changed or exchanged or which are received in such transaction.

 

 

(c) The Stockholder agrees, while this Agreement is in effect, not to take or agree or commit to take any action that would make any representation and warranty of the Stockholder contained in this Agreement inaccurate in any material respect. The Stockholder further agrees that he shall use his reasonable best efforts to cooperate with ListCo to effect the transactions contemplated hereby and the Transactions.

 

Section 3.2 Standstill Obligations of the Stockholder. The Stockholder covenants and agrees with ListCo that, during the Voting Period:

 

(a) The Stockholder shall not act in concert with any person to, make, or in any manner participate in, directly or indirectly, a “solicitation” of “proxies” or consents (as such terms are used in the proxy solicitation rules of the SEC) or powers of attorney or similar rights to vote, or seek to advise or influence any person with respect to the voting of, any shares of Common Stock in connection with any vote or other action with respect to the Nasdaq Compliance Proposal, other than to recommend that stockholders of ListCo vote in favor of the Nasdaq Compliance Proposal and in favor of approval of the other proposals set forth in the Proxy Statement and any actions required in furtherance thereof and otherwise as expressly provided by Article II of this Agreement.

 

(b) The Stockholder shall not act in concert with any Person to, deposit any of the Subject Shares in a voting trust, grant any proxies with respect to the Subject Shares, or subject any of the Subject Shares to any arrangement or agreement with any person with respect to the voting of the Subject Shares, in each case other than those entered into with, or otherwise for the benefit of, ListCo as contemplated herein.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

 

The Stockholder hereby represents and warrants to ListCo as follows:

 

Section 4.1 Binding Agreement. The Stockholder is of legal age to execute this Agreement and is legally competent to do so. The Stockholder has full power and authority to execute and deliver this Agreement and to perform his obligations hereunder. This Agreement, assuming due authorization, execution, and delivery hereof by ListCo, constitutes a legal, valid, and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles).

 

Section 4.2 Ownership of Shares. Schedule I hereto sets forth opposite the Stockholder’s name the number of all of the shares of Class B Common Stock over which the Stockholder has beneficial ownership as of the date hereof. As of the date hereof, the Stockholder is the lawful and beneficial owner of the shares of Class B Common Stock denoted as being owned by the Stockholder on Schedule I and has the sole power to vote or cause to be voted such shares of Class B Common Stock. The Stockholder has good and valid title to the Class B Common Stock denoted as being owned by the Stockholder on Schedule I, free and clear of any and all pledges, charges, proxies, voting agreements, Liens, adverse claims, options and demands of any nature or kind whatsoever, other than those created by this Agreement or under applicable federal or state securities laws. There are no claims for finder’s fees or brokerage commissions or other like payments in connection with this Agreement or the transactions contemplated hereby payable by the Stockholder pursuant to arrangements made by the Stockholder.

 

Section 4.3 No Conflicts.

 

(a) No filing with, or notification to, any Governmental Authority, and no consent, approval, authorization or permit of any other Person is necessary for the execution of this Agreement by the Stockholder and the performance by the Stockholder of his obligations hereunder. No consent of the Stockholder’s spouse is necessary under any “community property” or other Laws in order for the Stockholder to enter into and perform his obligations under this Agreement.

 

 

(b) None of the execution and delivery of this Agreement by the Stockholder, the consummation by the Stockholder of the transactions contemplated hereby or compliance by the Stockholder with any of the provisions hereof shall (i) result in, or give rise to, a violation or breach of or a default under any of the terms of any material contract, understanding, agreement or other instrument or obligation to which the Stockholder is a party or by which the Stockholder or any of the Stockholder’s Subject Shares or assets may be bound, or (ii) violate any applicable order, writ, injunction, decree, Law, statute, rule or regulation of any Governmental Authority, except for any of the foregoing as would not reasonably be expected to impair the Stockholder’s ability to perform his obligations under this Agreement in any material respect.

 

Section 4.4 Reliance by ListCo, Act-On and the Act-On Stockholders. The Stockholder understands and acknowledges that ListCo, Act-On and the Act-On Stockholders are entering into the Merger Agreement in reliance upon the execution and delivery of this Agreement by the Stockholder and the representations, warranties, covenants, and agreements of the Stockholder set forth herein.

 

Section 4.5 No Inconsistent Agreements. The Stockholder hereby covenants and agrees that, except for this Agreement, the Stockholder (a) has not entered into, nor will enter into at any time while this Agreement remains in effect, any voting agreement or voting trust with respect to the Stockholder’s Subject Shares inconsistent with the Stockholder’s obligations pursuant to this Agreement, (b) has not granted, nor will grant at any time while this Agreement remains in effect, a proxy, consent or power of attorney with respect to the Stockholder’s Subject Shares and (c) has not entered into any agreement or knowingly taken any action (nor will enter into any agreement or knowingly take any action) that would make any representation or warranty of the Stockholder contained herein untrue or incorrect in any material respect or have the effect of preventing the Stockholder from performing any of his obligations under this Agreement.

 

Section 4.6. Absence of Litigation. As of the date hereof, there is no Action pending or, to the knowledge of the Stockholder, threatened, against or affecting the Stockholder that would reasonably be expected to impair the ability of the Stockholder to perform the Stockholder’s obligations hereunder or to consummate the transactions contemplated hereby.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF LISTCO

 

ListCo hereby represents and warrants to the Stockholder as follows:

 

Section 5.1 Binding Agreement. ListCo is a corporation duly incorporated and validly existing under the Laws of the State of Delaware. ListCo has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by ListCo have been duly authorized by all necessary corporate actions on the part of ListCo. This Agreement, assuming due authorization, execution, and delivery hereof by the Stockholder, constitutes a legal, valid, and binding obligation of ListCo enforceable against ListCo in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles).

 

Section 5.2 No Conflicts.

 

(a) No filing with, or notification to, any Governmental Authority, and no consent, approval, authorization or permit of any other Person is necessary for the execution of this Agreement by ListCo and the consummation by ListCo of the transactions contemplated hereby.

 

(b) None of the execution and delivery of this Agreement by ListCo, the consummation by ListCo of the transactions contemplated hereby or compliance by ListCo with any of the provisions hereof shall (i) conflict with or result in any breach of the ListCo Organizational Documents, (ii) result in, or give rise to, a violation or breach of or a default under any of the terms of any material contract, understanding, agreement or other instrument or obligation to which ListCo is a party or by which ListCo or any of its assets may be bound, or (iii) violate any applicable order, writ, injunction, decree, Law, statute, rule or regulation of any Governmental Authority, except, with respect to clauses (ii) and (iii), for any of the foregoing as would not reasonably be expected to impair ListCo’s ability to perform its obligations under this Agreement in any material respect.

 

 

ARTICLE VI

TERMINATION

 

Section 6.1 Termination. This Agreement shall automatically terminate, without any further action by any of the Parties, and none of the Parties shall have any rights or obligations hereunder, and this Agreement shall become null and void and have no effect upon the earliest to occur of: (a) the Closing Date (as defined in the Merger Agreement), if ListCo does not issue any Pre-Funded Warrants pursuant to the Merger Agreement, (b) the date of receipt of the approval by the ListCo Stockholders of the Nasdaq Compliance Proposal, and (c) the date of termination of the Merger Agreement in accordance with its terms. The termination of this Agreement in accordance with this Section 6.1 shall not prevent any Party hereunder from seeking any remedies (at law or in equity) against another Party or relieve such Party from liability for such Party’s breach of any terms of this Agreement. Notwithstanding anything to the contrary herein, the provisions of this Article VI and Article VII (other than the provisions of Section 7.13, which shall terminate) shall survive the termination, in accordance with this Section 6.1, of this Agreement.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.1 Further Assurances. From time to time, at the other Party’s request and without further consideration, each Party shall execute and deliver such additional documents and take all such further action as may be reasonably necessary (including under applicable Laws) or desirable to consummate the transactions contemplated by this Agreement on the terms and subject to the conditions set forth herein and therein, as applicable.

 

Section 7.2 Fees and Expenses. Each of the Parties shall be responsible for its own fees and expenses (including, the fees and expenses of investment bankers, accountants, and counsel) in connection with the entering into of this Agreement and the consummation of the transactions contemplated hereby.

 

Section 7.3 No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in ListCo or any other Person any direct or indirect ownership or incidence of ownership (including beneficial ownership) of or with respect to any Subject Shares.

 

Section 7.4 Amendments, Waivers. This Agreement may not be amended except by an instrument in writing signed by each of the Parties hereto. At any time prior to the Effective Time, (a) the Parties may (i) extend the time for the performance of any obligation or other act of ListCo, (ii) waive any inaccuracy in the representations and warranties of ListCo contained herein or in any document delivered by ListCo pursuant hereto and (iii) waive compliance with any agreement of ListCo or any condition to its own obligations contained herein and (b) ListCo may (i) extend the time for the performance of any obligation or other act of the Stockholder, (ii) waive any inaccuracy in the representations and warranties of the Stockholder contained herein or in any document delivered by the Stockholder pursuant hereto and (iii) waive compliance with any agreement of the Stockholder or any condition to their obligations contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding any other provision of this Agreement to the contrary, neither Party shall agree to any amendment hereof, or grant any consent, waiver, or extension hereunder, that would reasonably be expected to prevent or materially impede the approval of the Nasdaq Compliance Proposal.

 

Section 7.5 Notices. All notices, requests, claims, demands and other communications hereunder (each a “Notice”) shall be in writing and shall be given (and shall be deemed to have been duly given) when delivered in person, when delivered by e-mail (having obtained electronic delivery confirmation thereof), or when sent by registered or certified mail (postage prepaid, return receipt requested) (upon receipt thereof) to the other Parties as follows:

 

 

If to ListCo or the Stockholder:

 

	Banzai International, Inc.
	435 Ericksen Ave, Suite 250
	Bainbridge Island, WA 98110
	Attention:	Joseph Davy
	Email:	[***]

 

 

with a copy (which shall not constitute notice) to:

 

	Hunter Taubman Fischer & Li LLC
	950 Third Avenue, 19th Floor
	New York, NY 10022
	Attention:	Lou Taubman, Esq.
	Email:	[***]

 

or to such other address as the Party to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Additionally a copy of any Notice delivered under this Section 7.5 shall also be provided to Act-On at the address set forth in the Merger Agreement.

 

Section 7.6 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 7.7 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby or any of the other Transactions is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible.

 

Section 7.8 Entire Agreement; Assignment. This Agreement and the schedules hereto (together with the Merger Agreement, and the Ancillary Documents to which the Parties hereto are parties, in each case to the extent referred to herein) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof. Except for Transfers permitted by Section 3.1, this Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise) by any Party without the prior express written consent of the other Parties hereto.

 

Section 7.9 Reserved.

 

Section 7.10 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement; provided, that following the consummation of the Merger, the Act-On Stockholders shall be third party beneficiaries of the obligations of ListCo and the Stockholder hereunder and shall be entitled to specific performance of such obligations.

 

 

Section 7.11 Construction; Interpretation. The term “this Agreement” means this Voting and Support Agreement together with the Schedule hereto, as the same may from time to time be amended, modified, supplemented, or restated in accordance with the terms hereof. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No Party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any Party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedule hereto, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$” or “dollar” or “US$” shall be references to United States dollars; (f) the word “or” is disjunctive but not necessarily exclusive; (g) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “day” means calendar day unless Business Day is expressly specified; (i) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (j) all references to Articles, Sections or Schedules are to Articles, Sections and Schedules of this Agreement; and (k) all references to any Law will be to such Law as amended, supplemented or otherwise modified from time to time. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

Section 7.12 Governing Law; Jurisdiction. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. Any Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such Court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such Proceeding, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the Proceeding shall be heard and determined only in any such court, and agrees not to bring any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence legal Proceedings or otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any Proceeding brought pursuant to this Section 7.12.

 

Section 7.13 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in the Court of Chancery of the State of Delaware or, if that court does not have jurisdiction, any court of the United States located in the State of Delaware without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at law or in equity as expressly permitted in this Agreement. Each of the Parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.

 

Section 7.14 Waiver of Jury Trial. THE PARTIES EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

 

Section 7.15 Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf”, “tif” or “jpg”) and other electronic signatures (including, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable law. Minor variations in the form of the signature page, including footers from earlier versions of this Agreement or any such other document, shall be disregarded in determining the Party’s intent or the effectiveness of such signature.

 

Section 7.16 No Partnership, Agency, or Joint Venture. This Agreement is intended to create a contractual relationship between the Stockholder, on the one hand, and ListCo, on the other hand, and is not intended to create, and does not create, any agency, partnership, joint venture, or any like relationship between or among the Parties or any other Persons. Without limiting the generality of the foregoing sentence, except as otherwise provided herein, the Stockholder (a) is entering into this Agreement solely on his own behalf and shall not have any obligation to perform on behalf of any other holder of Common Stock or any liability (regardless of the legal theory advanced) for any breach of this Agreement to any other holder of Common Stock and (b) by entering into this Agreement does not intend to form a “group” with any other Person for purposes of Rule 13d-5(b)(1) of the Exchange Act or any other similar provision of applicable Law. The Stockholder has acted independently regarding his decision to enter into this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, ListCo has caused this Agreement to be duly executed as of the day and year first above written.

 

	BANZAI INTERNATIONAL, INC.
	By:	/s/ Joseph P. Davy
	Name:	Joseph P. Davy
	Title:	Chief Executive Officer

 

[Signature Page to Voting and Support Agreement]

 

 

IN WITNESS WHEREOF, the Stockholder has caused this Agreement to be duly executed as of the day and year first above written.

 

	STOCKHOLDER
	By:	/s/ Joseph P. Davy
	Name:	Joseph P. Davy

 

[Signature Page to Voting and Support Agreement]

 

 

SCHEDULE I

 

Beneficial Ownership of Securities

 

Holder		Number of Shares of Class B Common Stock
Joseph Davy		2,311,340

 

 

 

Exhibit 10.4

 

SHARE CONSIDERATION ESCROW AGREEMENT

 

This SHARE CONSIDERATION ESCROW AGREEMENT, dated as of January [  ], 2025 (the “Agreement”), is by and among Banzai International, Inc., a Delaware corporation (the “ListCo”), Banzai Passage Inc., a Delaware corporation wholly owned by ListCo (the “Merger Sub”), Act-On Software, Inc., a Delaware corporation (the “Company”), the Management Employees and the stockholders of the Company listed on Schedule I hereto (the “Management Employees” and “Company Stockholders”, respectively) and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York limited purpose trust company (the “Escrow Agent”). ListCo, each Company Stockholder, each Management Employee, and the Company are collectively referred to herein as the “Parties” and individually as a “Party”. Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Merger Agreement (as defined herein below).

 

WHEREAS, ListCo, Merger Sub and the Company have entered into an Agreement and Plan of Merger, dated as of January 22, 2025 (the “Merger Agreement”) whereby the parties thereto intend to effect the merger of Merger Sub with and into the Company, with the Company continuing as the surviving entity (the “Surviving Entity”) thereafter being a wholly owned subsidiary of ListCo, as contemplated by the Merger Agreement (the “Merger”);

 

WHEREAS, ListCo shall, subject to the terms of the Merger Agreement, deliver, pay and issue to the Management Employees and the Company Stockholders an aggregate of $53,200,000 less the Payoff Amount and the Transaction Expenses in combination of cash and shares of ListCo Class A Common Stock and/or Pre-Funded Warrants (the “Merger Consideration”, the share portion of the Merger Consideration is referred to as the “Share Consideration”, while the cash portion thereof is referred to as the “Cash Consideration”), in accordance with the terms of the Merger Agreement.

 

WHEREAS, pursuant to the Merger Agreement, among other matters, ListCo will withhold from the Share Consideration [--------------] shares of ListCo Class A Common Stock (as calculated pursuant to the Merger Agreement with any fractional shares rounded up to the nearest whole number, the “Indemnification Holdback Amount”), as sole security for the obligations of Company Stockholders and Management Employees pursuant to Section 2.10(b)(i) and Section 7.03(a) of the Merger Agreement;

 

WHEREAS, the Indemnification Holdback Amount shall be held by the Escrow Agent for a period of twelve (12) months following the Closing Date of the Merger (the “Indemnification Holdback Period”) and shall be released to the Company Stockholders and Management Employees within ten (10) business days of the expiration of the Indemnification Holdback Period in an amount as set forth herein;

 

WHEREAS, the Parties desire that the Escrow Agent accept the Indemnification Holdback Amount, in escrow, to be held and disbursed as hereinafter provided.

 

IT IS AGREED:

 

1. Appointment of Escrow Agent. The Parties hereby appoint the Escrow Agent to act in accordance with and subject to the terms of this Agreement and the Escrow Agent hereby accepts such appointment and agrees to act in accordance with and subject to such terms.

 

2. Deposit of Shares. On or before the Closing Date, the applicable Indemnification Holdback Amount as set forth on Schedule I hereto, shall be deposited in an escrow account (the “Escrow Account”), to be held and disbursed subject to the terms and conditions of this Agreement. The Parties acknowledge that the applicable Share Consideration deposited in escrow will be legended to reflect the deposit of such shares of ListCo Class A Common Stock under this Agreement.

 

 

3. Disbursement of the Escrow Shares.

 

3.1 Indemnification Holdback Amount

 

(i)

If at the end of the Indemnification Holdback Period, there is any remainder of the Indemnification Holdback Amount being held in escrow with the Escrow Agent, ListCo agrees that the Escrow Agent shall deliver to the Company Stockholders and Management Employees the number of shares of ListCo Class A Common Stock, as allocated to the Company Stockholders and Management Employees in accordance with the percentage as set forth in the Schedule I attached hereto (the “Indemnification Escrow Allocation Schedule”). The Company shall promptly provide notice to the Escrow Agent of the expiration or termination of the Indemnification Holdback Period and the Indemnification Holdback Amount due, if any.

 

Except as otherwise set forth herein, the Escrow Agent shall hold the Indemnification Holdback Amount until twelve months after the Closing Date, or earlier, if, subsequent to the Merger, ListCo consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of ListCo’s shareholders having the right to exchange their shares for cash, securities or other property. ListCo shall promptly provide notice of the termination or expiration of the Indemnification Holdback Period to the Escrow Agent. Upon completion of the Indemnification Holdback Period, the Escrow Agent shall disburse such amount of the Indemnification Holdback Amount to the applicable Company Stockholder and Management Employees in accordance with the Indemnification Escrow Allocation Schedule. The Escrow Agent shall have no further duties hereunder after the disbursement of the Indemnification Holdback Amount in accordance with this Section 3.1.

 

4. Rights of Stockholders.

 

4.1 Voting Rights as a Stockholder. Except as herein provided, the Company Stockholders and Management Employees shall retain all of their rights as shareholders of ListCo as long as any shares are held in escrow pursuant to this Agreement, including, without limitation, the right to vote such shares.

 

4.2 Dividends and Other Distributions in Respect of the Indemnification Holdback Amount. For as long as any shares are held in escrow pursuant to this Agreement, all dividends payable in cash with respect to the Indemnification Holdback Amount shall be paid to the Company Stockholders and Management Employees, respectively, but all dividends payable in stock or other non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term “Indemnification Holdback Amount” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.

 

4.3 Restrictions on Transfer. During the Indemnification Holdback Period, the only permitted transfers of the Indemnification Holdback Amount will be

 

(a)

by the Company Stockholders: (i) among the Company Stockholders or to the Company Stockholders’ members, officers, directors, consultants, current and future limited partners and other equity owners, or their affiliates, (ii) by bona fide gift to a member of a Company Stockholder’s immediate family or to a trust, the beneficiary of which is a Company Stockholder, or a member of a Company Stockholder’s immediate family, in each case for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, or (v) by virtue of the laws of Delaware or the organizational documents of ListCo upon its dissolution; and

 

(b)

by the Management Employees: (i) among the Management Employees or to the Management Employees’ members, officers, directors, consultants or their affiliates, (ii) by bona fide gift to a member of a Management Employee’s immediate family or to a trust, the beneficiary of which is a Management Employee, or a member of a Management Employee’s immediate family, in each case for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, or (v) by virtue of the laws of Delaware or the organizational documents of ListCo upon its dissolution

 

 

5. Concerning the Escrow Agent.

 

5.1 Good Faith Reliance. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment in accordance with this Agreement, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent in good faith to be genuine and to be signed or presented by the proper person or persons as set forth in this Agreement. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination, or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.

 

5.2 Indemnification. Subject to Section 5.8 below, the Escrow Agent shall be indemnified and held harmless by ListCo from and against any expenses, including reasonable counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow Shares held by it hereunder, other than expenses or losses arising from the gross negligence, fraud or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the nature of interpleader in an appropriate court to determine ownership or disposition of the Escrow Shares or it may deposit the Escrow Shares with the clerk of any appropriate court or it may retain the Escrow Shares pending receipt of a final, non-appealable order of a court having jurisdiction over all of the parties hereto directing to whom and under what circumstances the Escrow Shares are to be disbursed and delivered. The provisions of this Section 5.2 shall survive in the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.

 

5.3 Compensation. Subject to Section 5.8 below, the Escrow Agent shall be entitled to reasonable compensation from ListCo for all services rendered by it hereunder. The Escrow Agent shall also be entitled to reimbursement from ListCo for all reasonable expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.

 

5.4 Further Assurances. From time to time on and after the date hereof, ListCo and the Company Stockholders and Management Employees shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

5.5 Resignation. The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by it giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn the Indemnification Holdback Amount over to a successor escrow agent appointed by ListCo and approved by a majority of the Company Stockholders and Management Employees who still have shares in the Escrow Account, which approval will not be unreasonably withheld, conditioned or delayed. If no new escrow agent is so appointed within the 60-day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Shares with any court it reasonably deems appropriate in the State of New York.

 

5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged from its duties as escrow agent hereunder if so requested in writing at any time by all of the other parties hereto; provided, however, that such resignation shall become effective only upon the appointment of a successor escrow agent selected by ListCo and approved by the Representative, which approval will not be unreasonably withheld, conditioned or delayed.

 

 

5.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence, fraud, or willful misconduct.

 

5.8 Waiver. The Escrow Agent hereby waives any right of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution of, the Escrow Account and hereby agrees not to seek recourse, reimbursement, payment, or satisfaction for any Claim against the Escrow Account for any reason whatsoever.

 

6. Miscellaneous.

 

6.1 Governing Law. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware.

 

6.2 Third Party Beneficiaries. Each of the parties to this Agreement hereby acknowledges that the Representative is a third-party beneficiary of this Agreement.

 

6.3 Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and, except as expressly provided herein, may only be changed, amended, or modified by a writing signed by each of the parties hereto.

 

6.4 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation thereof.

 

6.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors, and assigns.

 

6.6 Notices. Any notice, consent, or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery, by email or by electronic transmission:

 

If to ListCo, to:

 

Banzai International, Inc.

435 Eriksen Ave., Suite 250

Bainbridge Island, WA, 98110

Attn: Joseph Davy, Chief Executive Officer

Email: [***]

 

with a copy (which shall not constitute notice) to:

 

Hunter Taubman Fischer & Li LLC

950 3^rd Avenue, 19^th Floor

New York, NY 10022

Attn: Louis Taubman, Esq.

Email: [***]

 

If to the Company, to:

 

Act-On Software, Inc.

121 SW Morrison St.

Suite 1600

Attn: Roger Rowe

Email: [***]

 

 

with a copy (which shall not constitute notice) to:

 

Macro Law Group

500 SW 116^th, Suite 116

Portland, OR 97225

Attn: Bill Pierznik

Email: [***]

 

If to a Management Employee, to his or her address set forth in Schedule I.

 

If to a Company Stockholder, to his/her/its address set forth in Schedule I.

 

and if to the Escrow Agent, to:

 

Continental Stock Transfer & Trust Company

1 State Street

New York, New York 10004

Attn: [    ]

Email: [   ]

 

The parties may change the persons and addresses to which the notices or other communications are to be sent by giving written notice to any such change in the manner provided herein for giving notice.

 

6.7 Liquidation of the Escrow Account. ListCo shall give the Escrow Agent written notification of the liquidation of the Escrow Account at the termination or expiration of the Indemnification Holdback Period.

 

6.8 Counterparts. This Agreement may be executed in several counterparts, each one of which shall constitute an original and may be delivered by facsimile transmission and together shall constitute one instrument.

 

[Signature Page Follows]

 

 

WITNESS the execution of this Agreement as of the date first above written.

 

BANZAI INTERNATIONAL, INC.
By:
Name:	Joseph Davy
Title:	Chief Executive Officer

 

[Signature Page to Share Consideration Escrow Agreement]

 

 

WITNESS the execution of this Agreement as of the date first above written.

 

CONTINENTAL STOCK TRANSFER & TRUST, as Escrow Agent
By:
Name:
Title:

 

 

COMPANY STOCKHOLDER:
/s/
Name:
[Signature Page to Share Consideration Escrow Agreement]

 

MANAGEMENT EMPLOYEE:
/s/
Name:
[Signature Page to Share Consideration Escrow Agreement]

 

  

ACT-ON SOFTWARE, INC.
By:
Name:	Kate Johnson

 

		/s/
		Name:
		/s/
		Name:
		/s/
		Name:

 

[Signature Page to Share Consideration Escrow Agreement]

 

 

SCHEDULE I

 

Name and Address of Company Stockholders & Management Employees		Ownership Percentage of the Total Indemnification Holdback Amount

 

 

 

Exhibit 10.5

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of [  ], 2025, by and between Banzai International, Inc., a Delaware corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers”). Each Purchaser and the Company is herein referred to as “Party”, and collectively, “Parties”.

 

This Agreement is made pursuant to the Agreement and Plan of Merger, dated as of January 22, 2025 (the “Merger Agreement”), by and among the Company, Banzai Passage Inc., and Act-On Software, Inc., a Delaware corporation (“Act-On”).

 

The Company and each Purchaser hereby agree as follows:

 

1. Definitions.

 

Capitalized terms used and not otherwise defined herein that are defined in the Merger Agreement shall have the meanings given such terms in the Merger Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

“Advice” shall have the meaning set forth in Section 7(d).

 

“Company 5-Day VWAP” means the average of the daily volume-weighted average trading prices of ListCo Class A Common Stock for the consecutive five (5) Trading Days immediately prior to and including the Trading Day immediately preceding the Closing Date.

 

“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 60^th calendar day after the filing of the initial Registration Statement (or, in the event of a “full review” by the Commission, the 120^th calendar day after the filing of the initial Registration Statement) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 4(c), the 60^th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 120^th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the second (2^nd) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

 

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

 

 

“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 5^th Business Day following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 4(c), the earliest practicable date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Holder Fraud” means any Fraud (defined in the Merger Agreement) committed by a Holder.

 

“Indemnified Party” shall have the meaning set forth in Section 6(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 6(c).

 

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

 

“Losses” shall have the meaning set forth in Section 6(a).

 

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

 

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means, as of any date of determination, (a) all shares of Class A common stock, par value US$0.0001 per share, of the Company (“Common Stock”) to be issued pursuant to the Merger Agreement (the “Shares”), (b) all shares of Common Stock then issued and issuable upon exercise of the Pre-Funded Warrants (assuming on such date the Pre-Funded Warrants are exercised in full without regard to any exercise limitations therein) (the “Warrant Shares”), (c) any additional shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the Pre-Funded Warrants (without giving effect to any limitations on exercise set forth in the Pre-Funded Warrants) and (d) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter from counsel to the Company to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders.

 

 

“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 4(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 4(a).

 

“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.

 

“Trading Day” means a day on which the Trading Market on which the Common Stock is primarily listed or quoted is open for business.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the NYSE American, or the New York Stock Exchange (or any successors to any of the foregoing).

 

“Transfer Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, and any successor transfer agent of the Company.

 

 

2. Registration.

 

(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-1 (except if the Company later becomes eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on such other available form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise directed by at least 85% in interest of the Holders) substantially the “Plan of Distribution” attached hereto as Annex A and substantially the “Selling Stockholder” section attached hereto as Annex B; provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent. Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 4(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed, delivered, and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. (New York City time) on a Trading Day. The Company shall immediately notify the Holders via e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. (New York City time) on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.

 

(b)  Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file one or more amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-1 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e); provided, however, that prior to filing any such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.

 

 

(c) Notwithstanding any other provision of this Agreement, if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:

 

a.

First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities;

 

b.

Second, the Company shall reduce Registrable Securities represented by Shares and Warrant Shares (applied, in the case that some Shares and Warrant Shares already are registered, to the Holders on a pro rata basis based on the total number of unregistered Shares and Warrant Shares held by such Holders).

 

In the event of a cutback hereunder, the Company shall give each affected Holder at least five (5) Trading Days prior written notice, along with the calculations as to such Holder’s pro rata allotment of Registrable Securities to be registered after giving effect to such cutback. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as so amended.

 

(d) Reserved.

 

(e) If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.

 

 

(f) Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder as an “underwriter,” in any Registration Statement or otherwise, without the prior written consent of such Holder.

 

3. Right to Piggyback.

 

(a) Primary Offerings. If the Company proposes to register any of its Common Stock in a public offering (other than a registration statement on Form S-4 or S-8 or filed in connection with an exchange offer or offering of securities solely to the Company’s existing securityholders) (a “Piggyback Registration”), then, as soon as practicable (but in no event less than five (5) Business Days prior to the proposed date of filing of such registration statement), the Company will provide notice of the Piggyback Registration to each Holder. Each Holder that desires to participate in the Piggyback Registration shall provide to the Company, within two (2) Business Days of receipt of such written notice, a binding and irrevocable written request (a “Written Request”), stating the Holder’s desire to be included in the Piggyback Registration and the number of Registrable Securities such Holder has requested to be included in the Piggyback Registration (such Holder, a “Participating Holder”). If the Company receives Written Requests from Holders electing to participate in a Piggyback Registration with respect to at least 25% of the Registrable Securities then-outstanding, the Company shall cause to be included in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received a Written Request; provided, if a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration, based on the following order of priority: (i) first, the securities the Company proposes to sell, and (ii) second, the number of Registrable Securities of the Participating Holders requested hereunder to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the Participating Holders on the basis of the number of Registrable Securities owned by each Participating Holder.

 

(b) Selection of Investment Banks. The Participating Holders will have no right to select, opine on or make any recommendation regarding the investment banker(s) and manager(s) for any Piggyback Registration.

 

 

(c) Withdrawal of Registration. The Company shall have the right to terminate or withdraw any Piggyback Registration before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration.

 

4. Registration Procedures.

 

In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a) Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than two (2) Trading Days prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of the Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or two (2) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex C (a “Selling Stockholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4^th) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.

 

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so amended or supplemented.

 

 

(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of Registrable Securities then registered in a Registration Statement, file as soon as reasonably practicable, but in any case, prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such remaining Registrable Securities.

 

(d) Notify in writing the Holders of Registrable Securities registered for resale under any Registration Statement (which notice shall, if given pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the related Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any 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, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that, upon the advice of legal counsel, the Company reasonably believes is material and would require additional disclosure by the Company in the Registration Statement or Prospectus of such information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement or the Prospectus would be expected, in the reasonable determination of the Company, upon the advice of legal counsel, to cause the Registration Statement or the Prospectus to fail to comply with applicable disclosure requirements; provided, however, that in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries, and the Company agrees that the Holders shall not have any duty of confidentiality to the Company or any of its Subsidiaries and shall not have any duty to the Company or any of its Subsidiaries not to trade on the basis of such information.

 

 

(e) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Holder, and all exhibits to the extent requested by such Holder (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.

 

(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 4(d).

 

(h)  Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

 

 

(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates or book entry statements, as applicable, representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates or book entry statements shall be free of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

 

(j) Upon the occurrence of any event contemplated by Section 4(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will 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, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 4(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 4(j) to suspend the availability of a Registration Statement and Prospectus pursuant to clauses (iii) through (vi) of Section 4(d) on not more than two (2) occasions or for more than ninety (90) total calendar days (which need not be consecutive days), in each case during any 12-month period.

 

(k) Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

 

 

(l) The Company shall use its best efforts to seek to become eligible to use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.

 

(m) If at any time the Commission takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any Holder to be named as an “underwriter,” the Company shall use commercially reasonable efforts to persuade the Commission that the offering contemplated by such Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Holders is an “underwriter”.

 

(n) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares.

 

(o) Until the date on which the Holders or their assignees shall have sold all Registrable Securities of the Company so held by them (“Covenant Termination Date”), the Company shall file with or furnish to the SEC when required by the Federal Securities Laws all reports or information required to be filed with or furnished to the SEC under the Securities Laws, shall not terminate its status as an issuer required to file reports under the Exchange Act and shall otherwise comply in all material respects with its reporting obligations under the Securities Laws. In the event that the Company fails to comply fully with the preceding sentence and such failure prevents or restricts any Holder or its assignees from selling or transferring Registrable Securities of the Company held by them, then, in addition to any other rights the holders of Registrable Securities may have hereunder, under the Merger Agreement, under any Ancillary Document or under applicable Law, for each attempted sale or transfer that is prevented, restricted, postponed or otherwise limited due to such failure (each an “Impacted Transfer”), the Company shall, within five (5) days after receiving written notice of such Impacted Transfer, pay to the impacted Holder of Registrable Securities an amount in cash, as partial liquidated damages and not as a penalty, equal to $5,000.00 per Impacted Transfer. If the Company fails to pay any partial liquidated damages pursuant to this section when due, the Company will pay interest thereon at a rate of 15% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to each affected Holder of Registrable Securities, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full, provided, however, the total amount of liquidated damages payable, along with any other penalties incurred by the Company under this Agreement and under the Merger Agreement shall not exceed 15% of the total Merger Consideration in any event.

 

 

(p) If: (i) the Registration Statement is not declared effective by the staff of the SEC by the earlier of the (A) 60th day after the Filing Date for the initial Registration Statement (or, in the event of a “full review” by the Commission, the 120th calendar day after the Filing Date for the initial Registration Statement) and (B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review, or (ii) after the effective date of the Registration Statement, the Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the holders of Registrable Securities are otherwise not permitted to utilize the prospectus therein to resell such Registrable Securities, for more than fifteen (15) consecutive calendar days or more than an aggregate of twenty (20) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach specified in the immediately preceding clauses (i) and (ii) being referred to as an “Event”, and for purposes of clause (i), the date on which such Event occurs, and for purpose of clause (ii) the date on which such fifteen (15) or twenty (20) calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the holders of Registrable Securities may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder of Share Consideration, within five (5) days after receiving written notice of such Event an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.0% multiplied by the result of the Company 5-Day VWAP multiplied by the number of shares of Registrable Securities held by such holder (assuming full exercise of any Pre-Funded Warrants). The Parties agree that the maximum aggregate liquidated damages payable to a holder of Registrable Securities under this Agreement shall be 10.0% multiplied by the result of the Banzai 5-Day VWAP multiplied by the number of shares of Registrable Securities held by such Holder (assuming full exercise of any Pre-Funded Warrants). If the Company fails to pay any partial liquidated damages pursuant to this Section 7.02(h) in full when due, the Company will pay interest thereon at a rate of 15% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to each affected holder of Registrable Securities, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. Notwithstanding the foregoing, the total amount of liquidated damages payable, along with any other penalties incurred by the Company under this Agreement and under the Merger Agreement shall not exceed 15% of the total Merger Consideration in any event.

 

(q) Notwithstanding anything to the contrary in this Agreement, if the Company fails to file a Registration Statement on or prior to any Filing Date due to Act-On’s failure to provide information necessary to file such Registration Statement timely as required under the Merger Agreement or any Ancillary Document (as defined in the Merger Agreement), the Holder shall agree in writing to extend such Filing Date for no less than ten (10) Business Days following receipt by the Company of such information provided by Act-On. In addition, notwithstanding anything to the contrary in this Agreement, if the Company fails to cause a Registration Statement to be declared effective on or prior to any Effectiveness Date due to Act-On’s failure to provide information necessary to file such Registration Statement timely, the Holder shall agree in writing to extend such Effectiveness Date for no less than ten (10) Business Days following receipt by the Company of such information provided by Act-On.

 

 

5.  Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) with respect to (A) filings made with the Commission, (B) filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (C) compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement and (vii) fees and expenses of one legal counsel to the Holders, not to exceed $25,000 with respect to each such registration. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided in this Agreement, in the Merger Agreement, or in any other Ancillary Document, any legal fees or costs of the Holders.

 

6.  Indemnification.

 

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify, defend, and hold harmless each Holder, the officers, directors, members, stockholders, managers, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each Holder, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, managers, partners, agents, investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and investigation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company or its agents of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue or alleged untrue statements or omissions or alleged omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in such Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that each Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 4(d)(iii)-(vi), the use by such Holder of a Prospectus that is outdated, defective or otherwise unavailable pursuant to the terms hereof for use by such Holder after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 7(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders.

 

 

(b) Indemnification by Holders.

 

(i) Subject to the other terms and conditions of this Section 6, each Holder (“Indemnifying Holder”) shall, severally and not jointly, indemnify and defend the Company, and its directors, officers, and employees (“Company Indemnities”), to the fullest extent permitted by applicable law, against and shall hold the Company Indemnities harmless from and against, and shall pay and reimburse each of them for, any and all Losses, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue or alleged untrue statement or omission or alleged omission is contained in any information regarding such Indemnifying Holder furnished in writing by such Indemnifying Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Indemnifying Holder’s proposed method of distribution of Registrable Securities and such proposed method of distribution was reviewed and expressly approved in writing by such Indemnifying Holder expressly for use in such Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose).

 

(ii) Except with respect to Holder Fraud, the Holders shall not be liable to Company Indemnitees until the aggregate amount of all Losses in respect of indemnification under Section 6(b)(i) exceeds $250,000 (“Holders Deductible”), in which event the Holders shall be required to pay or be liable for all such Losses from and over the Holders Deductible; provided that in no event shall the liability of any Indemnifying Holder hereunder be greater in amount than such Indemnifying Holder’s pro rata share of the Indemnification Holdback Amount (it being agreed that, notwithstanding anything to contrary set forth herein and except for the immediately following proviso, the Company Class A Common Stock held in escrow pursuant to the Share Consideration Escrow Agreement shall be the sole and exclusive recourse of the Company Indemnities with respect to all Losses hereunder); provided that, with respect to Losses arising from Holder Fraud, solely the Holder that has committed such Holder Fraud shall be liable for such Losses; and provided further, that in no event shall any single Holder be liable for Losses hereunder in excess of such Holder’s pro rata share of the Merger Consideration that such Holder actually receives at Closing (inclusive of any Indemnification Holdback Amounts pertaining to such Holder).

 

(c) Conduct of Indemnification Proceedings.

 

(i) Any party that has an indemnification obligation under this Section 6 is referred to herein as an “Indemnifying Party” and any party that is entitled to indemnification under this Section 6 is referred to herein as an “Indemnified Party”.

 

 

(ii) In order to make a claim for indemnification hereunder, the Indemnified Party must provide written notice (a “Claim Notice”) of such claim to the Indemnifying Party, which Claim Notice shall include (A) a reasonable description of the facts and circumstances which relate to the subject matter of such indemnification claim to the extent then known, and (B) the amount of Losses suffered by the Indemnified Party in connection with the claim to the extent known or reasonably estimable.  Should any Claim by or involving a third party (including any Governmental Authority) that is not a party to this Agreement (or an Affiliate thereof) for which an Indemnifying Party has an indemnification obligation under the terms of this Agreement (a “Third-Party Claim”), the Indemnified Party shall notify the Indemnifying Party in writing (a “Third-Party Claim Notice”) within a reasonable time after such Third-Party Claim arises and is known to the Indemnified Party, including all of the details required to be included in a Claim Notice. No delay on the part of the Indemnified Party to provide the Indemnifying Party a Claim Notice or Third-Party Claim Notice shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is actually prejudiced as a result thereof.

 

(iii) Upon the receipt of a Third Party Claim Notice, the Indemnifying Party shall assume the defense at its expense, and with counsel selected by the Indemnifying Party; provided that, the Indemnified Party is entitled to select and employ separate counsel and to participate in the defense of such claim, at the Indemnified Party’s expense. If the Indemnifying Party shall have failed to assume the defense of such claim within a reasonable time after receipt of the Third Party Claim Notice, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any Losses resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent, not to be unreasonably withheld.

 

(iv) If the matter specified in the Claim Notice relates to any Action or Loss that is not a Third Party Claim, the Indemnifying Party shall have 30 days after its receipt of such Claim Notice to respond in writing to such claim. If the Indemnifying Party does not so respond within such 30 day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

(v) The Losses for which indemnification is provided under this Section 6 shall be calculated net of any insurance proceeds actually received by the Indemnified Party on account thereof; provided, that the obligation of the Indemnifying Party shall include all costs or expenses incurred by the Indemnified Party in connection with such matter or claim including, without limitation, collection costs, enforcement costs, Taxes, or deductibles incurred in connection therewith.

 

 

(d) Except for equitable remedies, from and after the Effective Time, the indemnification provided in this Section 6 shall constitute the sole and exclusive remedy of the Indemnified Party for monetary damages with respect to any Losses. For clarity, the survival periods and liability limits set forth in this Section 6 shall control notwithstanding any statutory or common law provisions or principles to the contrary.

 

7.  Miscellaneous.

 

(a) Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

(b) Listing. The Company shall use best efforts to maintain the listing of all Registrable Securities covered by a Registration Statement on the Nasdaq Capital Market..

 

(c) Rule 144. The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the reasonable request of the Holders, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rule 144), and it will take such further action as the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144, including providing any legal opinions relating to such sale pursuant to Rule 144, as appropriate.

 

(d) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 4(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.

 

 

(e) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended or modified, and waivers of or consents to departures from the provisions of this Agreement may not be given, unless the same shall be in writing and signed by the Company and the Holders of 50.1% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any security); provided that, if any such amendment, modification, waiver, or consent disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities as the result of an amendment, modification, waiver or consent effected or given in compliance with the previous sentence, then the number of Registrable Securities to be registered on such Registration Statement for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, waived, or departed from except in accordance with the provisions of the first sentence of this Section 7(e). No consideration shall be offered or paid to any Holder to amend or consent to a waiver or modification of or departure from of any provision of this Agreement unless the same consideration also is offered to all of the Holders.

 

(f) Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other internationally recognized overnight delivery service or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

If to the Company, to:

 

435 Ericksen Ave, Suite 250

Bainbridge Island, Washington 98110

Attn: Joseph Davy

E-mail: [***]

 

with a copy (which shall not constitute notice) to:

 

Hunter Taubman Fischer & Li LLC

950 3rd Avenue

19th Floor

New York, NY 10022

Attn: Louis Taubman, Esq.

Email: [***]

Phone: [***]

 

 

If to the Holder, to:

 

Such address as is indicated in such Holder’s Selling Stockholder Questionnaire (or such other address as such Holder may indicate to the Company by notice duly given hereunder)

 

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the parties and their respective successors and permitted assigns and shall inure to the benefit of each Holder. The Indemnified Parties are intended third-party beneficiaries of Section 6. A Holder may transfer or assign, in whole or from time to time in part, to one or more Persons its rights hereunder in connection with the transfer of Registrable Securities by such Holder to such Person and the Company shall include such assignee as a Selling Stockholder in the next amendment to the Registration Statement then in effect with respect to the Registrable Securities that the Company files; provided that such Holder complies with all Laws applicable to such transfer or assignment and provides written notice of assignment to the Company promptly after such assignment is effected, and such Person agrees in writing to be bound by all of the provisions contained herein. The Company may not assign (whether by operation of law or otherwise) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities; provided, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Holders in connection with such transaction unless such securities are otherwise freely tradable by the Holders after giving effect to such transaction.

 

(h) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

(i) Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery of a “.pdf” format data file or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com), such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such “.pdf” signature page were an original thereof.

 

 

(j) Governing Law. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. Each Party hereto (a) agrees that any Action by such Party seeking any relief whatsoever arising out of, or in connection with, this Agreement or the Transactions shall be exclusively in the Delaware Chancery Court, or, if the Delaware Chancery Court does not have subject matter jurisdiction, in the federal courts located in the State of Delaware, and not in any other State or Federal court in the United States of America or any court in any other country; (b) agrees to submit to the exclusive jurisdiction of such courts for purposes of all Actions arising out of, or in connection with, this Agreement or the Transactions; (c) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such Action brought in such a court or any claim that any such Action brought in such a court has been brought in an inconvenient forum; and (d) agrees that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.

 

(k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

 

(l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants, and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(m) Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

(n) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.

 

********************

 

(Signature Pages Follow)

 

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

	Banzai International, Inc.
	By:
	Name:	Joseph P. Davy
	Title:	Chief Executive Officer

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

 

[SIGNATURE PAGE OF HOLDERS TO BNZI RRA]

 

Name of Holder: __________________________

 

Signature of Authorized Signatory of Holder: __________________________

 

Name of Authorized Signatory: _________________________

 

Title of Authorized Signatory: __________________________

 

[SIGNATURE PAGES CONTINUE]

 

 

Annex A

 

Plan of Distribution

 

Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

 

·

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

·

block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

·

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

·

an exchange distribution in accordance with the rules of the applicable exchange;

 

·

privately negotiated transactions;

 

·

settlement of short sales;

 

·

in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

 

·

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

·

a combination of any such methods of sale; or

 

·

any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

 

 

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.

 

In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages, and liabilities, including liabilities under the Securities Act.

 

The Company agrees to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

 

Annex B

 

SELLING SHAREHOLDERS

 

The common stock being offered by the selling shareholders are those previously issued to the selling shareholders, and those issuable to the selling shareholders, upon exercise of the pre-funded warrants. For additional information regarding the issuances of those shares of common stock and pre-funded warrants, see “Private Placement of Shares of Common Stock and Pre-Funded Warrants” above. The Company is registering the shares of common stock in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the shares of common stock and the pre-funded warrants, the selling shareholders have not had any material relationship with us within the past three years.

 

The table below lists the selling shareholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling shareholders. The second column lists the number of shares of common stock beneficially owned by each selling shareholder, based on its ownership of the shares of common stock and pre-funded warrants, as of ________, 2025, assuming exercise of the pre-funded warrants held by the selling shareholders on that date, without regard to any limitations on exercises.

 

The third column lists the shares of common stock being offered by this prospectus by the selling shareholders.

 

In accordance with the terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale of the sum of (i) the number of shares of common stock issued to the selling shareholders in the “Private Placement of Shares of Common Stock and Pre-Funded Warrants” described above and (ii) the maximum number of shares of common stock issuable upon exercise of the related pre-funded warrants, determined as if the outstanding pre-funded warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration rights agreement, without regard to any limitations on the exercise of the pre-funded warrants. The fourth column assumes the sale of all of the shares offered by the selling shareholders pursuant to this prospectus.

 

The selling shareholders may sell all, some, or none of their shares in this offering. See “Plan of Distribution.”

 

 

Name of Selling Shareholder		Number of shares of Common Stock Owned Prior to Offering		Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus		Number of shares of Common Stock Owned After Offering

 

 

Annex C

 

Banzai International, Inc.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”) of Banzai International, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

1.

Name.

 

(a)

Full Legal Name of Selling Stockholder

 

 

(b)

Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

 

 

(c)

Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

 

 

2. Address for Notices to Selling Stockholder:

 

Telephone:

E-Mail: _____________________________________________________________________

Contact Person:

 

3. Broker-Dealer Status:

 

(a)

Are you a broker-dealer?

 

Yes ☐                No ☐

 

(b)

If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes ☐                No ☐

 

 

Note:

If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

(c)

Are you an affiliate of a broker-dealer?

 

Yes ☐                No ☐

 

(d)

If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes ☐                No ☐

 

Note:

If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Merger Agreement.

 

(a)

Type and Amount of other securities beneficially owned by the Selling Stockholder:

 

 

 

5. Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors, or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

 

The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.

 

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

Date:

Beneficial Owner:

 

	By:
	Name:
	Title:

 

PLEASE EMAIL A .PDF COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:

 

 

 

Exhibit 99.1

 

 

Banzai Announces Definitive Agreement to Acquire Act-On Software, Growing TTM Revenue 152% to $44M

 

Banzai Adds Enterprise Marketing Automation Platform, the Cornerstone of AI-driven B2B Marketing, to Growing Product Family

 

SEATTLE – January 23, 2025 – Banzai International, Inc. (NASDAQ: BNZI) (“Banzai” or the “Company”), a leading marketing technology company that provides essential marketing and sales solutions, today announced that it has signed a definitive agreement to acquire Act-On Software Inc. (“Act-On”), an enterprise marketing automation platform (MAP) provider.

 

Act-On is an easy-to-use and intelligent marketing automation platform, powered by AI and supported by an open data architecture. In a landscape filled with complex marketing suites, Act-On focuses on providing marketing software that enhances team efficiency and facilitates engagement with customers and prospects across all communication channels. Clients like Hitachi, BestBuy, and Progressive Insurance utilize Act-On to improve lead generation, increase sales pipeline, automate customer communications, and increase return on marketing investment (ROMI).

 

“Today’s marketers require efficient and agile marketing automation to achieve tangible business results, and we believe that Act-On provides solutions that fulfill this need,” said Joe Davy, Founder and CEO of Banzai. “Act-On’s software complements our suite of tools for data-driven marketers. By making customer data actionable, Act-On empowers marketers to think big and create smart, effective programs aimed to drive growth and increase customer lifetime value – all with exceptional speed and efficiency.”

 

“We’re excited to become part of the Banzai product family and contribute to the vision of AI-powered marketing,” said Kate Johnson, CEO of Act-On Software. “The future of marketing software is about making the marketer’s job easier through AI and seamlessly integrated solutions. Banzai’s family of tightly integrated best-in-class products - including webinar tools, video creation, and now marketing automation - will help marketers accomplish more in an AI empowered world.

 

The acquisition is projected to increase revenue by $27 million for the twelve-month period ending December 31, 2025, on a pro forma basis. Act-On’s financials are forecasted and are subject to change.

 

Banzai’s vision is to build a comprehensive suite of AI-driven marketing tools that make life easier for marketers and businesses of all sizes. Acquiring Act-On is a key step toward achieving this goal, driving revenue growth, and providing innovative solutions for our clients.

 

Transaction Details

 

Under the terms of the agreement, the aggregate merger consideration will consist of Banzai Class A Common Stock, and/or Pre-Funded Warrants exercisable for shares of Class A Common Stock, valued at $33.2 million and cash consideration of $20.0 million for an aggregate enterprise value for the merger consideration of $53.2 million. Additional details regarding the acquisition are included in the Company’s Form 8-K filed with the Securities and Exchange Commission on January 23, 2025. The transaction is expected to close in February 2025, subject to the satisfaction of customary closing conditions.

 

 

About Act-On Software

 

Act-On Software is the easiest to use and most intelligent marketing automation platform for mid-market and enterprise B2B customers. Act-On provides solutions that empower marketers to engage prospects and customers at every step of the customer lifecycle, including lead generation, automated multi-channel marketing, customer journey orchestration, email personalization, customer data management, and sales intelligence. By unifying customer engagement data and multi-channel outreach, Act-On makes it easy for brands to reach and engage their target buyers with personalized messages. Act-On Software serves enterprise customers such as Hitachi, Sharp, Best Buy, Flextronics, Red Lions Hotels, and SKF Group. Act-On is headquartered in Portland, Oregon. Learn more at https://act-on.com.

 

About Banzai

 

Banzai is a marketing technology company that provides AI-enabled marketing and sales solutions for businesses of all sizes. On a mission to help their customers grow, Banzai enables companies of all sizes to target, engage, and measure both new and existing customers more effectively. Banzai customers include Cisco, New York Life, Hewlett Packard Enterprise, Thermo Fisher Scientific, Thinkific, Doodle and Globe Life, among thousands of others. Learn more at www.banzai.io. For investors, please visit https://ir.banzai.io.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often use words such as “believe,” “may,” “will,” “estimate,” “target,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “propose,” “plan,” “project,” “forecast,” “predict,” “potential,” “seek,” “future,” “outlook,” and similar variations and expressions. Forward-looking statements are those that do not relate strictly to historical or current facts. Examples of forward-looking statements may include, among others, statements regarding Banzai International, Inc.’s (the “Company’s”): future financial, business and operating performance and goals; annualized recurring revenue and customer retention; ongoing, future or ability to maintain or improve its financial position, cash flows, and liquidity and its expected financial needs; potential financing and ability to obtain financing; acquisition strategy and proposed acquisitions and, if completed, their potential success and financial contributions; strategy and strategic goals, including being able to capitalize on opportunities; expectations relating to the Company’s industry, outlook and market trends; total addressable market and serviceable addressable market and related projections; plans, strategies and expectations for retaining existing or acquiring new customers, increasing revenue and executing growth initiatives; and product areas of focus and additional products that may be sold in the future. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements. Therefore, investors should not rely on any of these forward-looking statements. Factors that may cause actual results to differ materially include changes in the markets in which the Company operates, customer demand, the financial markets, economic, business and regulatory and other factors, such as the Company’s ability to execute on its strategy. More detailed information about risk factors can be found in the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q under the heading “Risk Factors,” and in other reports filed by the Company, including reports on Form 8-K. The Company does not undertake any duty to update forward-looking statements after the date of this press release.

 

Investor Relations

Chris Tyson

Executive Vice President

MZ Group - MZ North America

949-491-8235

BNZI@mzgroup.us

www.mzgroup.us

 

Media

Rachel Meyrowitz

Director, Demand Generation, Banzai

media@banzai.io

 

 

 

v3.24.4

Cover	Jan. 23, 2025
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 23, 2025
Entity File Number	001-39826
Entity Registrant Name	Banzai International, Inc.
Entity Central Index Key	0001826011
Entity Tax Identification Number	85-3118980
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	435 Ericksen Ave
Entity Address, Address Line Two	Suite 250
Entity Address, City or Town	Bainbridge Island
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98110
City Area Code	(206)
Local Phone Number	414-1777
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Class A common stock, par value $0.0001 per share
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	BNZI
Security Exchange Name	NASDAQ
Redeemable Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $575.00
Title of 12(b) Security	Redeemable Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $575.00
Trading Symbol	BNZIW
Security Exchange Name	NASDAQ

---